Harvard Lab Publishes Analysis Showing H.R.1 Hospital Cuts Likely to Cause Closures, Financial Strain, Reduced Access

On November 17, Harvard’s Healthcare Quality and Outcomes (HQO) Lab published a deep dive into H.R. 1 and its potential impacts on hospitals, finding that there is a serious risk of adverse effects on hospitals, particularly for urban providers. The researchers estimate that the Rural Health Transformation Fund (RHTF) will be insufficient to supplement the hospitals serving vulnerable populations, making up less than 40% of the estimated loss of federal funding. The HQO’s analysis findings suggest that urban safety-net hospitals may be at higher risk than other hospital types to challenges brought on by H.R. 1. Across their analysis, the researchers found that there was a higher percentage of safety net/critical access hospitals that were financially distressed and had a high proportion of Medicaid patients in urban areas (85%) compared to rural areas (15%). Financial stress on hospitals compounded by uncompensated care may cause closures or private equity acquisitions. These types of buyouts have been associated with negative effects on the quality of care and increased adverse events. To keep hospitals operational, the HQO Lab advocates for policy to financially support safety-net hospitals to counter DSH payment cuts, increased uncompensated care, and possible eliminations of critical clinical care services (Harvard, November 17).

White House Expected to Release Plan on ACA Subsidies

Following congressional hearings on November 19 where lawmakers debated the future of Affordable Care Act enhanced premium tax credits, with Republicans promoting Health Savings Accounts (HSAs) as an alternative and Democrats calling for an extension, the White House is preparing to release its own health policy framework. According to reports, the administration plans to propose a two-year extension of the ACA premium subsidies that are set to expire at the end of next month along with new eligibility limits that include an income cap up to 700% of the federal poverty level and a new minimum premium payment requirement. The proposal is also expected to call for congressional appropriations for cost-sharing reductions and to offer an option for enrollees to receive part of their tax credit in a tax-advantaged savings account if they switch to a lower-premium plan. Although the White House has not confirmed these details, the developing framework reflects growing pressure to address anticipated premium increases and continued divisions among Republicans, some of whom want the subsidies to expire while others support a temporary extension. Democrats have urged Republican lawmakers to negotiate but have not indicated whether they would accept additional restrictions tied to the extension (POLITICO, November 23; Inside Health Policy, November 19).

Congress Revives Bipartisan Push to Reform Pharmacy Benefit Managers

Congress is revisiting a bipartisan effort to reform pharmacy benefit managers (PBMs), with Senators Mike Crapo and Ron Wyden planning to reintroduce a bill that nearly passed last year before being pulled after criticism from Elon Musk. The proposal would change how PBMs are compensated in Medicare Part D, require full rebate pass-through to plans, ban spread pricing in Medicaid, and increase transparency around drug spending. Supporters say these changes could better align incentives in the drug supply chain, though the impact on patient costs is uncertain. Lawmakers may try to attach the package to upcoming funding legislation, while debate continues over how to address rising Affordable Care Act marketplace premiums (Health Care Dive, November 20).

KFF Releases 2025-2026 Annual Medicaid Budget Survey

On November 13, 2025, KFF released its Annual Medicaid Budget Survey for state fiscal years (FY) 2025 and 2026, detailing current Medicaid policies and planned changes across states. The survey shows that most states implemented or planned fee-for-service provider rate increases, although fewer increases were reported for certain provider types such as behavioral health compared to previous years. States reported significantly more benefit enhancements than reductions, with the most common additions involving mental health and substance use disorder services, pregnancy and postpartum care, and health-related social needs. Many managed care states have sought or expect to seek capitation rate amendments from the Centers for Medicare & Medicaid Services to address unanticipated shifts in enrollee acuity or service utilization, and several reported that their managed care organizations use artificial intelligence in prior authorization processes. Prescription drug spending continues to create financial pressures, prompting states to adopt various cost-containment efforts, expand carve-outs for high-cost specialty drugs, and reduce interest in expanding coverage for obesity medications. The survey also notes states’ ongoing reliance on provider taxes, including new or increased taxes planned for FY2026, and highlights that many states are assessing potential impacts of H.R.1 on these financing mechanisms. Overall, the report illustrates that states are pursuing benefit expansions and payment adjustments while navigating rising Medicaid expenditures and shifting policy requirements (KFF, November 13).

