Looking Ahead
Both chambers of the U.S. Congress are in session this week, with the U.S. House of Representatives and U.S. Senate set to resume a packed schedule of hearings and legislative markups. While much of the attention in the House will be focused on advancing to consideration of the National Defense Authorization Act (NDAA), the House Committee on Appropriations will also mark up the Labor, Health and Human Services, Education, and Related Agencies funding bill. The bill was advanced from the subcommittee on a party-line vote on Sept. 2, 2025, and provides $184.5 billion in funding, a 7 percent reduction from the previous enacted level. Focus on artificial intelligence (AI) also continues, with the Senate set to address the AI Action Plan in the Committee on Commerce, Science, and Transportation.
With the Sept. 30, 2025, government funding deadline looming, lawmakers are weighing options for a continuing resolution – potentially to later this year or into early 2026 – to avoid a government shutdown. As these discussions continue, there is increasing conversation centered around potentially including an extension of the advanced premium tax credits (APTCs) as part of a funding deal, especially following the recent introduction of a bill to do so by a bipartisan group. The length of time for an extension, as well as who might be eligible for the APTCs, is likely to be debated.
Week in Review
Last week, the Senate Committee on Finance held a hearing on the "President's 2026 Health Agenda," which lasted three hours, with U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. as the sole witness. The hearing's key topics included but were not limited to vaccine policy and Centers for Disease Control and Prevention (CDC) staffing changes, rural hospital funding through the Rural Health Transformation Program, rising healthcare costs and Medicare premiums, chronic disease prevention strategies, drug pricing and pharmacy benefit manager (PBM) reforms, and more.
Opening Statements:
- Chair Mike Crapo (R-Idaho) highlighted the Trump Administration's Make America Healthy Again (MAHA) initiative, emphasizing a shift toward chronic disease prevention and rooting out waste, fraud and abuse. He praised the One Big Beautiful Bill Act (OBBB) for Medicaid reforms and the $50 billion Rural Health Transformation Program, described as the largest federal investment in rural healthcare in decades.
- Ranking Member Ron Wyden (D-Ore.) criticized what he called the "largest cuts to American healthcare in history," accusing Secretary Kennedy of elevating "conspiracy theorists" and causing chaos at federal agencies. He cited CDC firings tied to vaccine policy disputes and raised concerns about corruption and higher costs for families.
- Secretary Kennedy defended his tenure, stressing a pivot from "sick care" to "true healthcare" and citing the MAHA Commission's findings on chronic disease drivers (ultra-processed foods, chemical exposures, inactivity, over-medicalization). He outlined actions on drug pricing, prior authorization delays, baby formula contamination, food dyes, animal testing and ending gain-of-function research. On vaccines, he insisted access remains available and argued that CDC leadership changes were needed to restore credibility after COVID-19-era failures.
Lines of Questioning:
The hearing devoted significant time to vaccine policy and CDC leadership changes. Sens. Wyden, Elizabeth Warren (D-Mass.), Michael Bennet (D-Colo.), Bernie Sanders (I-Vt.), Maria Cantwell (D-Wash.) and Raphael Warnock (D-Ga.) pressed Secretary Kennedy on his decision to reconstitute the Advisory Committee on Immunization Practices (ACIP) and narrow COVID-19 vaccine recommendations to certain age groups. Secretary Kennedy maintained that vaccines remain accessible and defended the revised guidance as evidence-based.
Sens. Crapo, Charles Grassley (R-Iowa), John Cornyn (R-Texas), John Barrasso (R-Wyo.), Roger Marshall (R-Kan.), James Lankford (R-Okla.) and Steve Daines (R-Mont.) largely focused on rural health funding, chronic disease prevention and drug pricing reforms. Sen. Grassley highlighted rural hospital demonstration programs, while Sen. Cornyn questioned whether U.S. healthcare spending aligns with outcomes. Several Republicans endorsed Secretary Kennedy's transparency initiatives and raised concerns about previous advisory committee structures. Sen. Ron Johnson (R-Wis.) submitted adverse event data for the record. Notably, Sens. Cassidy and Barrasso, both physicians, reaffirmed their support for vaccines.
