Weekly Health Care Policy Update – May 2, 2025

May 9, 2025

In this update: 

  • Legislative Updates
    • House Energy & Commerce Advances Health Care Legislation
    • Senate HELP Chair Cassidy Releases 340B Report
  • Federal Agencies
    • HHS Reportedly Appoints Yale Undergraduate as Acting Chief AI Officer
    • HHS Announces Changes to Vaccine Testing and Approval Process
    • CMS to Close Office of Equal Opportunity and Civil Rights
  • Other Updates
    • SCOTUS Sides with HHS in Medicare DSH Payments Case
    • Supreme Court Requests Additional Briefs on ACA Preventive Care Case
    • Leapfrog Group Releases Spring Hospital Grades
  • New York State Update
    • Governor Hochul Announces FY 2026 Enacted Budget Agreement
    • DOH Announces Amendment to Add the CCBHC Demonstration to the State Plan

Legislative Update

House Energy & Commerce Advances Health Care Legislation 
On April 29th, the House Energy and Commerce (E&C) Committee marked up and favorably reported six bipartisan health care bills. These bills were also advanced last Congress, but were not enacted. Much of the debate centered around reauthorizing programs housed in the Substance Abuse and Mental Health Services Administration (SAMHSA), which Secretary Kennedy has proposed eliminating. Democratic members offered amendments tying reauthorization to protections against restructuring. While these efforts failed, Republican leadership agreed to schedule a hearing with Secretary Kennedy to discuss restructuring efforts.

The six bills are the SUPPORT for Patients and Communities Reauthorization Act of 2025  (H.R. 2483), Charlotte Woodward Organ Transplant Discrimination Prevention Act (H.R. 1520), Women and Lung Cancer Research and Preventive Services Act of 2025 (H.R. 2319), To amend the Public Health Service Act to reauthorize the Stop, Observe, Ask, and Respond to Health and Wellness Training Program (H.R. 1669), Shandra Eisenga Human Cell and Tissue Product Safety Act (H.R. 1082), and Seniors’ Access to Critical Medications Act (H.R. 2484).

Senate HELP Chair Cassidy Releases 340B Report
On April 24th, Health, Education, Labor and Pensions (HELP) Committee Chair Senator Bill Cassidy (R-LA) released a report on a long-term investigation into the 340B Drug Pricing Program. In developing the report, Senator Cassidy requested information from hospitals, Federally Qualified Health Centers (FQHCs), contract pharmacies, and drug manufacturers. Key highlights from the report include: 

  • Bon Secours Mercy Health and Cleveland Clinic both generated millions of dollars in 340B revenue, with unclear paths to patient savings. These specific providers have stated that savings help fund capital improvement and community benefit programs;
  • CVS Health and Walgreens charge a complex range of fees to dispense 340B drugs, which generally increase year over year; and
  • Drug manufacturers report increasing 340B sales to contract pharmacies rather than direct to hospitals.

Chair Cassidy outlined a number of potential policy remedies, including: 

  • Requiring detailed annual reporting on how covered entities translate savings to patients;
  • Addressing logistical challenges from program administrative complexity;
  • Investigating the types of financial benefits incurred by pharmacies, including fees; and
  • Clarify guidelines for eligible patients and contract pharmacies’ use of the inventory replenishment model.

340B Health, which represents hospitals enrolled in the program, raised “concerns with several aspects of the report that may not fully reflect the purpose or implementation of 340B.” PhRMA applauded Chair Cassidy’s report. The future of legislative action remains unclear.

The report is available here, and the press release is available here.

Federal Agencies

HHS Reportedly Appoints Yale Undergraduate as Acting Chief AI Officer
On April 30th, Politico reported that the Department of Health and Human Services (HHS) has appointed Peter Bowman-Davis as Acting Chief AI Officer. Bowman-Davis graduated high school in 2021, was previously a fellow at Andreessen Horowitz, a venture capital firm, a former Andreessen Horowitz fellow, and according to his LinkedIn, is currently on leave from undergraduate studies at Yale. HHS’s top technology officers under the Biden Administration, including Chief AI Officer Meghan Dierks, were placed on administrative leave in February.

HHS Announces Changes to Vaccine Testing and Approval Process
On April 25th, the Wall Street Journal reported that the Food and Drug Administration (FDA) asked Novavax to conduct new randomized controlled trials of its updated Covid-19 vaccine before it would consider granting full approval. The vaccine has been available since 2022 under emergency use authorization.

HHS has not promulgated a new overall policy, but the request appears to imply that manufacturers of annual vaccines will have to generate new efficacy data before the release of annual updates to their shots—a task that would in practice make the vaccines worthless. Collecting efficacy data would require early-season studies, therefore making distribution too late to protect the public at large.

On May 1st, HHS Secretary Robert F. Kennedy, Jr. released a statement potentially requiring all new vaccines to undergo placebo testing, whereby a portion of patients receive a vaccine and others receive an inert substance. Traditionally, vaccines for new pathogens do undergo placebo-controlled trials; vaccines for older diseases such as measles and polio do not, given that the placebo group would be given a known ineffective shot. The Department said the policy would not apply to the influenza vaccine, but did not specify which shots it would apply to.

