Weekly Health Care Policy Update – May 16, 2025

May 23, 2025

In this update: 

  • Legislative Update
    • House Committees Advance Reconciliation Bills, But Package Fails Budget Vote
  • Trump Administration
    • Trump Re-Proposes Most Favored Nation Drug Pricing
    • U.S. Likely to Hit Debt Limit in August
  • Federal Agencies
    • CMS Introduces Proposed Rule on Medicaid Provider Taxes
    • CMMI Launches New Strategy
    • CMS Issues RFI on Technologies to Empower Medicare Beneficiaries
    • HHS Issues RFI on Deregulatory Plan
    • CMS Issues Guidance on Drug Price Negotiation Program
    • CMS Reports Record ACA Enrollment Numbers

Legislative Update

House Committees Advance Reconciliation Bills, But Package Fails Budget Vote
On May 16th, the House Budget Committee failed to advance the Republican reconciliation package amid opposition from the caucus’s most conservative members. Budget Chair Jodey Arrington (R-TX) closed the session after the failed vote, noting that the Committee would reconvene next week. Four Republican members voted no (as well as one bill supporter who voted against for procedural reasons). The four conservatives are demanding deeper spending cuts and policy changes—in particular, bringing forward the implementation date for Medicaid work requirements from 2029, and the immediate stripping of Medicaid benefits from undocumented immigrants. 

The Budget Committee’s goal had been to combine and pass the 11 bills previously approved by their respective policy committees. That included health care and other language from the House Energy and Commerce and Ways and Means Committees, which each held mark-ups to consider their respective legislative packages earlier this week. Both committees voted along party lines to advance reconciliation instructions without significant changes to the underlying text. Within the health care subtitles, Republicans voted down hundreds of Democratic amendments that addressed concerns over insurance coverage losses, reproductive and maternal health, hospital closures, and other issues. 

SPG covered the markup of the Energy and Commerce Committee here earlier this week, which covered Medicaid and health care cuts. Separately, the Ways and Means Committee advanced the tax title of the reconciliation bill out of its committee, which also included a number of health care policy changes. It did not include any extension of the expanded premium tax credits for ACA Marketplace coverage. Key provisions of the proposed bill included:  

  • Eliminating premium tax credit eligibility for certain “lawfully present” individuals who are eligible under current law. In New York, this would remove federal funding for both Medicaid and the Essential Plan for the Aliessa population, a potential cost of $2-3 billion.  
  • Requiring annual verification of an individual’s eligibility for premium tax credits (eliminating passive re-enrollment without verification).
  • Eliminating premium tax credit eligibility for any individuals enrolling through a special enrollment period associated with their income. 
  • Eliminating the limitation on recapture of excess advance premium tax credits, requiring individuals to reimburse the IRS for the full amount of excess tax credit received. 
  • Codifying a rule proposed by the Centers for Medicare & Medicaid Services (CMS) on March 10th regarding Marketplace Integrity and Affordability.

In total, the Congressional Budget Office estimates that the two bills will increase the number of people without health insurance by at least 13.7 million in 2034. 

Reports indicate the House still aims to vote on this megabill before Memorial Day, though the package’s failure to pass the Budget Committee threatens this timeline.

The Energy and Commerce Committee’s health subtitle is available here and a section-by-section summary is available here. The Ways and Means Committee’s legislation is available here and a section-by-section summary is available here.

Administration Updates

Trump Re-Proposes Most Favored Nation Drug Pricing
On May 12th, President Trump issued an Executive Order re-proposing a drug pricing policy that ties the cost of drugs in the U.S. to prices paid by other developed nations, known as the “most favored nation” (MFN) policy. In his first term, Trump used an interim final rule to implement this policy, but it was subject to a court challenge and withdrawn by the Biden administration. The executive order is broader and vaguer in scope than the previous rule, directing the Secretary of the Department of Health and Human Services (HHS) to work with relevant officials to communicate MFN pricing targets with drug manufacturers. Manufacturers that do not comply with MFN pricing will be subject to “additional administrative actions,” which could include HHS rulemaking, drug importation, and enforcement action against anticompetitive conduct.
 
The Executive Order is available here and a fact sheet is available here.
 
U.S. Likely to Hit Debt Limit in August 
On May 9th, the Treasury Department announced that the U.S. would likely hit its debt limit by August recess, raising the stakes of the ongoing fight to avoid a default. The U.S. currently holds more than $36 trillion debt. This timeline puts pressure on congressional Republicans to pass their megabill, including tax cuts, with an approval of a $4 trillion (House plan) or $5 trillion (Senate plan) debt limit increase. By attaching the debt limit increase to the overall bill, Republicans are hoping to head off any Democratic demands. The Treasury Department advises that the debt limit should be increased by mid-July to prevent any market panic.
 
