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Democratic States Challenge Exchange Rule Finalization

Democratic states sued the Trump administration today over the finalization of the Exchange rule that will significantly tighten the enrollment season and dampen eligibility. Provisions in the budget reconciliation bill will further clampdown on enrollment.

The states are arguing that the administration did not follow all regulatory rules before finalization and that the rule is arbitrary and capricious. They also argue that the changes will boost the uninsured rate and cost states a great deal of money.

In related news, the administration supplied data on improper enrollments in government programs. Analyzing 2024 enrollment data, the administration found 1.2 million enrolled in Medicaid or the Children’s Health Insurance Program in multiple states, and 1.6 million enrolled in one of those programs and an Exchange plan. Data-sharing and procedural requirements in the budget bill seek to further address this issue.

As well, the Centers for Medicare and Medicaid Services (CMS) said it won’t approve or renew state programs to promote multiyear, continuous Medicaid enrollment or health professional workforce development. Nine states have continuous enrollment waivers for children and eight states have them for adults. 

Last, some lawmakers want to help out Medicare doctors by revisiting the Medicare rate fix in the budget reconciliation bill. The House version had a better solution (although it was by no means perfect), but it was watered down by the Senate to a one-time override increase for 2026. Some suggest Medicare Advantage (MA) upcoding in risk adjustment could help pay for any changes.

Additional articles: https://www.modernhealthcare.com/legal/mh-aca-final-rule-lawsuit/ and https://thehill.com/policy/healthcare/5407442-democratic-ags-sue-trump-administration-obamacare-changes/ and https://www.beckerspayer.com/payer/cms-2-8m-people-have-enrolled-in-medicaid-aca-plans-in-multiple-states/ and https://www.modernhealthcare.com/politics-regulation/mh-1115-waivers-medicaid-enrollment-cms/ and https://www.beckerspayer.com/payer/cms-to-end-medicaid-continuous-eligibility-waivers-5-things-to-know/ and https://www.fiercehealthcare.com/payers/cms-warns-states-new-medicaid-waiver-expectations and https://www.modernhealthcare.com/politics-regulation/mh-medicare-doctor-pay-tax-law/

(Some articles may require a subscription.)

#medicaid #exchanges #chip #1115waivers #coverage #healthcare #cms #budgetreconciliation #medicare #providers #primarycare

https://www.fiercehealthcare.com/payers/states-challenge-aca-final-rule-cms-rolls-out-new-duplicative-enrollment-data

Employers Could Transfer Costs to Employees

While there has been some increased costs for employees the past few years, employers attempted to shelter much of the huge trend in employer healthcare costs from their employees. Given ongoing trends, that is likely about to change.

Analysts at Mercer polled 711 employers and found that 51% said they are likely or very likely to shift costs to employees in 2026. That’s up from 45% in 2025. About 19% said they were very likely to shift costs and 33% said they were likely to do so in 2026.

More than half of employers are likely or very likely to make plan design changes that will shift more cost sharing to employees in 2026.

Additional article: https://www.fiercehealthcare.com/payers/mercer-survey-employers-may-make-return-healthcare-cost-shifting-strategies

#employercoverage #healthcare #coverage

https://www.beckerspayer.com/payer/employers-plan-to-shift-more-healthcare-costs-to-employees-2026-10-things-to-know

CMS Issues Additional Payment Reform Rules

After publishing a far-reaching rule Monday, the Centers for Medicare and Medicaid Services (CMS) issued today a proposed reform rule as well as proposed rates for outpatient hospitals and ambulatory surgery centers. Outpatient rates for hospitals would increase by 2.4% in 2026. Ambulatory surgery centers also would increase by 2.4% in 2026.

Most important, CMS proposes important reforms to reduce the costs in Medicare over time. Many of these were proposed earlier during Trump 45, but the Biden administration rescinded the proposals upon coming to office. The reforms include:

— Phasing out the inpatient only list over a 3-year period and allowing the services to be performed in a hospital outpatient setting or ambulatory surgery center.

