THIS WEEK’S DOSE
- Senate Finance Committee Releases Reconciliation Text. The language is subject to change as negotiations continue and the Byrd rule process plays out.
- CMS Releases MA Risk Adjustment Audit Methodology for Payment Year 2019. The risk adjustment process aims to recover overpayments made to Medicare Advantage (MA) plans.
- Medicare Trustees Release 2025 Report. The estimated date of Medicare Part A insolvency notably differs by 20 years compared to a previous estimate from the Congressional Budget Office.
- Federal Court Rules Against NIH in Grant Termination Cases. The decision comes as lawmakers and stakeholders express concerns over pauses or terminations in fiscal year 2025 National Institutes of Health (NIH) grant funding.
- SCOTUS Upholds Tennessee Law Prohibiting Gender-Affirming Care for Minors. The Supreme Court of the United States (SCOTUS) ruling comes as the Trump Administration and Congress are seeking to limit certain federal funding of gender-affirming care.
CONGRESS
Senate Finance Committee Releases Reconciliation Text. On June 16, 2025, the Senate Finance Committee released its portion of the budget reconciliation bill. The section-by-section summary is available here. The text includes the majority of healthcare provisions being considered as part of the reconciliation process, because the Finance Committee has jurisdiction over Medicaid, Medicare, and the Affordable Care Act (ACA). The text includes some of the same provisions as the House-passed bill, while removing or making significant changes to other key provisions. The Senate text goes further than the House-passed bill on Medicaid provider taxes and state directed payments (SDPs). Some Senate Republicans have expressed concern about these provisions, including Sens. Hawley (R-MO) and Murkowski (R-AK), who have both raised concerns about Medicaid cuts this year.
Major changes compared to the House-passed bill include:
- Medicaid Provider Taxes. Provider taxes would be frozen at current rates, but starting in 2027, Medicaid expansion states would see their hold harmless threshold incrementally decrease from 6% to 3.5% by 2031. The text includes exceptions for provider taxes on nursing homes and intermediate care facilities in expansion states.
- SDPs. The House-passed bill grandfathered in existing Medicaid SDPs, but the Senate bill would reduce existing SDP payment limits in all states by 10% annually until they reach their specified payment limit. The payment limit for all SDPs in non-expansion states would be 110% of the Medicare rate, and for expansion states it would be 100% of the Medicare payment rate.
- Medicare. The only Medicare provision in the Finance Committee text is the provision limiting Medicare coverage for certain non-citizens. The Finance Committee removed other House-passed Medicare provisions, including the provision to reform Medicare physician payment.
- Other Missing Provisions. The Senate bill does not include the delay of disproportionate share hospital payment reductions, any of the health savings account provisions, or the codification of the proposed ACA program integrity rule (although rumors persist that it may reappear).
It remains to be seen if this package, which has significant differences from the House-passed version, would get 51 votes in the Senate as written, given concerns about the Medicaid provisions and non-health-related tax policies. However, the package is subject to change as negotiations continue. The “Byrd bath” process is also happening, and provisions may be struck or modified to comply with the Byrd rule.
Majority Leader Thune (R-SD) has reiterated his plan to bring the reconciliation package to the Senate floor next Wednesday or Thursday. That could be delayed as senators react to the package and negotiations continue. And, after Senate passage, the bill will need to pass the House again before it can go to the president for his signature. President Trump and Senate leaders continue to push to have the Senate complete consideration of the bill before the July 4 recess. However, this is a self-imposed deadline and if it slips past that date, Congress will continue their work in July. In fact, Vice President Vance acknowledged at a Senate meeting this week that the August recess is the real deadline.
ADMINISTRATION
CMS Releases MA Risk Adjustment Audit Methodology for Payment Year 2019. The Centers for Medicare & Medicaid Services (CMS) released the methodology for payment year (PY) 2019 risk adjustment data validation (RADV) audits. CMS selected 45 MA contracts for those audits. The methodology provides additional information about the criteria used to select enrollees for audit, instructions for submission of medical records, and details on how CMS will calculate extrapolated overpayment amounts. This follows a May 2025 announcement that CMS will accelerate RADV audits for PYs 2018 to 2024 to recoup overpayments made to MA plans. In related news, the US Department of Health and Human Services (HHS) Office of Inspector General updated its work plan that notes forthcoming reports, including one on MA health risk assessments by dual-eligible special needs plans.