The announcement is available here.

Federal Agencies

CMS Introduces Proposed Rule on Medicaid Provider Taxes 
On May 12th, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule to close a Medicaid funding stream in which states levy targeted taxes on privately run managed care organizations’ (MCOs) Medicaid businesses, which CMS has called a “loophole.” These funds can be matched anywhere from 50% to 77% by federal funding and are redistributed to providers through CMS-authorized payment arrangements. A number of states have applied for and received waivers to adopt non-uniform taxation schemes on MCOs. According to CMS, these taxes generate $23.6 billion in federally matched revenue to seven states per year. California, New York, Michigan, and Massachusetts collect approximately 95% of the funds. CMS estimates that if the rule is finalized as proposed, the federal government will save over $33 billion over the next five years.

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

CMMI Launches New Strategy 
On May 13th, the Center for Medicare and Medicaid Innovation (CMMI) announced a new strategy for value-based care models and policies. The strategy hinges on three central goals: chronic illness prevention and management, bolstering access to technology, and supporting competition and choice. CMMI called out the need for independent and rural providers to meaningfully participate in models, as well as designing demonstrations with Medicare Advantage (MA) plans. According to the announcement, new models could require all alternative payment models (APMs) to involve downside risk and drive more Medicare and Medicaid beneficiaries into risk-based arrangements with providers, such as Accountable Care Organizations (ACOs). CMMI also announced that it will move to promote site neutrality and address Certificate of Need (CON) laws. 

The announcement is available here.

CMS Issues RFI on Technologies to Empower Medicare Beneficiaries 
On May 13th, the Centers for Medicare and Medicaid Services (CMS) issued a request for information to modernize Medicare beneficiaries access to new health technologies. In conjunction with the Assistant Secretary for Technology Policy/Office of the National Coordinator for Health Information Technology (ASTP/ONC), CMS is looking to invest in patient-centered digital health infrastructure for more seamless management of chronic conditions. CMS is seeking comments on the development of digital health management and care navigation applications, stronger interoperability, and opportunities to reduce regulatory burden.

CMS is accepting comments through June 16th. The announcement is available here.

HHS Issues RFI on Deregulatory Plan 
On May 13th, the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) issued a request for information (RFI) to identify opportunities to reduce regulatory burden and increase transparency. This RFI aligns with President Trump’s Executive Order 14192, “Unleashing Prosperity Through Deregulation.” HHS is seeking sector-wide input on “outdated and unnecessary regulations.” Specifically: 

  • Secretary Kennedy is committing to a “’10-to-1’ deregulatory policy: for every new regulation proposed, at least ten existing regulatory actions will be rescinded” across HHS;
  • HHS will implement a regulatory cost cap, in which the total cost of all new regulations in fiscal year 2025 must be significantly less than zero; and
  • HHS is committing to publishing annual reports detailing changes to rules and regulations.

Interested parties have 60 days to submit comments through a newly launched portal.  The announcement is available here.

CMS Issues Guidance on Drug Price Negotiation Program 
On May 12th, the Centers for Medicare and Medicaid Services (CMS) issued draft guidance on the third cycle of negotiations under the Medicare Drug Price Negotiation Program (Negotiation Program). Broadly, the guidance seeks to improve transparency, minimize the negative impacts on pharmaceutical innovation, and target the highest cost drugs for negotiation. Specifically, the draft guidance includes new policies to incorporate Part B drugs into the Negotiation Program and offers options for the renegotiation of drugs negotiated during the Biden Administration. CMS will release up to 15 additional Part B or D drugs for the third cycle of negotiations by February 1st and the negotiated maximum fair price (MFPs) will take effect in 2028.

CMS is accepting comments through June 26th. The announcement is available here; the guidance is available here; and the fact sheet is available here.

CMS Reports Record ACA Enrollment Numbers
On May 12th, CMS released data on 2025 Health Insurance Exchange open enrollment, finding that 24.3 million consumers selected or were automatically re-enrolled in coverage. This number represents a 13% increase over 2024, or 2.9 million additional consumers signed up for coverage. Compared to 2023, nearly 8 million additional consumers signed up (a 49% increase); compared to 2022, nearly 10 million additional consumers signed up (a 68% increase). The average monthly premium was $619, but reduced to an average of $113 with Advance Payments of the Premium Tax Credit (APTC).

The CMS report is available here.