— Reforming the ambulatory surgery center list by updating its general criteria and shifting five exclusion criteria into a new, nonbinding section to allow the expansion of services, including inclusion of codes from the inpatient only list. 

— Updating the hospital price transparency rule with more requirements.

— Applying the Physician Fee Schedule payment rates to a broader swath of services at hospital outpatient and hospital owned settings, especially drug administration. This is a modest but good step toward site neutrality.

Additional articles: https://www.fiercehealthcare.com/providers/cms-floats-24-annual-outpatient-asc-pay-bump-alongside-price-transparency-site-neutrality and https://www.cms.gov/newsroom/press-releases/cms-proposes-bold-reforms-modernize-hospital-payments-strengthen-transparency-and-put-patients-back and https://www.cms.gov/newsroom/fact-sheets/calendar-year-2026-hospital-outpatient-prospective-payment-system-opps-and-ambulatory-surgical

#medicare #hospitals #siteneutral #ascs

https://www.beckershospitalreview.com/finance/cms-pitches-2-4-outpatient-pay-bump-for-hospitals-in-2026-5-things-to-know

Medicare Physician 2026 Rate And Reforms

The Centers for Medicare & Medicaid Services (CMS) released its 2026 physician fee schedule on Monday evening, announcing an increase of 3.62% over the 2025 rate. The budget reconciliation bill increased rates for that year by 2.5%. The added amount was due to other changes in the rate-setting system. Physicians in alternative payment models will see an increase of 3.83%.

CMS also unveiled a series of rate and other reforms, including rewarding certain physicians for avoiding hospitalizations, coordinating better with primary care, and early intervention. CMS also proposed removing 10 quality measures that do not improve patient health outcomes and introduced five new ones, with an emphasis on preventive services and expanding Medicare diabetes prevention.

Additional articles: https://www.fiercehealthcare.com/regulatory/cms-proposes-36-pay-bump-docs-takes-aim-chronic-conditions-physician-fee-schedule and https://www.beckershospitalreview.com/finance/cms-pitches-2026-physician-pay-plan-with-2-conversion-factors-8-things-to-know/ and https://www.beckershospitalreview.com/finance/cms-proposes-2026-medicare-rule-6-notes/ and https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-pfs-proposed-rule-cms-1832-p and https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-proposed-rule-cms-1832-p-medicare-shared and https://www.cms.gov/newsroom/press-releases/cms-proposes-physician-payment-rule-significantly-cut-spending-waste-enhance-quality-measures-and

(Some articles may require a subscription.)

#cms #medicare #regulations #providers #physicians #acos

https://www.modernhealthcare.com/politics-regulation/mh-medicare-physician-pay-cms-2026

Mergers and Acquisitions Down

Due to the major healthcare reductions in the budget reconciliation bill, mergers and acquisitions between hospitals and health systems were down in Q2 2025 against recent years. Eight transactions were announced in the second quarter, the lowest in the quarter since at least 2017.

Another report says that employers need to brace for continuing increases in healthcare costs. This is in part due to underlying utilization trends but also the probable price hikes providers will demand due to the losses in other lines of business under the reconciliation bill as well as the threat of tariffs. Hospital uncompensated care costs are expected to grow by $443 billion over ten years.

Additional article: https://www.healthcaredive.com/news/hospital-health-system-ma-falls-q2-medicaid-cuts-2025/752685/

#employercoverage #manda #mergers #acquisitions

https://www.beckerspayer.com/payer/why-2026-may-hit-employers-with-a-one-two-punch-on-healthcare-costs

PAYGO Politics

President Donald Trump and Republicans said they would not cut Medicare, but the budget reconciliation could very well do that. Since the bill actually increases the deficit in future years, what is known as PAYGO sequestration kicks in to address the increase. Medicare is one program that can be cut under the law to a cap of 4%. On an earlier version of the bill, the Congressional Budget Office (CBO) said about $500 billion in cuts could be triggered beginning in 2026.

PAYGO can be overruled but the Senate Democrats would have to join Republicans to overrule PAYGO by 60 votes. In this political world, will that happen this time as it has in the past? Will Democrats blame Republicans for passing the budget bill and not overrule or would that then put the blame on Democrats?

