THIS WEEK’S DOSE
- House Ways and Means Committee advances hospital reporting legislation. HR 9504 would establish new reporting requirements for large tax-exempt hospitals and high-revenue tax-exempt hospitals.
- House Education and Workforce Health Subcommittee discusses direct contracting in healthcare. Members and witnesses evaluated how direct contracting could help address rising healthcare costs while improving access, quality, and transparency in employer-sponsored coverage.
- CMS releases CY 2027 OPPS and ASC Payment System proposed rule. The rule includes proposals related to the inpatient only list, the 340B program, and site-neutral payments, and would increase payment rates under the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System by 2.4%.
- HHS, CMS launch “Make Hospital Food Healthier” pledge. The voluntary pledge asks hospitals to reduce highly processed foods and prioritize options that align with the Dietary Guidelines for Americans.
- States sue Trump administration over Medicaid work requirements interim final rule. The suit, brought by 25 states, claims the administration is seeking unlawful implementation of new Medicaid work requirements included in the One Big Beautiful Bill Act.
CONGRESS
House Ways and Means Committee advances hospital reporting legislation. During the July 1, 2026, markup, the committee advanced seven tax-related bills, including HR 9504, the Tax Exempt Hospital Transparency Act, which would establish new reporting requirements for tax-exempt hospitals. Under HR 9504, large tax-exempt hospitals (defined as having more than 100 staffed inpatient beds) would be required to submit additional data, including data related to the three highest-priority health needs identified in the community health needs assessment, data on spending, and descriptions of actions to fulfill identified health needs. High-revenue tax-exempt hospital organizations (defined as having net patient revenue of more than $100 million for the taxable year) would be required to specify advertising information, health service line information, and 340B drug discount program information. HR 9504 was favorably reported out of committee by a party-line vote of 25 – 15.
House Education and Workforce Health Subcommittee discusses direct contracting in healthcare. During the hearing, Republicans stated that direct contracting and direct primary care can help employers lower healthcare costs and improve productivity by relying on market-based solutions and innovation. Democrats expressed concerns that the One Big Beautiful Bill Act (OBBBA) cuts $1 trillion from Medicaid and could contribute to 15 million people losing healthcare coverage. Both Democrats and Republicans agreed that rising healthcare costs are an affordability crisis, noting that healthcare costs are higher in the United States compared to other developed nations.
ADMINISTRATION
CMS releases CY 2027 OPPS and ASC Payment System proposed rule. Highlights from the proposed rule include:
- Inpatient only (IPO) list. The Centers for Medicare & Medicaid Services (CMS) proposes the second set of procedures to be removed from the IPO list as part of a three-year transition period.
- Site-neutral payments. CMS proposes to expand site-neutral payments to include imaging services without contrast furnished by excepted off-campus provider-based outpatient departments, with an exception for rural sole community hospitals.
- ASC covered procedures list. CMS proposes to expand the ASC covered procedures list by adding 618 procedures, tracking the procedures that CMS proposes to remove from the IPO list for CY 2027.
- Changes to device pass-through eligibility criteria. As discussed in the fiscal year 2027 Inpatient Prospective Payment System proposed rule, CMS proposes to eliminate the alternate pathway for transitional pass-through under OPPS, requiring medical devices with breakthrough device designation to meet the same eligibility criteria as non-breakthrough technologies.
- Payment for 340B-acquired drugs. CMS proposes to pay for 340B-acquired drugs at average sales price minus 33.4%, rather than the current default OPPS rate of average sales price plus 6%. Several hospital types, including rural sole community hospitals, would be exempt from this change, if finalized. This reduction would be implemented in a budget-neutral manner, resulting in an 8.44% increase to the conversion factor for OPPS non-drug items and services for CY 2027.
- 340B remedy. CMS proposes to increase the annual reduction to the OPPS conversion factor for non-drug items and services from 0.5% to 3% effective January 1, 2027, to accelerate recoupment of the budget neutrality payments associated with the 340B remedy.
- Software as a medical service. CMS proposes an interim payment policy of assigning all service codes representing software as a medical service technologies to new technology ambulatory payment classifications for CY 2027 while the agency contemplates a broader strategy for payment of these types of services.
- Skin substitutes. CMS proposes to maintain its policy finalized in CY 2026 of unpackaging skin substitutes and paying for them separately as incident-to supplies.
- Requests for information. CMS requests feedback on ways to improve the comparability and standardization of available hospital price transparency data.
Comments on the proposed rule are due August 31, 2026. For more information, see CMS’s press release and fact sheet. McDermott+ has created a dashboard showing the proposed 2027 Medicare payment rates for OPPS and the ASC Payment System by procedure code.