CMS to Close Office of Equal Opportunity and Civil Rights
On April 28th, the Centers for Medicare and Medicaid Services (CMS) announced that it would be closing the Office of Equal Opportunity and Civil Rights in June. The Office is tasked with developing civil rights compliance policies for CMS workers. Moving forward, managers are expected to handle requests for accommodations and complaints related to workplace discrimination. This move is part of both Secretary Kennedy’s reorganization and President Trump’s executive action surrounding diversity, equity, and inclusion.

Other Updates

SCOTUS Sides with HHS in Medicare DSH Payments Case
On April 29th, the U.S. Supreme Court sided with the Department of Health and Human Services (HHS) in Advocate Christ Medical Center v. Becerra/Kennedy in a 7-2 decision. The plaintiffs – more than 200 hospitals – argued that HHS’s disproportionate share hospital (DSH) payment methodology undercounts patients eligible for Supplemental Security Income (SSI) benefits by incorrectly calculating the “Medicare fraction.”
 
HHS argues that the “Medicare fraction” includes patients who were entitled to and received benefits during the month of their hospitalization, while hospitals argue for a more expansive interpretation: all patients enrolled in and entitled to SSI during their month of hospitalization, even if they did not receive payment. The latter approach would increase the patients in the numerator, raising payments. The American Hospital Association (AHA) has claimed that this narrow approach to determining the “Medicare fraction” costs hospitals “approximately $1.5 billion annually nationwide.”
 
Justice Ketanji Brown Jackson dissented, joined by Justice Sonia Sotomayor, saying that the SSI system as a whole–not its monthly payments–represents a pool of “society’s neediest” that the program is meant to serve. The dissenting Justices warn that this decision will deprive hospitals of funding that is due.
 
Supreme Court Requests Additional Briefs on ACA Preventive Care Case
On April 25th, the Supreme Court issued an order requesting additional briefings in Braidwood v. Kennedy which caused some court watchers to be less optimistic about the likelihood that the Court will uphold the Affordable Care Act’s preventive care coverage requirement. The challengers in this case argue that the role of the United States Preventive Services Task Force (USPSTF) violates the Constitution’s Appointments Clause because the Task Force is set up as an independent entity but has the power to set preventive health care coverage requirements for millions of Americans. In its April 25thorder, the Court asks the parties to address whether Congress has “by law” vested the Secretary of Health and Human Services (HHS) with the power to appoint members of the Task Force. The order directs the parties to address the Court’s decisions in two cases from the late 1800s, suggesting that the Court seeks to determine whether Congress must grant the Secretary specific appointment for the Task Force to survive the challenge.
 
The order is available here.
 
Leapfrog Group Releases Spring Hospital Grades
On May 1st, The Leapfrog Group released its Spring 2025 Hospital Safety Grade. For the first time, the report highlights “Straight A” hospitals, or those who have received an “A” grade for five or more grading rounds. Twelve percent of all hospitals received “Straight A” status, with Utah, Connecticut, New Jersey, Rhode Island, and Virginia housing the most of such facilities. Alaska, Delaware, Hawaii, Iowa, North Dakota, Nebraska, New Mexico, Nevada, South Dakota, Vermont, West Virginia, Wyoming and Washington, D.C. have no Straight A facilities.  
 
New York ranks 31st overall, with 25.2% of all hospitals receiving an “A” grade. New York hospital rankings are available here.

New York State Updates

Governor Hochul Announces FY 2026 Enacted Budget Agreement
On April 29th, Governor Hochul announced that “an agreement has been reached with legislative leaders on key priorities in the Fiscal Year 2026 New York State Budget.” According to the press release, the final budget includes several initiatives related to mental health, including: 

  • Strengthening involuntary commitment laws;
  • Investing $16.5 million in Assisted Outpatient Treatment (AOT) and $2 million in Office of Mental Health (OMH) staffing; and
  • Investing $160 million to create 100 new forensic inpatient psychiatric beds in New York City.

With a conceptual agreement in place, the legislative houses are expected to pass the related bills in the next week. Based on the negotiated changes, the total Enacted Budget for FY 2026 is currently estimated at $254 billion.

The Governor’s press release is available here.

DOH Announces Amendment to Add the CCBHC Demonstration to the State Plan
On April 30th, the New York State (NYS) Department of Health (DOH) issued a public notice in the State Register indicating its intention to maintain the Certified Community Behavioral Health Clinic (CCBHC) demonstration by adding it to the State Plan. The federal CCBHC demonstration is currently set to expire on September 30th, absent federal action. The State Plan Amendment (SPA) would ensure that all services in the CCBHC model are covered benefits in the State Plan and that the reimbursement methodology allows the provider to continue to utilize the Prospective Payment System (PPS).  

The public notice is available here. Public comments may be submitted to spa-inquiries@health.ny.gov.