See my blog this week for all the details of the budget bill: https://www.healthcarelabyrinth.com/saga-over-big-beautiful-bill-has-passed-for-good-or-bad/

(Article may require a subscription.)

#budgetreconciliation #medicare #deficit

https://www.modernhealthcare.com/politics-regulation/mh-tax-law-medicare-cuts-paygo-law

A Second Budget Bill Coming?

Capitol Hill was abuzz today when the budget chairs of each house signaled that they both would like to see a second bill. While budget reconciliation rules allow for only one bill per year, the GOP had FFY 2025 and FFY 2026 budget years they could use for the process. And technically, after October 1, 2025, FFY 2027’s budget could also be acted on with a budget reconciliation bill.

Budget Chairs Mike Crapo, R-ID, and Rep. Jodey Arrington, R-TX, each confirmed a desire for a second bill later this year but did not specify what might be included. Separately, Ron Johnson, R-WI, said that he has a commitment from the White House and Senate GOP leadership to get another chance to repeal part of the Affordable Care Act’s (ACA) expansion of Medicaid. Johnson’s proposal would end the 90 percent federal cost-share at the end of 2030. Afterwards, states would return to regular matching rates for expansion populations. A group of conservatives sponsored such an amendment during the recent Vote-a-Rama, but it failed to receive sufficient support to be acted on. Crapo was one of the sponsors. So, this idea could get into any second bill.

Separately, Democrats are seeking to hang the blame on expiring subsidy enhancements for the Exchanges on the GOP. The enhanced subsidies expire at the end of the year because they have not been extended. Part of the political gameplan of Democrats is to tie the subsidy expiration to the GOP and argue more displacement is coming after the election. The Democrats could also point to a new Trump rule that tightens enrollment processes. About 5 million fewer people are forecasted to be on the Exchanges due to the subsidy expiration and the new rule. Overall, about 17 million would lose coverage when including the full rollout of the budget reconciliation cuts.

Drew Altman of healthcare policy group KFF has a good article on this issue and whether the Democrats will be successful. I will opine on this in an upcoming blog.

Additional articles: https://www.politico.com/live-updates/2025/07/08/congress/senate-finance-chair-endorses-a-second-megabill-this-fall-00443261 and https://www.politico.com/live-updates/2025/07/08/congress/ron-johnson-believes-he-will-get-second-bite-of-the-apple-on-medicaid-cuts-00443331 and https://www.kff.org/from-drew-altman/can-democrats-make-the-medicaid-and-aca-cuts-their-winning-political-issue-before-people-feel-the-cuts/

#budgetreconciliation #trump #congress #medicaid #exchanges #coverage

https://thehill.com/policy/healthcare/5390885-republicans-obamacare-subsidies-expiration

Good News, Bad News On Drug Tariffs

President Trump said Tuesday that he could levy up to 200 percent tariffs on pharmaceutical products imported into the U.S. soon. “If they have to bring the pharmaceuticals into the country, the drugs and other things into the country, they’re going to be tariffed at a very, very high rate, like 200 percent,” Trump said during a Cabinet meeting. That is the bad news.

In good news, Trump said any tariffs would not take effect immediately. “We’re going to give people about a year, year and a half, to come in, and after that, they’re going to be tariffed,” Trump said.

America imports the majority of its generic drugs from abroad and Trump wants this production onshored for national security reasons. Many brand drugs are also imported. Levies on drugs would increase already steep spending trends in healthcare.

#tariffs #drugpricing

https://thehill.com/homenews/administration/5390505-trump-200-percent-tariffs-pharma-imports

Gearing Up For 2026 Election and Medicaid

Interesting The Hill article on Medicaid being a huge election 2026 issue. Democrats will try to argue that the $1 trillion in cuts in the budget reconciliation bill will devastate coverage and providers, especially rural ones. Republicans will argue they are attacking fraud, waste, abuse, and improper enrollment. As the article notes, while many policy changes will not  be in effect yet, in prior midyear cycles issues still resonated.