Hearings This Week
The House Appropriations Committee was scheduled to hold a full committee markup on Sept. 9, 2025, of the Fiscal Year (FY) 2026 Labor, Health and Human Services, Education, and Related Agencies Bill.
The House Committee on Ways and Means Subcommittee on Social Security was scheduled to hold a hearing on Sept. 9, 2025, titled "Untapped Talent in America: Removing Barriers to Work and Supporting Opportunity for Individuals with Disabilities."
The House Committee on Oversight and Government Reform was scheduled to hold a hearing on Sept. 9, 2025, titled "Better Meals, Fewer Pills: Making Our Children Healthy Again." Dorothy Fink, HHS acting assistant secretary for health, and Eve Stoody, director of the Nutrition Guidance and Analysis Division at the U.S. Department of Agriculture (USDA), will testify.
The Senate Committee on Homeland Security and Governmental Affairs was scheduled to hold a hearing on Sept. 9, 2025, titled "How the Corruption of Science Has Impacted Public Perception and Policies Regarding Vaccines."
The Senate Commerce, Science, and Transportation Committee's Subcommittee on Science, Manufacturing, and Competitiveness will hold a hearing on Sept. 10, 2025, titled "AI've Got a Plan: America's AI Action Plan."
The House Committee on Energy and Commerce Subcommittee on Health will hold a markup on Sept. 10, 2025. The following bills will be considered:
- H.R. 4262 – To reauthorize programs related to health professions education and for other purposes (Rep. Jan Schakowsky, D-Ill.)
- H.R. 3593 – Title VIII Nursing Workforce Reauthorization Act of 2025 (Rep. Dave Joyce, R-Ohio)
- H.R. 2493 – Improving Care in Rural America Reauthorization Act of 2025 (Rep. Buddy Carter, R-Ga.)
- H.R. 3419 – To amend the Public Health Service Act to reauthorize the telehealth network and telehealth resource centers grant programs (Rep. David Valadao, R-Calif.)
- H.R. 3302 – Healthy Start Reauthorization Act of 2025 (Rep. Alexandria Ocasio-Cortez, D-N.Y.)
- H.R. 2846 – To amend Title II of the Public Health Service Act to include as an additional right or privilege of commissioned officers of the Public Health Service (and their beneficiaries) certain leave provided under Title 10, U.S. Code, to commissioned officers of the U.S. Army (or their beneficiaries) (Rep. Chrissy Houlahan, D-Pa.)
- H.R. 4709 – Newborn Screening Saves Lives Reauthorization Act of 2025 (Rep. Kelly Morrison, D-Minn.)
Upcoming Events
Holland & Knight's Hospitals and Health Systems Team will host its second annual Hospital Horizons Symposium, where attendees will hear from an impressive list of speakers who will provide healthcare regulatory, legislative and policy updates that are impacting hospitals and health systems. The event will begin with a reception on Oct. 6, 2025, and will continue with a full day of programming on Oct. 7, 2025.
Staffing Changes
Michael Stuart's nomination as general counsel for HHS was approved.
Administrative Updates
Executive Order Updates
The Trump Administration has continued to release wide-ranging executive orders (EOs). For the latest updates, see our "Trump's 2025 Executive Orders: Updates and Summaries" tracking chart.
- Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements: On Sept. 5, 2025, President Donald Trump issued an EO to implement tariff modifications after finding it "necessary and appropriate" to do so in order to implement the terms of any final trade agreement between the U.S. and a foreign trading partner. The order includes an annex that lists various imports "for which [the President] is willing to provide a zero percent reciprocal tariff rate." Additional information regarding specific trade agreements is expected to be forthcoming, as will additional guidance from the U.S. Department of Commerce and other agencies following the U.S.-European Union trade agreement announced earlier this summer.
Legislative Updates
Lawmakers Weigh ACA Tax Credit Expiration
Senate Democrats, led by Sen. Jeanne Shaheen (D-N.H.), released a new analysis warning of the consequences if enhanced premium tax credits under the Affordable Care Act (ACA) are allowed to expire at the end of the year. The report projects significant declines in marketplace enrollment and higher premiums, as the loss of subsidies would coincide with rising healthcare costs. Last week, Reps. Jen Kiggans (R-Va.) and Tom Suozzi (D-N.Y.) introduced the Bipartisan Premium Tax Credit Extension Act (H.R. 5145), which would extend the Inflation Reduction Act's enhanced subsidies for one year through Jan. 1, 2027. The estimated cost of continuing these marketplace coverage subsidies is $24 billion.
