Federal Legislation

One Big Beautiful Bill Act: Senate Outlook

• On May 22, 2025, the U.S. House of Representatives passed the One Big Beautiful Bill Act (OBBBA) by a vote of 215 to 214. The bill, over 1,000 pages long, aims to reshape U.S. health policy dramatically. The bill now moves to the Senate. While the Congressional Budget Office has not yet fully scored the financial impacts of the final version, OBBBA includes at least $698B in reductions to Medicaid and $267B in reductions to SNAP spending over ten years, shifting an estimated $78B in Medicaid and SNAP costs to states. The bill passed the House by a single vote and faces a tough road in the Senate. Several Republican Senators oppose the bill’s $698B Medicaid cuts and limits on provider taxes that fund state programs. Senate Democrats plan to use reconciliation rules to challenge policy provisions and highlight that the bill cuts healthcare to fund tax breaks for the wealthy. The upcoming Senate debate is expected to bring significant changes to OBBBA, where it will be refined before ultimately needing to go back to the House for a final vote (Health Affairs, May 23; Modern Healthcare, May 22).

Sellers Dorsey experts have compiled a detailed summary of the Medicaid-related provisions in the OBBBA which you can find here.

One Big Beautiful Bill Act: Expansions to ICHRA, DPC, and HSA Usage

• Also included within the reconciliation bill are provisions aimed at increasing the usage of Individual Coverage Health Reimbursement Arrangements (ICHRAs), Health Savings Accounts (HSAs), and Direct Primary Care (DPC) arrangements. If the bill is enacted as written, DPCs would transition away from being considered a health plan and instead be seen as a supplementary product, based on which individuals are eligible to utilize their HSA benefits on DPCs. Additional updates to HSAs include increased contribution limits, and expanding usage to gym memberships. ICHRAs will be subsequently rebranded as Custom Health Option and Individual Care Expense (CHOICE) arrangements, through which employers at small and midsized companies can provide their employees with tax-free stipends that can be used to purchase health coverage on the individual marketplace. The bill would also incentivize CHOICE usage, as employers may be eligible to receive up to $1.2K in tax credits per employee in the first year and up to $600 per employee in the second year (Fierce Healthcare, May 21; Health Payer Specialist, May 23).

FDA Proposes Slimmer FY2026 Budget

• FDA Commissioner Marty Makary proposed a $6.8B budget for FY2026, aiming to maintain user fee programs while increasing agency efficiency, despite an 11.5% reduction in budget authority. Lawmakers raised concerns over approval delays for rare drugs due to staff cuts and criticized the absence of a detailed funding breakdown from the agency’s budget. Makary highlighted the FDA’s progress such as unannounced foreign inspections, seizure of illegal e-cigarettes, and an $8.2M increase in medical device spending to meet user fee requirements. He also emphasized investments tied to the MAHA agenda, including food safety, nutrition, and infant formula oversight. Makary defended the agency’s direction, pointing to AI integration and strengthened enforcement. Still, several Senators warned that recent decisions, such as delayed drug approvals and a lack of transparency in the agency’s budget plans and decision-making process could undermine the FDA’s core mission (Inside Health Policy, May 23).

Senators Reintroduce Bipartisan Medicare Advantage Prior Authorization Bill

• Senators Roger Marshall and Mark Warner reintroduced the Improving Seniors’ Timely Access to Care Act, a bipartisan bill that would streamline Medicare Advantage’s prior authorization processes with the goal of reducing providers’ administrative burdens and speeding up patients’ access to care. According to Senator Marshall’s press release, the bill would codify and expand on the Advancing Interoperability and Improving Prior Authorization Process (e-PA) rule that was finalized by CMS on January 17, 2024. The Act would establish a standardized electronic process for prior authorization, require increased transparency around MA prior authorization requirements and use, clarify the authority of HHS to establish timeframes for e-PA requests, require HHS and other agencies to submit reports to Congress detailing program integrity efforts, and expand MA enrollee protections. The bill is supported by many industry organizations and payers, including Humana, the American Medical Association, and the American Hospital Association (Fierce Healthcare, May 21; Senator Marshall Press Release, May 20).