NASBO Releases Fall 2025 Fiscal Survey of States

The National Association of State Budget Officers (NASBO) released its Fall 2025 Fiscal Survey of States. The survey includes data from all 50 states, the District of Columbia, and U.S. territories. FY2025 saw increased spending over what states originally projected for 24 states due to mid-year budget actions from the executive branch or state legislature. At the end of FY2025, general fund revenue collections were above estimates for 34 states. When compared to the first few months of general fund revenue collections in FY2026, states seem to be more varied, with some exceeding estimates while others coming in below estimated collections. However, NASBO collected the data early in FY2026 and many states did not have sufficient revenue collection data to report. FY2026 is expected to have slower general fund revenue growth, cooling after previous fiscal years’ record growth. Likewise, states expect to have lower general fund ending balances in FY2026, but projected ending balances are still higher than pre-COVID figures. FY2026 enacted budgets also had a slight increased usage of budget management tools, like targeted reductions, eliminating vacant positions, or hiring freezes. Additionally, NASBO noted that there were fewer state employee pay increases in FY2026, only 25 across-the-board increases compared to 39 in FY2025. Finally, many states increased their rainy day funds in FY2025 and expect to do the same in FY2026 (NASBO, November 20).

CMS Finalizes ESRD PPS Rule for 2026

On November 20, CMS issued the CY2026 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Final Rule (CMS-1830-F), impacting the payment rates and policies for services provided to Medicare beneficiaries in 2026. The final rule was published in the Federal Register on November 24. CMS finalized a 2.20% increase for renal dialysis services, a slight increase from its proposed raise of 1.90%. CMS estimates that hospital-based ESRD facilities will see a total payment increase of 1.50%, with freestanding facilities receiving a 2.20% increase. CMS finalized a new facility-level pay adjustment for Alaska, Hawaii, and the U.S. Pacific Territories that increases the non-labor aspect of the ESRD base payment but is capped at 25%. In payment year 2027, CMS will remove three measures from the ESRD QIP related to health equity and social determinants of health. In payment year 2028, CMS will update the ICH CAHPS clinical measure to address concerns about patient survey burden and declining survey response rates. Finally, the final rule also ends the ESRD Treatment Choices Model ahead of its scheduled December 31, 2025, end date (CMS.gov, November 20; Inside Health Policy, November 20).

CMS Releases Final Rule with New Site-Neutral Payment Policy

On Friday, November 21, CMS released the Calendar Year 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Final Rule (CMS-1834-FC). The final rule is slated to be published in the Federal Register on November 25. The agency finalized the proposal that will pay the physician fee rate for administering Part B drugs regardless of setting, a new site-neutral payment policy. CMS finalized the provision despite strong opposition from stakeholders and estimates that this policy will save $290M in CY2026. In comments, the agency argued that it has the authority to make the change under Section 11833(t)(2)(F) of the Act. The final rule also aims to expand flexibility for providers and patients by phasing out the inpatient only list and expanding the covered procedures list for ambulatory surgical centers. Finally, the rule also establishes new hospital price transparency requirements with the aim of making costs more accurate and comparable (Inside Health Policy, November 21; CMS.gov, November 21).

Harvard Lab Publishes Analysis Showing H.R.1 Hospital Cuts Likely to Cause Closures, Financial Strain, Reduced Access

On November 17, Harvard’s Healthcare Quality and Outcomes (HQO) Lab published a deep dive into H.R. 1 and its potential impacts on hospitals, finding that there is a serious risk of adverse effects on hospitals, particularly for urban providers. The researchers estimate that the Rural Health Transformation Fund (RHTF) will be insufficient to supplement the hospitals serving vulnerable populations, making up less than 40% of the estimated loss of federal funding. The HQO’s analysis findings suggest that urban safety-net hospitals may be at higher risk than other hospital types to challenges brought on by H.R. 1. Across their analysis, the researchers found that there was a higher percentage of safety net/critical access hospitals that were financially distressed and had a high proportion of Medicaid patients in urban areas (85%) compared to rural areas (15%). Financial stress on hospitals compounded by uncompensated care may cause closures or private equity acquisitions. These types of buyouts have been associated with negative effects on the quality of care and increased adverse events. To keep hospitals operational, the HQO Lab advocates for policy to financially support safety-net hospitals to counter DSH payment cuts, increased uncompensated care, and possible eliminations of critical clinical care services (Harvard, November 17).