Medicare Trustees Release 2025 Report. The report is an annual publication in which the trustees review Medicare enrollment and spending, project future spending, and evaluate the financial health of the trust funds that finance Medicare expenditures.
Key takeaways from the report include:
- Medicare Part A Solvency: The report projects that Medicare’s Part A Trust Fund, which funds inpatient hospital care, will become insolvent in 2033. This is 3 years earlier than projected in last year’s report, mainly due to higher-than-anticipated 2024 expenditures and higher projected spending for inpatient hospital and hospice services in future years. The Congressional Budget Office previously projected the Part A Trust Fund would remain solvent until 2052.
- Physician Payment: The trustees express concern about the potential for physician payment updates, which under current law do not vary based on underlying economic conditions or keep pace with the average rate of physician cost increases, to impede access to care in future years. The report notes that this could be an issue in years when levels of inflation are high and would be problematic when the cumulative gap between the price updates and physician costs becomes large.
- MA: The trustees estimate that MA enrollment will continue to grow, from about 50% of all Medicare enrollment in 2024, to about 58% in 2034.
COURTS
Federal Court Rules Against NIH in Grant Termination Cases. A federal judge in Massachusetts who was appointed by former President Reagan ruled in two cases that hundreds of grants terminated by NIH were illegal. The judge noted that the process of terminating the grants was arbitrary and capricious and ordered some of the grants to be restored. The cases were filed by the American Public Health Association and 16 states and mostly focused on terminations of grants related to gender identity and diversity, equity, and inclusion.
SCOTUS Upholds Tennessee Law Prohibiting Gender-Affirming Care for Minors. At the center of the case is a 2023 Tennessee law that prohibits healthcare providers from providing certain gender-affirming care services to minors. Transgender minors, their parents, and a doctor challenged the law under the Equal Protection Clause of the Fourteenth Amendment. In the case, US v. Skrmetti, SCOTUS ruled 6 – 3 that the law does not violate the Equal Protection Clause but satisfies rational basis review, allowing the Tenneessee law to take effect.
QUICK HITS
- CMS Approves Medicaid Expansion of Tribal Healthcare in Six States. The approvals in Minnesota, New Mexico, Oregon, South Dakota, Washington, and Wyoming allow Indian Health Service and Tribal clinics to provide Medicaid clinic services outside of the “four walls” of a physical clinic site, including in schools and homes. This policy was mandated in the calendar year 2025 Medicare Hospital Outpatient Prospective Payment System final rule.
- FDA Announces National Priority Voucher Program. The US Food and Drug Administration (FDA) program aims to expedite drug application reviews for companies developing drugs that are in line with specific priorities, including increasing domestic drug manufacturing and addressing unmet public health needs.
- House Energy and Commerce Democrats Question Kennedy on MAHA Report. In a letter, leading Energy and Commerce Democrats posed questions to HHS Secretary Kennedy on the validity of information in the recently released Make America Healthy Again (MAHA) report. Read the press release here.
- House Energy and Commerce Republicans Express Concerns about Data Privacy in California Marketplace. In a letter to the executive director of California’s Health Insurance Marketplace, Covered California, the committee’s Republican leaders seek information about data management practices of the exchange. Read the press release here.
- Gary Andres Confirmed as HHS Assistant Secretary for Legislation. The Senate confirmed Andres by a 57 – 40 vote, with Sens. Hassan (D-NH), Shaheen (D-NH), Warnock (D-GA), Welch (D-VT), and Whitehouse (D-RI) joining Republicans in voting yes. Andres formerly worked at the House Budget Committee.
NEXT WEEK’S DIAGNOSIS
Both chambers will be in session next week. Lawmakers will continue to hash out the details of the reconciliation bill before an anticipated vote on the Senate floor, which could occur as early as next week. The House Energy and Commerce Committee will hold a hearing with HHS Secretary Kennedy, and the House Ways and Means Committee will discuss digital health data. The Senate Health, Education, Labor, and Pensions Committee will hold the nomination hearing for Susan Monarez, nominated for Centers for Disease Control and Prevention director.