Warren Report Slams SSA for Data Removal, Transparency Failures
Sen. Warren released a new investigative report revealing that the Trump Administration's Social Security Administration (SSA) has quietly removed more than 45 key performance metrics from its public website, which Sen. Warren argues undermines transparency and makes it harder for Americans to access benefits. The missing data includes disability and retirement claims processing times, staffing levels and call center wait times. Sen. Warren's office argues the removals obscure growing dysfunction within the agency and violate commitments made by SSA Commissioner Frank Bisignano to restore public-facing data. The report calls for immediate reinstatement of all metrics to ensure Congress and the public can properly evaluate SSA's performance and protect the integrity of the program.
Regulatory Updates
FDA Announces Actions to Reduce Import of APIs Used in the Production of Compounded Medicines
The U.S. Food and Drug Administration (FDA) issued a new import alert on Sept. 5, 2025, to reduce the importation of unauthorized active pharmaceutical ingredients (APIs) used to manufacture compounded GLP-1 products and address concerns related to the safety of compounded GLP-1 products. The import alert details that only products imported from facilities that have been previously inspected or evaluated by the FDA – and been found to meet federal standards – will be allowed into the country. The facilities are listed on a "green list" established as part of the announcement. The import alert follows growing concerns about the safety of ingredients used in the production of compounded GLP-1 products following their removal from the FDA's list of drugs in shortage earlier this year.
HHS Information Unblocking Initiative
The HHS has announced a new enforcement initiative targeting healthcare entities that engage in information blocking, practices determined to prevent patients and providers from accessing electronic health data. The effort underscores the agency's aim to advance interoperability, with a renewed focus on holding violators accountable under the 21st Century Cures Act. Officials emphasized that seamless access to health records is essential for improving care coordination, empowering patients and driving innovation across the health information technology (IT) ecosystem.
AHEAD Model Updates Announced
The Centers for Medicare & Medicaid Services (CMS) announced significant policy and operational changes to the Achieving Healthcare Efficiency through Accountable Design (AHEAD) Model, aimed at helping states meet total cost of care (TCOC) goals while improving quality and transparency. The updates, effective January 2026, introduce new tools for managing Medicare costs, expand preventive care through a Population Health Accountability Plan and require states to implement policies that promote choice and competition. For the first time, AHEAD will apply TCOC accountability to all original Medicare beneficiaries in participating regions, supported by payment reforms and new transparency requirements. The model's end date is now set for Dec. 31, 2035. Additionally, CMS released new frequently asked questions (FAQs).
CMS Launches Prior Authorization Demo for ASC Services
CMS is rolling out a five-year prior authorization demonstration targeting select procedures performed in ambulatory surgical centers (ASCs) across 10 states: Arizona, California, Florida, Georgia, Maryland, Pennsylvania, New York, Ohio, Tennessee and Texas. Beginning Dec. 15, 2025, the initiative will apply to five service categories: blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty and vein ablation. Providers may begin submitting prior authorization requests starting Dec. 1, 2025. Participation is voluntary, but those who opt out will be subject to prepayment medical review.
The demonstration is designed to improve compliance with Medicare coverage and payment rules, reduce denials and appeals, and protect the Medicare Trust Fund. By requiring documentation earlier in the process, CMS aims to streamline approvals while maintaining access to medically necessary care.
MedPAC Holds September Meeting
On Sept. 4-5, 2025, the Medicare Payment Advisory Commission (MedPAC) held its monthly open meeting. The agenda included sessions on Medicare payment operations and strategies to improve payment accuracy and broader context for Medicare payment policy, as well as access to hospice and related services for beneficiaries with end-stage renal disease (ESRD) or cancer. In addition, the U.S. Government Accountability Office (GAO) presented on oversight needed to ensure Medicare's long-term sustainability.
