In this update:
- Federal Funding
- Government Shuts Down as Congress Fails to Reach Deal
- Federal Agencies
- FDA to Review Mifepristone REMS and Approves New Generic Option
- FEMA Awards Nearly $3.5 Billion to States for Emergency Preparedness
- Other Updates
- CMS Says MA Premiums to Decline for 2026
- Dr. Anthony Letai Chosen as Director of the National Cancer Institute
- RWJF Report Estimates $32B Provider Revenue Loss if ACA Enhanced Premiums Expire
- KFF Report Reiterates High Premium Increase without Tax Credit Extension
- CMS Releases Final Guidance for Third Round of Drug Price Negotiation Program
- Federal Judge Rejects Rule on Medicare Advantage Audits
- New York State Updates
- DOH Finalizes Statewide Fiscal Intermediary Regulations for CDPAS
- NYS Issues Update on ABA Supervision for Unlicensed Individuals
Federal Funding
Government Shuts Down as Congress Fails to Reach Funding Deal
On October 1st, the federal government shut down for the first time since 2019. Democrats and Republicans failed to reach a funding agreement; Republicans pressed for a “clean” seven-week extension of current funding levels, and Democrats insisted that any funding bill include an extension of the expiring enhanced premium tax credits for Affordable Care Act (ACA) plans and a restoration of Medicaid funding that was cut as part of the One Big Beautiful Bill Act (OBBBA). Some Republicans appear open to negotiations regarding the ACA tax credits but insist that conversation cannot be part of a continuing resolution to temporarily extend funding.
Approximately 41% of HHS staff are now furloughed, and President Trump indicated he would like to use the shutdown to permanently lay off some of the furloughed federal employees. At CMS, approximately 53% of the agency’s 6,200 workers are furloughed. Administration of federal health insurance programs, including the federal Marketplace, is considered mandatory and will continue during the shutdown. However, CMS’ shutdown plans indicate it will pause or limit new policy and regulation announcements, among other activities. Current shutdown plans assume a short-term shutdown; a prolonged shutdown would force additional cuts.
Additional specific health-related impacts are as follows:
Will continue:
- Medicare and Medicaid benefits, including claims processing and provider payments.
- Medicare Advantage open enrollment, though call center wait times and customer support may slow.
Immediately halted or left without renewed funding:
- Medicare telehealth flexibilities and the Medicare Hospital-at-Home program, which required congressional action to continue past September 30th. (Providers may still submit telehealth claims but there is a 10-day hold in effect, with a risk they will not be included in the final agreement.)
- Medicaid Disproportionate Share Hospital (DSH) supplemental payments, which need annual extensions to avoid reductions.
Severely reduced federal health operations:
- CDC has furloughed roughly two-thirds of staff, curtailing disease surveillance, outbreak response, and public health guidance.
- NIH has furloughed about three-quarters of staff, halting most new clinical trials and grant reviews.
- FDA is scaling back food and drug safety inspections and product approvals.
- As noted above, CMS is operating with about half its staff; claims are still processed, but oversight, quality measurement, and new program development will slow.
Federal Agencies
FDA to Review Mifepristone REMS and Approves New Generic Option
On September 19th, HHS Secretary Robert F. Kennedy Jr. and FDA Commissioner Dr. Marty Makary issued a joint letter in response to a letter of concern from 21 Republican attorneys general, discussing their intent to review the safety of Mifepristone. Mifepristone has been approved for medical abortion, up to seven weeks gestation, since 2000. In 2016 and 2023, the drug’s Risk Evaluation and Mitigation Strategy (REMS) were revised to extend drug use for up to 10 weeks gestation and to remove the in-person dispensing requirement, respectively.
In their letter, Secretary Kennedy and Commissioner Makary note that based on “reports of serious adverse events in patients who took mifepristone”, the FDA will “conduct a study of the safety of the current REMS, in order to determine whether modifications are necessary.” The letter cites “lack of adequate consideration underlying the prior REMS approvals” as well as “recent studies raising concerns about the safety of mifepristone as currently administered” as their justification for this study.
Separately, the FDA approved a second generic mifepristone option on September 30th.
The letter from Secretary Kennedy and Commissioner Makary is here. The original letter sent by the group of attorneys general is here. The generic mifepristone approval letter is here.
FEMA Awards Nearly $3.5 Billion to Help States Manage Emergency Preparedness
On September 29th, Secretary Noem announced that FEMA awarded $3.5 billion to states through their non-disaster grant programs. These grants were awarded to support emergency preparedness for emergencies and disasters, such as fires, floods, tornadoes, cyber incidents, and terrorist attacks. They are intended to protect critical infrastructure such as ports and transportation systems, to implement public warning systems, protect against terror attacks, and to increase resilience to threats. This month, FEMA awarded funds through 12 preparedness grant programs, and through nine non-disaster grant programs.
The Department of Homeland Security’s announcement is available here.
Other Updates
CMS Says MA Premiums to Decline for 2026
On September 26th, CMS announced that 2026 average consumer premiums are projected to decline in both the MA and Part D programs. Despite this, plan submissions project MA enrollment to decrease from 34.9 million in 2025 to 34 million in 2026, due to the termination of unprofitable plans. This would be the first decline in the MA population in two decades, and CMS noted that it expects higher enrollment than the plans.
