Weekly Health Care Policy Update – April 18, 2025

April 25, 2025

In this update: 

  • Administration Updates
    • OMB Outlines Mass Reorganization of HHS in Leaked Document
    • Trump Administration Instructs Agencies to Repeal Rules Without Notice and Comment
    • President Trump Issues EO on Drug Prices
  • Legislative Updates
    • Republicans Send Letter to Congressional Leaders Expressing Medicaid Support
    • Ways and Means Members Ask GAO to Investigate MLR Adherence in MA
  • Federal Agencies
    • CMS Tells States Not to Use Medicaid Dollars for Gender-Affirming Care
    • CMS Releases Proposed Hospice Payment and Quality Reporting Rule
    • CMS Releases Proposed Skilled Nursing Facility Payment Rule
    • CMS Releases Proposed IPPS and LTCH Payment Rule
  • Other Updates
    • Avalere Publishes Report Showing CMMI Models Not Generating Overall Savings
    • MedPAC Holds April 2025 Meeting
    • MACPAC Holds April 2025 Meeting
    • Lown Institute Report Shows Many Hospitals Have Fair Share Deficit
  • New York State Updates
    • NYS Budget Deadline Continues to be Extended
    • DOH Announces Ongoing Progress of CDPAP Transition

Administrative Updates

OMB Outlines Mass Reorganization of HHS in Leaked Document
On April 17th, a 64-page PDF was leaked from the Office of Management and Budget (OMB) detailing plans for a mass reorganization of the Department of Health and Human Services (HHS). The document – dated April 10th – includes a header noting the contents are “pre-decisional” but details approximately $40 billion in cuts to the agency, or one-third of HHS’s discretionary spending budget.
 
The document also includes a new organizational chart, which eliminates the Health Resources Services Administration (HRSA), the Administration for Community Living (ACL), the Substance Abuse and Mental Health Services Administration (SAMHSA), the Agency for Healthcare Research and Quality (AHRQ), and the Administration for Strategic Preparedness and Response (ASPR). It also includes a newly-formed Administration for a Healthy America (AHA) with a $20 billion budget.
 
Many programs within existing agencies are also eliminated in the plan. The National Institutes of Health (NIH) budget is cut by 40% and reduced from 27 to eight institutes. The Centers for Disease Control and Prevention (CDC) budget is cut by over 40% and programs related to global health, HIV/AIDS, youth violence prevention, traumatic brain injury, asthma, childhood lead poisoning and others are eliminated. At HRSA, eliminations include state offices of rural health, Title V block grants, and programs for public health workforce development, primary care training and enhancement, medical school education, behavioral health, and others. The Food and Drug Administration would no longer have any direct role in routine inspection of food facilities, and the Head Start program would be eliminated.
 
A version of the document will presumably be part of the White House’s formal budget proposal to Congress.
 
Trump Administration Instructs Agencies to Repeal Rules Without Notice and Comment 
On April 9th, President Trump issued a memorandum directing federal agencies and their assigned Department of Government Efficiency (DOGE) teams to repeal regulations inconsistent with Administration priorities without standard notice-and-comment processes. The directive seems to apply new legal precedent established in the Loper Bright Enterprises v. Raimondo case (which overturned Chevron deference) retroactively as justification for this policy change. However, in that decision, Chief Justice Roberts specifically held that the Loper Bright decision is forward-looking. Legal advocacy groups have already signalled their intent to challenge the move in court.
 
The announcement is available here.
 
President Trump Issues EO on Drug Prices
On April 15th, President Trump issued an executive order (EO) on lower prescription drug prices. Broadly speaking, the EO directs his Administration to take regulatory action and work with Congress on statutory changes that may be required to implement changes to the Medicare Drug Pricing Negotiation Program to lower the price of prescription drugs and lower Medicare Part D premiums. The EO also directs federal agencies to evaluate the role and increase transparency of pharmaceutical benefit managers, increase prescription drug importation, and ensure Medicare policy does not encourage use of more expensive hospital outpatient department settings for drug administration.
 
The executive order is available here.

