Government shuts down. Early in the week, President Trump met with Democratic leaders Schumer (NY) and Jeffries (NY) and Republican leaders Thune (SD) and Johnson (LA), but no deal was reached to keep the government open ahead of the September 30, 2025, funding deadline. Democratic leaders were unwilling to concede on key healthcare policies, such as repealing the One Big Beautiful Bill Act’s (OBBBA’s) Medicaid provisions and extending the Marketplace enhanced advanced premium tax credits (APTCs).
The Senate held several votes this week on the same two stopgap spending bills that failed to advance last week, demonstrating that a path forward remains elusive:
As a result of the failed votes, the government shut down on October 1, 2025, and several health programs tied to the government funding deadline also expired. A bipartisan group of senators have been discussing a path forward to end the shutdown, including Sens. Kaine (D-VA), Rounds (R-SD), Gallego (D-AZ), Hoeven (R-ND), Sullivan (R-AK), Murkowski (R-AK), Tuberville (R-AL), and Shaheen (D-NH). The group is said to be considering a short-term CR (through mid-October) and compromising on a short-term APTC extension. These discussions do not appear to include leadership at this time.
During past shutdowns, federal workers deemed nonessential have been furloughed and have received backpay after the government reopens. During this shutdown, Office of Management and Budget Director Russel Vought announced his intention to also lay off large numbers of federal workers, although such actions have not occurred yet.
The US Department of Health and Human Services (HHS) released an updated shutdown contingency staffing plan, and CMS released information to stakeholders regarding claims processing and treatment of telehealth visits. CMS suggests that providers consider alerting beneficiaries with an advance notice of noncoverage and holding claims if they choose to continue to offer telehealth services. CMS has not provided assurances that providers will eventually be reimbursed for these services if Congress reinstates the flexibilities, or that patients will not be responsible for the full cost of an appointment during the lapse.
The Acute Hospital Care at Home (AHCAH) waiver also expired, and CMS noted that all hospitals with active AHCAH waivers must discharge or return all inpatients to the hospital. CMS also stopped accepting waiver requests for participation in the AHCAH initiative after September 1, 2025.
White House continues drug pricing push. The White House announced its first deal with a pharmaceutical company in line with President Trump’s most-favored nation (MFN) EO. As part of the deal, the administration will launch a new website, TrumpRx.gov, which should allow state Medicaid programs to purchase pharmaceuticals directly from the manufacturer at discounts, although it is unclear if these will align with MFN prices. At this time, only one drug manufacturer is participating. The details of the deal and website launch remain largely confidential at this point. Prior to the deal’s announcement, President Trump had discussed enacting a 100% tariff on certain pharmaceuticals starting October 2, 2025, but he delayed implementation to continue pursuing discussions with manufacturers on discounting pricing and making investments in the United States. We also await the release of the administration’s Global Benchmark for Efficient Drug Pricing (GLOBE) Model and Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model (CMS-5546), which may give more insight into the administration’s implementation of drug pricing initiatives.
The day before the deal announcement, Senate Health, Education, Labor, and Pensions Committee Ranking Member Sanders (I-VT) released a report criticizing the president’s approach to lowering drug prices. The report states that since President Trump took office, the prices of 688 drugs have increased by a median of 5.5%.
President Trump signs EO on pediatric cancer research. The EO directs the Make America Healthy Again Commission, HHS, the assistant to the president for science and technology, and the special advisor for artificial intelligence (AI) and crypto to develop innovative ways to use technologies such as AI to improve pediatric cancer diagnoses, treatments, cures, and prevention strategies. The EO states that the work will align with the recent “AI Action Plan” and will initially prioritize:
The same day the EO was signed, HHS announced that it would increase funding for the Childhood Cancer Data Initiative from $50 million to $100 million. The initiative was established in the first Trump administration and aims to collect and analyze data on childhood cancer.
CMS releases Medicare Drug Price Negotiation Program final guidance. Key provisions in the newly released guidance for the third cycle of negotiations include the following:
CMS will begin its third cycle of drug price negotiations in 2026, with the resulting maximum fair prices taking effect on January 1, 2028. CMS plans to announce 15 additional drugs covered under Part D and/or payable under Part B for potential negotiation by February 1, 2026, plus any additional drugs selected for the first cycle of renegotiation.
CMS issues guidance on Medicaid managed care coverage for immigrants. The state Medicaid director letter announces a change in how CMS interprets Medicaid managed care organization payments for services necessary for treatment of an emergency medical condition for “aliens ineligible for full Medicaid benefits.” Under this guidance, states may not contract with managed care organizations to provide such services to aliens ineligible for full Medicaid benefits. Under the updated interpretation, states have two options for providing the care:
CMS generally does not expect to take enforcement action with respect to implementation of this guidance before the start of the first rating period beginning at least one year following the date of publication (e.g., January 1, 2027, for states that have a rating period that operates on the calendar year).
The Senate is expected to be in session next week, presumably working toward an agreement to end the shutdown, while the House announced it intends to remain in recess through October 13. The Senate will hold the following health-related hearings:
