CMS Administrator Dr. Oz Backs $200B Medicaid Technology Investment Amid Future Cuts

In an interview last weekend, Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz announced a Trump administration plan to invest $200B in Medicaid, aimed at improving efficiency and increasing the return on healthcare spending through technology and policy reforms such as work requirements. While specific funding details were not provided, Dr. Oz discussed pilot programs testing mobile apps to help users report work activity and maintain eligibility. The announcement comes as the administration moves forward with plans to reduce Medicaid funding by $1T over ten years and make changes to Affordable Care Act policies, including the potential nonrenewal of premium subsidies and revisions to tax provisions. Analysts estimate these changes could push around 16 million Americans out of coverage over the next decade by making it harder to qualify for or afford health insurance. Dr. Oz also outlined plans to reduce costs by auditing Medicare Advantage insurers and negotiating drug prices with pharmaceutical companies (Health Payer Specialist, August 4).

Dr. Oz Announces Sept. Date for Rural Health Transformation Fund Applications

During a TV interview on August 3, Dr. Oz announced that states will be able to apply for funding from the Rural Health Transformation Program starting in early September. Applications were initially expected to open for the $50B fund at the end of July. The applications must detail how states, hospitals, and other providers intend to use the money to support rural health. CMS must approve applications by December 31, as detailed in the newly codified OBBBA (Modern Healthcare, August 4).

Senate Subcommittee Advances HHS Budget, Rejecting Many Administration Requests

The U.S. Senate Appropriations Subcommittee on Health and Human Services voted on a bipartisan basis last week to advance an HHS budget for FY2026 totaling $116.6B, a $446M increase over FY2025. The Senate subcommittee version rejects several proposals from the White House and HHS Secretary Robert F. Kennedy, Jr. to reduce programmatic funding. Those proposals include cuts to National Institutes of Health funding, a15% cap on indirect costs, as well as proposed cuts to Centers for Disease Control and Prevention funding. In maintaining the Substance Abuse and Mental Health Services Administration (SAMHSA) as an independent agency, the Senate budget writers rejected Secretary Kennedy’s proposal to consolidate SAMHSA and other agencies to create the Administration for a Healthy America (AHA). A spokesperson for committee chair Susan Collins (R-ME) noted that HHS had not submitted a formal reorganization plan to Congress nor allowed sufficient time for consideration. The budget will now go to the full Senate for consideration and must eventually be reconciled with the version the House passes (Inside Health Policy, July 31; Association of State and Territorial Health Officials, August 1).

CMS Finalizes FY2026 IPPS Rule

CMS has finalized the FY2026 Hospital Inpatient PPS rule that was initially proposed in April, with the final rule published in the Federal Register on August 4. The agency finalized a 2.6% increase for acute care hospitals, up from the proposed 2.4% increase in April. This is expected to add an additional $5B to hospital payments from Medicare, including a $2B increase in uncompensated care payments to disproportionate share hospitals. Long-term care hospitals will receive a 2.7% increase in payments, slightly higher than the 2.6% that was proposed, due to a 3.4% projected market basket increase. Notably, CMS made changes to the Transforming Episode Accountability Model (TEAM) that is set to begin on January 1, 2026. These changes include requiring patient-reported outcomes, improved target pricing, and expanded access to post-acute care. CMS also made revisions to the Hospital Inpatient Quality Reporting Program and the Medicare Promoting Interoperability Program and finalized as proposed. The low wage index hospital category has been discontinued with the final rule. Stakeholders noted their appreciation for the reimbursement increase but remained wary of the significant cuts to Medicaid funding on the horizon that may outweigh the finalized increases (Inside Health Policy, July 31; Becker’s Hospital Review, July 31).

HHS Finalizes HTI-4 Rule to Improve Electronic Prescribing and Prior Authorization

The Department of Health and Human Services (HHS) finalized the Health Data, Technology, and Interoperability: Electronic Prescribing, Real-Time Prescription Benefit, and Electronic Prior Authorization (HTI-4) rule as part of the CMS Inpatient Prospective Payment System to improve health information exchange and reduce administrative burdens in healthcare. Effective October 1, 2025, the rule updates health IT certification requirements by mandating electronic prior authorization, enhancing electronic prescribing standards by requiring use updated NCPDP SCRIPT version 2023011 (an electronic standard for pharmacy data exchange), and introducing real-time prescription benefit tools that help providers and patients compare drug costs at the point of care. These changes aim to improve workflows, increase transparency in clinical decision-making, and save millions of clinician hours annually, estimated to total about $19B in labor cost savings over 10 years. The rule also advances Application Programming Interface (API) functionality, a set of rules that allows different software systems to communicate and share data to support provider-payer data exchange consistent with CMS’s Interoperability and Prior Authorization Final Rule. It also finalizes standards for coverage requirements, documentation templates, and prior authorization status tracking to speed up approvals and reduce paperwork (Fierce Healthcare, August 1).