Senate Passes Budget Reconciliation Bill, 51-50

• The Senate passed its version of the budget reconciliation bill on July 1 with a tie-breaking vote from Vice President Vance. The lawmakers worked over the previous weekend to revise provisions that were advised against by the Parliamentarian. The bill was then voted to advance on Saturday, June 28 with amendments being proposed on Monday, June 30 which lasted over 24 hours.  The Senate’s final version retains provisions that will reduce the federal share of Medicaid financing by limiting provider assessments and state-directed payments as detailed previously, though it adds back more flexible language on taxes that have been submitted prior to the bill’s enactment date (which may be July 4).The final version of the bill also doubles the Rural Health Transformation Program funding to $50B, with applications due by the end of 2025. Other Medicaid policies did not pass, like the FMAP penalty for states that offered healthcare coverage to undocumented immigrants, delaying DSH cuts, and PBM reforms. The Senate expanded eligibility for home-and community-based 1915(c) waivers to include those who do not meet the “institutional level of care” qualification. The FMAP penalty for states that elected to cover undocumented immigrants with state funds did not pass and was not finalized. The bill now moves back to the House for a final vote ahead of President Trump’s July 4 deadline for the GOP (Inside Health Policy, June 28; The Hill, June 28; The Hill, June 30).

Supreme Court Upholds ACA’s Preventive Services Mandate

• On Friday, June 27, the Supreme Court ruled in a 6-3 decision to uphold the United States Preventive Services Task Force’s (USPSTF) authority to determine which preventive healthcare services or prescriptions must be covered by insurance companies at no cost to patients. Within the Department of Health and Human Services, the USPSTF is made up of 16 experts in the field of prevention and primary care, including family medicine, geriatrics, and obstetrics, who are appointed to four-year terms by the HHS Secretary. The plaintiffs in the Kennedy v. Braidwood Management case alleged that the task force members should be considered “principal officers” subject to appointment by the President and approval of the Senate, and that the members’ status as “inferior officers” was unconstitutional and rendered their recommendations unenforceable. The plaintiffs also made claims that the preventive service mandate violated their religious beliefs, largely based on the USPSTF’s requirement to cover pre-exposure prophylaxis treatment (PrEP) which can prevent the transmission of HIV (The New York Times, June 27). 

CMS Launches New Innovation Center Model Aimed at Reducing Original Medicare Waste

• On June 27, the Centers for Medicare Medicaid Services (CMS) announced the Wasteful and Inappropriate Service Reduction (WISeR) Model to test approaches to enhance prior authorization processes and decrease healthcare spending within Traditional Medicare using AI. The model looks to incorporate enhanced technologies such as AI to both expedite the current prior authorization system and identify low-value services that offer minimal benefit to patients, such as skin and tissue substitutes and electrical nerve stimulator implants. The Medicare Payment Advisory Committee estimated that in 2022, $5.8B in Medicare spending was for minimal benefit services. Services that could put patients at risk if delayed, such as inpatient-only and emergency services, are explicitly excluded from the AI model. CMS notes that while AI will assist in streamlining decisions, all final determinations will be made by licensed clinicians. The model is expected to run for six performance years, from January 1, 2026, to December 31, 2031. CMS has issued a Request for Applications (RFA) until July 25 to enhanced technology companies that are interested in participating in the WISeR model (CMS, June 27). 

The Joint Commission Releases New Accreditation 360 Program for Healthcare Organizations

• The Joint Commission announced its “Accreditation 360: The New Standard” program on June 30. The accreditation program is intended to reduce administrative burden, improve health outcome measures, and efficiently share best practices.  The Accreditation 360 program will introduce a simplified accreditation process, streamline patient safety practices, create certifications focused on outcome metrics, and produce the Survey Analysis for Evaluating Strengths (SAFEST) program to bolster the dissemination of best practices in hospitals. The SAFEST Program and patient safety practices will begin on January 1, 2026, with more information available through their website (The Joint Commission, June 30).   

Several States Begin Work Requirement Processes, Ahead of Bill Approval

• As legislators gear up to pass the budget reconciliation bill, which mandates the implementation of work requirements as a condition of Medicaid coverage, many states have already begun the process of implementing Medicaid work requirements through 1115 waivers. In the current landscape, one state has been approved by CMS, four are pending at CMS, three have released proposals for public comment, and six have begun state-level legislative conversations. 

On the federal level:

• Georgia’s “Pathways to Coverage” waiver is set to expire in September 2025, and they look to renew the waiver.  

• Arizona (AHCCCS), Arkansas (ARHOME), and Iowa (Iowa Health and Wellness Plan) are looking to add an amendment to their work requirement 1115 waivers. 

• Ohio is proposing a new 1115 waiver.  

On the state level:

• Idaho, Indiana, and Kentucky have currently adopted legislation and are seeking federal approval for implementation.  

• Missouri is seeing ongoing legislative activity with a possibility of the measure appearing on next year’s election ballot.  

• Montana and North Carolina have the policy included in authorizing legislation. 

• New Hampshire’s legislation effort is currently stalled, with a recent House committee vote holding the bill. 

Exemptions, hour requirements, and consequences for non-compliance vary a bit from state to state and are subject to change once federal legislation is put into place (KFF, June 23). 

CMS Releases Proposed Rule Aimed at Remediating the Home Health Payment System

On June 30, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule to update Medicare payment policies and rates for home health agencies (HHAs). The agency aims to cut home health reimbursements by 6.4% or $1.14B in CY2026. Some key items in the proposed rule include: 

• Modifies the Face-To-Encounter Policy by expanding the regulation to allow physicians, nurse practitioners (NPs), clinical nurse specialists (CNSs), and physician assistants (PAs) as allowable professionals. 

• Restructures the former Patient-Driven Groupings Model (PDGM) system. Specifically, the agency intends to recalculate case-mix weights for all 432 payment groups, update low utilization payment adjustment (LUPA) thresholds, and adjust functional impairment levels and comorbidity subgroups using CY2024 data. 

• Expands the Home Health Value-Based Purchasing (HHVBP) Model to improve performance-based payments. 

• Proposes an additional permanent adjustment of -4.059% for the 30-day base payment rate and a temporary 5.0% reduction to the CY2026 national standardized payment rate. 

• Enforces a final submission deadline for all-payer OASIS data from 4.5 months to 45 days.  

(Inside Health Policy, June 30; CMS, June 30)