Legislative Updates

Republicans Send Letter to Congressional Leaders Expressing Medicaid Support 
On April 14th, 12 congressional Republicans sent a letter to House Republican leadership expressing their “strong support for [the Medicaid] program.” The authors describe themselves as “Members of Congress who helped to deliver a Republican Majority” and who represent “districts with high rates of constituents who depend on Medicaid.” While noting that the Medicaid program requires reform – including improved program integrity, reduced improper payments, and modernized delivery systems – the letter states that “the federal budget must not come at the expense of those who depend on these benefits for their health and economic security.” The authors note that they will not support a final reconciliation bill that includes “any reduction in Medicaid coverage for vulnerable populations.”
 
The letter is available here.
 
Ways and Means Members Ask GAO to Investigate MLR Adherence in MA 
On April 16th, Ways and Means Health Subcommittee Ranking Member Lloyd Doggett (D-TX) and Health Subcommittee member Greg Murphy (R-NC) asked the Government Accountability Office (GAO) for a report on “the vertical consolidation of Medicare Advantage Organizations (MAO) and its effect on Medical Loss Ratio (MLR) calculations.” Today, MAOs spending less than 85% of revenue on health care are subject to financial and other penalties. The letter expresses concern that the “acquisition of related businesses such as health care providers by MAOs could undermine the effectiveness of MLR requirements” given that payments to such businesses may be considered medical expenses for the purposes of calculating MLR.
 
The request to GAO is available here.

Federal Agencies

CMS Tells States Not to Use Medicaid Dollars for Gender-Affirming Care
On April 11th, the Centers for Medicare and Medicaid Services (CMS) sent a letter to state Medicaid Directors regarding funding for various gender-affirming care services for children. The letter reminds Directors of their “responsibility to ensure that Medicaid payments are consistent with quality of care and that covered services are provided in a manner consistent with the best interest of recipients.” The letter references an “underdeveloped body of evidence” surrounding gender-affirming care for children, though every major medical association in the U.S. supports gender-affirming care for transgender adults and minors. To date, 27 states have enacted laws or policies that limit access to gender-affirming care services for children.

On April 14th, the Department of Health and Human Services (HHS) also published new guidance and launched a new online portal for whistleblowers to submit a tip or complaint regarding gender-affirming care provided to minors. HHS also announced an investigation into a “major pediatric teaching hospital” for allegedly unlawfully terminating a nurse that voiced conscience objections to care at the hospital.

The letter is available here and the whistleblower announcement is available here.
​​
CMS Releases Proposed Hospice Payment and Quality Reporting Rule
On April 11th, the Centers for Medicare & Medicaid Services (CMS) released the Fiscal Year (FY) 2026 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Proposed Rule. Overall, the rule proposes to increase hospice payment rates by 2.4%, based on a 3.2% market basket percentage increase reduced by a 0.8 percentage point productivity adjustment. The payment update represents an aggregate increase of $695 million from FY 2025. The proposed hospice cap amount is $25,292.51, an increase of 2.4% from FY 2025.

In accordance with President Trump’s Executive Order (EO) 14192 “Unleashing Prosperity Through Deregulation,” CMS also included a request for information (RFI) on opportunities to decrease regulatory burden in the Medicare Program. Additionally, CMS plans to seek feedback on the adoption of health information technology and standards including Fast Healthcare Interoperability Resources (FHIR).

The proposed rule is available here; the announcement is available here; and the RFI is available here.

CMS Releases Proposed Skilled Nursing Facility Payment Rule 
On April 11th, the Centers for Medicare & Medicaid Services (CMS) released the Fiscal Year (FY) 2026 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Proposed Rule. Overall, the rule proposes to increase SNF PPS rates by 2.8%, based on a market basket update of 3.0%, a 0.6% market basket forecast error adjustment, and a negative 0.8% productivity adjustment. This payment update represents an aggregate increase of $196.5 million in FY 2026. In addition, the rule proposes:

  • several changes to the Patient-Driven Payment Model (PDPM) ICD-10 code mappings to maintain consistency with the latest ICD-10 coding guidance;
  • a series of operational and administrative proposals for the SNF Value-Based Purchasing (VBP) Program, including scoring policy updates, the creation of a reconsideration policy, and the removal of the Program’s Health Equity Adjustment; and
  • several changes to the SNF Quality Reporting Program (QRP), including removing four standardized patient assessment data elements and amending the reconsideration policy. CMS is also seeking input on three requests of information (RFI) related to QRP.