Session 1: Medicare Payment Operations and Accuracy
Staff reported FY 2024 improper payments at $32 billion (7.7 percent of fee-for-service payments), down from 12.7 percent in 2012. Medicare Administrative Contractors (MACs) processed 1.1 billion claims, totaling $431.5 billion in FY 2023, supported by multiple automated and post-payment review mechanisms. Medicare Advantage showed a 5.6 percent improper payment rate ($19 billion), largely coding-related, and Part D had a 3.7 percent error rate ($4 billion) due to missing documentation. Commissioners supported developing this work into a chapter and requested flowcharts on claim life cycles and enrollment, analysis of automated vs. manual processes and cost estimates of oversight functions. Commissioner Robert Cherry stressed treating coding intensity separately from improper payments.
Session 2: GAO Report on Oversight and Sustainability
GAO Comptroller General Gene Dodaro noted cumulative Medicare improper payments exceed $880 billion since 2003, with current estimates around $50 billion annually. Fraud across federal programs is $233 billion to $521 billion yearly. Highest Medicare error rates occur in skilled nursing facilities (SNFs), home health, hospice and outpatient physician services. Barriers to stronger oversight stem more from political will than funding. CMS has tripled Program Integrity staffing; 200,000 pandemic-era providers still require recertification. Commissioners discussed expanding policy tools beyond payment cuts, including regulatory reforms and prior authorization. Dodaro backed site-neutral payments, highlighted telehealth's promise for mental health and underscored fiscal urgency with the Medicare Hospital Insurance (HI) Trust Fund projected to be depleted by 2033.
Session 3: Context for Medicare Payment Policy
Medicare spending reached $1 trillion in 2023 and is projected to hit $2 trillion by 2033, driven by enrollment and service volume, not price. Provider consolidation is accelerating: 63 percent of hospital markets are now "super concentrated," physician ownership has dropped to 42 percent, and private equity-owned practices rose 44 percent from 2022 to 2024. Workforce challenges persist, with 47 percent turnover among nursing home aides. Commissioners flagged Medigap's induced demand, workforce shortages and PBM consolidation's role in opaque drug spending. While some noted potential benefits of consolidation, others warned of higher costs without efficiency gains. MedPAC Chair Michael Chernew closed by stressing the need to prioritize which issues fit within the context chapter versus separate analyses.
Session 4: Access to Hospice for ESRD and Cancer Patients
Staff highlighted barriers limiting hospice access for ESRD and cancer patients, noting that high-cost palliative services – dialysis (40 percent to 50 percent of hospice costs), transfusions (30 percent to 50 percent) and radiation (10 percent to 30 percent) – are not covered by Medicare's daily rates. Commissioners agreed access barriers exist but differed on remedies. They opposed allowing hospices to exclude services, emphasized budget neutrality given industry margins and cautioned against broadening hospice's scope. Outlier payments drew more support than add-ons, case-mix adjustments raised doubts about adequacy, and the transitional program drew mixed views – patient-friendly to some, confusing to others. Staff will refine these options for the June 2026 report, focusing on defining services and clinical guidelines that preserve hospice's palliative intent while improving access.
OPM Modernizes Federal Hiring with "Rule of Many"
The Office of Personnel Management (OPM) finalized a new hiring rule on Sept. 5, 2025, that replaces the long-standing "rule of three" with the more flexible "rule of many." The change allows federal agencies to select from a broader pool of top-ranked candidates using skills-based assessments and cut-off scores, rather than being limited to the top three applicants. The move is designed to promote merit, increase flexibility and help agencies attract the most qualified talent to serve the public.
NIH to Launch AI Program to Transform Medical Imaging
The National Institutes of Health (NIH) is preparing to launch a new initiative – Precision Medicine with AI: Integrating Imaging with Multimodal Data (PRIMED-AI) – aimed at transforming medical imaging through AI to advance precision medicine. The agency has been actively exploring AI applications in biomedical data analysis and recognizes the need for more AI-ready datasets. To address this, NIH has funded four projects to create flagship data resources for training AI models. One effort underway involves developing a dataset drawn from intensive care units (ICUs) across the country, covering 100,000 patients from 14 ICUs. This dataset will be used to train generative AI models capable of predicting deadly adverse events in critical care settings such as cardiac arrest, sepsis and stroke.