Federal Regulation/Guidance

CMS, DoL, HHS, and the Treasury Release RFIs and Guidance Surrounding Transparency in Healthcare

• In alignment with the Trump Administration’s EO 14221, federal agencies have taken preliminary steps to strengthen transparency in coverage and hospital prices.

On May 22, the Departments of Labor, Health and Human Services, and Treasury jointly filed a Request for Information (RFI) for input regarding prescription drug price transparency. The Departments also jointly released guidance informing health plans of the agencies’ plans to develop an updated technical implementation guidance for machine-readable files (MRFs), schema version 2.0. Plans will have until February 2, 2026, to transition to this new system.

On May 22, CMS released updated hospital price transparency guidance. Hospitals will be required to encode MRFs with payer-specific standard charged methodologies, including items like gross charges, cash prices and minimum negotiated charges, and subsequent updates to the calculation of “estimated allowed amounts.” Along with the guidance, the agency has submitted an RFI, asking the public for their feedback on both challenges and tactics to improve hospital compliance with reporting to increase transparency and accuracy in pricing data. The public comment period will end on July 21 at 11:59pm ET (CMS, May 22; Modern Healthcare, May 22; American Hospital Association, May 22).

CMS Issues Notice to States on Increased Financial Oversight

• On May 27, 2025, CMS announced increased federal oversight to prevent states from using federal Medicaid dollars to cover healthcare for undocumented immigrants beyond emergency services, which violates federal law. In a letter to state Medicaid directors, CMS outlined plans to increase audits of state Medicaid spending, eligibility systems, and financial controls, with recoupment of funds if misuse is found. This action aligns with President Trump’s February 2025 executive order “Ending Taxpayer Subsidization of Open Borders.” (CMS, May 27).

CMS Issues SHO Letter Regarding T-MSIS Data Quality Compliance Efforts

• On May 28, CMS released a State Health Official Letter (SHO #25-002), “Transformed-Medicaid Statistical Information System (T-MSIS) Data Quality Compliance.” The agency aims to accelerate the improvement of T-MSIS data quality and expand its programmatic and analytical use. The SHO letter discusses the resumption of Data Quality (DQ)-related compliance actions starting in September 2025; mandated compliance with updated data submission formats in September 2026; and the support and tools that CMS has made available to states. Beginning September 1, 2025, if a state’s DQ assessment does not meet quality targets for two consecutive monthly reporting periods, the state will be notified by CMS of the potential for compliance actions. If the state continues not to meet reporting requirements after two additional consecutive months, CMS will initiate the MES Compliance and Reapproval Process. The next version of the T-MSIS file layout is expected to be released in the near future. After publication by CMS, states will be required to utilize this next version by September 30, 2026. The agency encourages states to adopt the new format by September 2025 to allow time to address any issues that may arise from transitioning to a newer file. Finally, CMS lists a number of ways that states can be supported in their data quality efforts including T-MSIS Operations Dashboards, one-on-one technical assistance, national webinars, and other tools (Medicaid.gov, May 28).

Federal Reports

MAHA Commission Releases First Report on Childhood Health

• On May 22, the Presidential Commission to Make America Healthy Again (MAHA) released its report on childhood chronic disease, per the President’s executive order in February. The “Make Our Children Healthy Again Assessment” report details potential drivers of childhood chronic disease in America: improper diets, environmental toxins, reduced physical activity levels, high chronic stress levels, and increased use of pharmaceuticals. Notably, this section also includes information on childhood vaccines and argues that the vaccine schedule has grown rapidly without sufficient guardrails or nuanced debate. The assessment calls for the National Institutes of Health, the Food and Drug Administration, and the Centers for Medicare and Medicaid Services to close research gaps in children’s health; bolster pediatric drug safety monitoring; utilize artificial intelligence to provide real-time surveillance; invest in alternative testing models; and expand data initiatives, like the NIH-CMS autism data initiative, to study childhood chronic diseases. The MAHA Commission will now work to create the Make Our Children Healthy Again Strategy based on the report’s findings, with publication due in less than 80 days. Following the report’s release, RFK Jr. released a statement on May 27 that the CDC will no longer recommend the COVID-19 vaccine for “healthy” children and pregnant women (The White House, May 22; Politico, May 27).