See my recap of what is in the budget reconciliation bill: https://www.healthcarelabyrinth.com/saga-over-big-beautiful-bill-has-passed-for-good-or-bad/

In other news, another study details impacts of healthcare cuts on providers throughout the nation.

As well, Molina Healthcare released preliminary results from its second-quarter financials and is bracing for elevated medical costs. Centene pulled its earnings forecast earlier.

Molina sees ongoing financial troubles in its Affordable Care Act (ACA) Exchange, Medicaid, and Medicare Advantage lines of business. The budget reconciliation bill and expiration of enhanced premiums subsidies at the end of 2025 hurt further.

Additional articles: https://www.modernhealthcare.com/medicaid/mh-medicaid-cuts-tax-bill-states-hospitals/ and https://www.fiercehealthcare.com/payers/molina-healthcare-lowers-2025-guidance-warns-elevated-medical-costs and https://www.healthcaredive.com/news/molina-cuts-earnings-guidance-costs-rise-aca-medicaid-medicare/752297/

(Some articles may require a subscription.)

#election2026 #budgetreconciliation #mediaid #coverage #molinahealthcare

https://thehill.com/homenews/campaign/5384501-trump-democrats-medicaid-cuts-2026-midterms

Big Beautiful Bill Signed

President Donald Trump signed Republicans’ One Big Beautiful Bill and touted it as a landmark major tax and domestic policy bill. The bill extends tax reductions ready to expire and enacts new ones. At the same time, it institutes massive cuts to Medicaid that could remove millions of people from Medicaid and the Exchanges.

The bill was months in the making and Donald Trump is being given considerable credit for its passage. Whatever you think of the bill itself, its passage can be described as a political master stroke given the tight vote count for the GOP in each chamber of Congress. Trump stayed engaged with lawmakers on each vote – the initial House draft, the Senate recrafted one, and the House adoption of the Senate version. He is credited with creating a full course press to pass the bill, including a mixture of cajoling, education, and even threats. Trump, Vice President JD Vance, Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz, Treasury Secretary Scott Bessent, other Cabinet officials, Speaker Mike Johnson (R-LA), Senate Majority Leader John Thune (R-SD), and other GOP leaders in each house all executed on final passage over several months.

Healthcare policy group KFF has already updated its bill comparison and it is well done as usual. The link is in the additional articles area. I will have a blog Monday that goes through the final language. At a high level, this is what is in the bill:

• Medicaid work requirements for the able-bodied.
• Medicaid eligibility checks every six months for some populations.
• Elimination of a Medicaid eligibility streamlining regulation.
• Medicaid Cost-sharing for some enrollees.
• Medicaid provider tax limitations in non-expansion states and a phasedown from 6% to 3.5% over time in expansion states.
• Limitations on state-directed payments in Medicaid.
• Affordable Care Act (ACA) Exchange subsidy verification and stricter eligibility rules. 
• Limits on immigrant eligibility for Medicare, Medicaid, and ACA premium tax credits. 
• A $50 billion fund for rural hospitals and health systems.
• Prohibition on enforcing a Biden-era nursing home staffing regulation.

Notwithstanding what Republicans say, millions will lose coverage as a result of social barriers, red tape, administrative hurdles, the great inefficiency and lack of infrastructure in state Medicaid agencies, and lower availability of revenue in states to match federal dollars.

The bill does include a temporary 2.5% increase to the Medicare Physician Fee Schedule for 2026.

Additional articles: https://thehill.com/homenews/house/5385546-trump-republicans-megabill/ and https://thehill.com/homenews/administration/5384512-trump-signs-big-beautiful-bill/ and https://www.beckershospitalreview.com/hospital-management-administration/senate-passes-gop-budget-bill-heads-to-house-8-things-to-know/ and https://thehill.com/policy/healthcare/5384707-how-trumps-megabill-will-impact-health-care/ and https://www.kff.org/tracking-the-health-savings-accounts-provisions-in-the-2025-budget-bill/  

#budgetreconciliation #trump #congress #coverage #medicaid #exchanges #aca #obamacare #uninsured

https://www.healthcaredive.com/news/trump-signs-reconciliation-bill-medicaid-cuts/752259/