The proposed rule is available here, and the announcement is available here.

CMS Releases Proposed IPPS and LTCH Payment Rule
On April 11th, the Centers for Medicare & Medicaid Services (CMS) issued the Fiscal Year (FY) 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment Systems (LTCH PPS) Proposed Rule. Overall, CMS proposes to give general acute care hospitals a 2.4% increase in operating payment rates so long as they participate in the Hospital Inpatient Quality Reporting (IQR) program and are meaningful electronic health record (EHR) users. This increase is the result of a 3.2% market basket update, reduced by a 0.8% productivity adjustment. CMS notes that hospitals may be subject to additional payment adjustments within the Hospital Readmissions Reduction Program, the Hospital Acquired Condition Reduction Program, or the Hospital Value-Based Purchasing Program.

Disproportionate share hospital (DSH) payments and Medicare uncompensated care payments are projected to increase by $1.5 billion. In addition, CMS estimates that additional payments for inpatient cases involving new medical technologies will increase by $234 million, due to the continuation of new technology add-on payments for several technologies. Additional policies include: 

  • Low Wage Index Hospital Policy: CMS proposes to discontinue the low wage index hospital policy for FY 2026 and subsequent year, in favor of a budget-neutral narrow transitional exception to the calculation of FY 2026 IPPS payments for such hospitals;
  • Digital Quality Measurement: CMS is seeking comments on the Fast Healthcare Interoperability Resources (FHIR) electronic clinical quality measure (eCQM) reporting and its potential use for inpatient psychiatric facilities;
  • Hospital Inpatient Quality Reporting (IQR) Program: CMS is seeking comments on potentially modifying four current measures related to readmission and mortality. CMS is also seeking comments on removing four measures related to health equity, Covid-19 vaccine coverage for providers, and screening for social drivers of health (SDOH);
  • Medicare Promoting Interoperability Program: CMS is proposing a number of policies related to electronic health record (EHR) reporting periods, Security Risk Analysis measures, the Safety Assurance Factors for EHR Resilience (SAFER) Guides, and the Public Health and Clinical Data Exchange. CMS is also seeking comments on a handful of program policies;
  • Hospital Readmissions Reduction Program: CMS proposes a modification of six readmission measures and the calculation of aggregate payments to add Medicare Advantage (MA) data, a shortened “applicable period” for measuring performance, and updating the Extraordinary Circumstances Exception (ECE) policy;
  • Hospital-Acquired Condition (HAC) Reduction Program: CMS is proposing an update to the ECE policy that affirms its discretion to grant an extension in response to ECE requests;
  • Hospital Value-Based Purchasing (VBP) Program: CMS seeks to remove the Health Equity Adjustment from scoring methodology; and
  • Long-Term Care Hospital Quality Reporting Program (LTCH QRP): CMS seeks to remove a number of reporting requirements related to Covid-19 vaccination and SDOH. CMS is also seeking comments on future measure concepts and data submission deadlines.

The rule is available here, and the announcement is available here.

Other Updates

Avalere Publishes Report Showing CMMI Models Not Generating Overall Savings 
On April 9th, Avalere Health published a report on the value of 18 Center for Medicare and Medicaid Innovation (CMMI) payment models across respective performance years. On the whole, payment models are not generating direct savings to Medicare, but a select few models were effective in reducing net costs, with promising opportunities in the future. Specifically, the report found: 

  • Overall Effectiveness: One-third of models yielded substantial net savings; one-third of models generated substantial net losses; and one-third had nominal financial impacts. Overall, the models surveyed brought $6.4 billion in net model losses and $1.3 billion in model-specific operational losses. Models were most successful in reducing overall utilization and addressing patient-level outcomes of interest, like chronic disease management;
  • Quality: Four models showed quality performance improvement; three models showed nominal quality performance improvement; four models had no statistically significant impact on quality performance; and seven models showed mixed results on quality performance. Across the board, there was little-to-no impact on patient experience surveys; and
  • Best and Worst: The greatest savings came from the Maryland All-Payer model (about $975 million) and the Maryland Total Cost of Care (about $689 million).​​ The greatest net losses came from Primary Care First ($847 million), Comprehensive Primary Care Plus ($2.8 billion), and Medicare Advantage Value-Based Insurance Design Model ($4.5 billion).