The average monthly plan premium across all MA plans is estimated to decrease from $16.40 in 2025 to $14.00 in 2026. The average stand-alone Part D plan total premium is projected to decrease from $38.31 in 2025 to $34.50 in 2026. The average Part D total premium for MA plans with prescription drug coverage is projected to decrease from $13.32 in 2025 to $11.50 in 2026. Medicare Open Enrollment will run from October 15, 2025 to December 7, 2025.
The press release from CMS is here.
Dr. Anthony Letai Chosen as Director of the National Cancer Institute
On September 29th, Dr. Anthony Letai, a Harvard Medical School professor and medical oncologist at the Dana Farber Cancer Institute, was sworn in as the Director of the National Cancer Institute. Dr. Letai’s career has mainly focused on studying cell death in cancer and cellular immunotherapies. Dr. Letai has received the European Cell Death Organization Career Award, the Smith Family Prize for Outstanding Scientific Contributions, and the National Cancer Institute Outstanding Investigator Award.
Additional announcement about Dr. Letai’s appointment is available here.
RWJF Report Shows $32B Revenue Loss for Providers if ACA Enhanced Premiums Expire
On September 25th, the Robert Wood Johnson Foundation published a report on the effects of allowing the Affordable Care Act’s enhanced premium tax credits to expire at the end of 2025. The report projects that if the enhanced tax credits expire, an estimated 7.3 million people will lose subsidized coverage and 4.8 million will become uninsured. In addition, RWJF projects $32.1 billion in lost provider revenue and a $7.7 billion increase in uncompensated care in 2026. Overall, spending would be reduced by $14.2 billion on hospital services, by $5.1 billion on physician services, by $5.8 billion on prescription drugs, and by $6.9 billion on other services. The added burden of uncompensated care would fall more sharply on non-expansion states.
The report is available here.
KFF Report Reiterates High Premium Increase Without Tax Credit Extension
On September 30th, the Kaiser Family Foundation released a report finding that ACA consumer premiums will more than double next year if the enhanced premium tax credits expire as currently scheduled. The report finds that average annual out-of-pocket premiums for individuals receiving a tax credit in 2025 will increase by 114% in 2026, rising from $888 to $1,904, if the enhanced premium tax credits expire. The authors note that this estimate is higher than previous estimates due to recent changes by the Trump administration in tax credit calculations and rising 2026 premiums filed by issuers.
The report is available here.
CMS Releases Final Guidance for Third Round of Drug Price Negotiation Program
On September 30th, CMS released final guidance for the third cycle of Medicare price negotiations for drugs payable under Part B, effective for the 2028 initial price year. The guidance includes expanded protections for orphan drugs to preserve incentives for rare disease research, the integration of Medicare Advantage encounter data into drug expenditure calculations, and clarifications on how vaccines for infectious diseases will be identified and negotiated. These efforts aim to enhance transparency, promote fair pricing, and sustain innovation while addressing the needs of the Medicare drug market.
A summary of the guidance is available here.
Federal Judge Rejects Rule on Medicare Advantage Audits
On September 29th, a federal judge struck down the Biden-era risk adjustment audit overhaul, ruling that HHS violated the Administrative Procedure Act by failing to adequately notify the insurers and the public about the changes. Specifically, the ruling invalidates the 2023 regulation that intensified risk adjustment audits and eliminated the “fee-for-service adjuster,” which helped to ensure parity between MA and traditional Medicare overpayments. The decision emphasizes that insurers relied on previous methodology from 2018-2023, and the abrupt retroactive application of new rules without proper notice caused significant harm and unforeseen costs.
The ruling is available here.
New York State Updates
DOH Finalizes Statewide Fiscal Intermediary Regulations for CDPAS
On October 1st, the New York State (NYS) Department of Health (DOH) adopted final regulations that amend Title 18 of the New York Codes, Rules, and Regulations (NYCRR) to conform with the establishment of the single Statewide Fiscal Intermediary (SFI) for the Consumer Directed Personal Assistance Services (CDPAS) program. CDPAS allows individuals to choose their own person care aide to address their home health needs.
In accordance with the 2025 NYS Enacted Budget, the State is required to contract with a single SFI (Public Partnerships LLC) to oversee the delivery of CDPAS. Eligibility requirements to participate in CDPAS do not change as a result of this rulemaking; instead, the regulations update terminology to define the SFI and subcontractors, describe their responsibilities, and replace references to multiple fiscal intermediaries throughout the rule.
In response to public comment, the final regulations clarify the exceptions applicable to Programs of All-Inclusive Care for the Elderly (PACE), including exempting PACE organizations from certain assessment and authorization requirements that are not aligned with federal PACE requirements.
The final regulations, which include DOH’s assessment of public comments, are available here.
NYS Issues Update on ABA Supervision for Unlicensed Individuals
In the most recent NYS Medicaid Update, the State issued a notice to providers regarding the supervision of unlicensed individuals/technicians providing Applied Behavior Analysis (ABA) services. In accordance with the 2026 NYS Enacted Budget, the State Medicaid program will require Licensed Behavior Analysts (LBAs) to supervise unlicensed individuals or technicians on their service delivery team for at least 5% of the total hours those individuals spend delivering ABA services each month. This supervision standard applies to both fee-for-service and Medicaid managed care effective October 1, 2025.
The State notes that this change aligns NYS Medicaid policy with Behavior Analyst Certification Board (BACB) guidance. On-site supervision is preferred; however, supervision may be conducted via a synchronous audio/video communication system. The update also provides specifics on the Medicaid reimbursement reduction for unlicensed personnel providing ABA services (see SPG summary here).
Additional details are available in the August Medicaid Update here.