HHS, CMS launch “Make Hospital Food Healthier” pledge. The voluntary pledge asks hospitals to limit ultra-processed foods, sugary drinks, processed meats, added sugars, sodium, and artificial additives; use healthier cooking methods; and prioritize whole grains and minimally processed proteins, including plant-based options. As referenced in the US Department of Health and Human Services (HHS) press release, the pledge is in line with CMS’s memo to hospitals reminding them of federal Medicare requirements to ensure hospital menus and diets meet individual patient nutritional needs in accordance with recognized dietary practices. The memo notes that hospitals should review and revise food and nutrition service policies, standard menus, therapeutic diet protocols, and food procurement practices to align with the 2025 – 2030 Dietary Guidelines for Americans.
Hospitals can sign the pledge here.
COURTS
States sue Trump administration over Medicaid work requirements interim final rule. The June 2026 interim final rule implements the Medicaid work requirements enacted as part of the OBBBA. It provides implementation information to states, defines key terms, and gives more clarity on good-faith-effort exemptions for states. States must implement work requirements for the expansion population by January 1, 2027.
The District of Columbia and 25 states filed suit against HHS Secretary Kennedy and CMS Administrator Oz, alleging the interim final rule unlawfully narrows Congress’ protections for medically frail Medicaid recipients and makes other unlawful changes that increase administrative burdens for states and patients. The suit is co-led by the attorneys general of California, Massachusetts, and New Jersey.
QUICK HITS
- Senate HELP Committee announces confirmation hearing for CDC Director nominee. Dr. Erica Schwartz, nominated by President Trump in April 2026 to be the director of the Centers for Disease Control and Prevention (CDC), will appear before the Senate Health, Education, Labor, and Pensions (HELP) Committee for a confirmation hearing on July 15, 2026. If confirmed she will replace Dr. Jay Bhattacharya, who has served as acting director since February 2026 while simultaneously serving in his primary role as director of the National Institutes of Health. The committee will also consider the nomination of Sean Kaufman to be assistant secretary for preparedness and response for HHS.
- ONC announces TEFCA milestone and enhanced oversight. The Office of the National Coordinator for Health Information Technology (ONC) announced that more than one billion health records have been exchanged through the Trusted Exchange Framework and Common Agreement (TEFCA) since its December 2023 launch. ONC also announced new oversight steps, including a contract to strengthen network oversight and additional compliance reviews of qualified health information networks and participants.
- Sen. Collins asks OMB to extend comment period, withdraw portions of grants proposed rule. In a letter to Office of Management and Budget (OMB) Director Vought, Sen. Collins (R-ME) said the proposed rule could burden recipients and subrecipients by allowing mid-award terminations with limited appeal rights, thus creating uncertainty particularly for multi-year scientific and biomedical research. She also requested an at-least-90-day extension of the comment period, which currently closes July 13, 2026, ahead of OMB’s stated October 1, 2026, finalization target.
- USPSTF meeting postponed for fourth time. The US Preventive Services Task Force’s (USPSTF) July meeting was postponed until late August, reportedly to allow more time for selection and onboarding of new members. USPSTF, which makes preventive care recommendations tied to Affordable Care Act (ACA) coverage requirements, has not met in person since March 2025.
- CMS launches Medicare GLP-1 Bridge initiative. Through GLP-1 Bridge, eligible individuals enrolled in Medicare Part D prescription drug coverage can obtain certain GLP-1 medications for $50 per month. The initiative will remain available through December 31, 2027.
- ASPE publishes 2026 ACA exchange enrollment report. HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a report that federal antifraud efforts have reduced but not eliminated improper, phantom, or fraudulent ACA exchange enrollment. ASPE estimated that Trump administration program integrity actions stopped, ended, or blocked subsidies for 2.9 million improper enrollees, while 2.6 million improper or phantom enrollments remain.
NEXT WEEK’S DIAGNOSIS
Both chambers will return from their July 4 holiday recess next week. The Senate HELP Committee will hold a confirmation hearing for CDC and Administration for Strategic Preparedness and Response nominees and the Senate Judiciary Committee will hold a hearing focusing on patent eligibility.
Across the Capitol, the House Energy and Commerce Health Subcommittee will hold a hearing on biomedical innovation, and the House Education and Workforce Committee will hold a hearing on diversity, equity, and inclusion in medical schools.
In addition, both the Senate Homeland Security and Governmental Affairs Committee and the House Oversight Committee’s Government Operations Subcommittee will hold hearings on fraud.
We are also keeping an eye on the House Ways and Means Committee, which may schedule a markup of healthcare transparency bills in the coming weeks.
On the regulatory front, we await the proposed Medicare Physician Fee Schedule rule for CY 2027.
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