CMMI has come under political pressure after a 2023 Congressional Budget Office (CBO) report found billions in overall losses. In March, the Department of Health and Human Services (HHS) announced the premature termination of four models: Maryland Total Cost of Care, Primary Care First, ESRD Treatment Choices, and Making Care Primary.

The report is available here.

MedPAC Holds April 2025 Meeting 
On April 10th and 11th, the Medicare Payment Advisory Commission (MedPAC) held its monthly public meeting. The Commissioners unanimously recommended updating the physical fee schedule based on Medicare Economic Index (MEI) growth. The Commissioners also unanimously recommended that Congress direct the Secretary of Health and Human Services (HHS) to better inform relative payment rates for clinical services through accurate data collection. Within Medicare Advantage, Commissioners expressed strong interest in more analysis of supplemental benefit utilization and the issue of benefit standardization. Lastly, the Commissioners discussed the shortcomings of current regulations, policies, and ratings in meaningfully addressing nursing home quality. The next MedPAC meeting will take place on September 4th and 5th.

The slides are available here.

MACPAC Holds April 2025 Meeting
On April 10th and 11th, Medicaid and CHIP Payment and Access Commission (MACPAC) held its monthly public meeting. Despite robust discussions across a number of topics, the Commissioners only voted to advance recommendations for the June 2025 Report to Congress to improve transitions of care for Children and Youth with Special Health Care Needs (CYSHCN). The Commission also hosted a panel discussion on the use of technology, including AI, in the Medicaid prior authorization process. The next MACPAC meeting will take place on September 18th and 19th.

The slides are available here.

Lown Institute Report Shows Many Hospitals Have Fair Share Deficit
A recent report by the Lown Institute shows that most (54%) of nonprofit hospitals received more in tax benefits than was spent on community investment, leading to a fair share deficit. Using 2020-2022 data from Internal Revenue Service (IRS) tax returns, Centers for Medicare & Medicaid Services (CMS) hospital cost reports, and local property assessment portals, the report also found that: 

  • In the 20 states surveyed, the total fair share deficit amounted to $11.5 billion per year. In California, Illinois, Massachusetts, Pennsylvania, and Ohio, fair share deficits exceeded $1 billion each.
  • Twelve hospitals had fair share deficits greater than $100 million, amounting to roughly 20% of the nation’s fair share deficit.
  • 23 hospitals had fair share surpluses that exceeded $50 million.

The report shows that New York hospitals received a total of $2.4 billion in tax benefits per year. Though 42% of hospitals had a fair share deficit, New York had a higher rate of community investments than most states studied.  The report is available here. New York-specific data is available here.

New York State Updates

NYS Budget Deadline Continues to be Extended 
Negotiations between the Executive, Assembly, and Senate over the New York State Fiscal Year (FY) 2025-26 Budget are continuing, requiring ongoing extensions of the statutory April 1st deadline. Lawmakers have passed a sixth budget extender, ensuring the government remains funded through April 23rd.

DOH Announces Ongoing Progress of CDPAP Transition
On April 14th, the New York State (NYS) Department of Health (DOH) issued an update on the transition of the State’s Consumer Directed Personal Assistance Program (CDPAP) to the new single Statewide Fiscal Intermediary, Public Partnerships LLC (PPL): 

  • Out of approximately 280,000 CDPAP consumers, about 60,000 have already transitioned to personal care services;
  • Of the remaining 220,000 CDPAP consumers, at least 98% have started registration and 87% (over 190,000) have completed registration with PPL;
  • More than 245,000 CDPAP personal assistants have started or completed registration, with 160,000 fully onboarded and payroll ready, with paychecks  disbursed for the  first April pay period

A federal court agreement (available here) allows certain personal assistants to be paid by their prior intermediary for a limited time but requires all consumers to complete registration with PPL by May 15th.

The State’s update is available here.