Top News
CMS Releases Medicare Advantage and Part D Final Rule
On April 2nd, the Centers for Medicare and Medicaid Services (CMS) released the Contract Year (CY) 2027 Medicare Advantage and Part D Final Rule. In February, the Public Sector HealthCare Roundtable (Roundtable) submitted comments on the proposed rule urging CMS to consider the needs of public sector purchasers offering Medicare Advantage (MA) Employer Group Waiver Plans (EGWPs). The Roundtable’s comment letter is available here.
Further, CMS agreed with the Roundtable’s request for transparent risk adjustment policies. The Roundtable advocated for consistent, predictable payment policies; however, CMS moved forward with significant updates to the Star Ratings calculations, recognizing the payment instability it would cause. Additionally, many of the Roundtable’s recommendations to CMS were deferred to future rulemaking. These recommendations include:
- Assessing growth rate methodology updates to identify and protect against unintended consequences
- Ensuring CMS Innovation Center model payment methodologies are transparent, accurate, and reflective of true cost and utilization trends
- Adopting phased implementation of significant risk adjustment and quality measurement changes while providing plans with advance notice to appropriately plan
- Aligning MA and Part D policy and bidding timelines with EGWP and state procurement cycles
As always, the Roundtable encouraged CMS to engage with public sector purchasers and EGWP sponsors and will continue to elevate the unique needs of public sector purchasers.
Roundtable Submits Testimony to House Energy and Commerce Subcommittee on Health on Affordability
The Public Sector HealthCare Roundtable submitted testimony to the House Energy and Commerce Subcommittee on Health’s hearing on Lowering Health Care Costs for All Americans: an Examination of the U.S. Provider Landscape. The Roundtable expressed its support for initiatives that constrain health care cost growth and improve affordability for public sector purchasers, beneficiaries, and taxpayers. The Roundtable called for the Committee to address provider consolidation and price opacity to reduce the cost of provider services. Specifically, the Roundtable urged the Committee to strengthen oversight of provider consolidation and promote competition in local health care markets, advance site-neutral payment reforms to disincentivize consolidation, encourage independent physician practices to preserve provider diversity, and support stronger enforcement of price transparency requirements. This testimony represents the Roundtable’s continued commitment to advocate for public sector purchasers, employees, retirees, and state and local taxpayers in Congress. The testimony can be viewed here.
Health Affairs Data Shows IDR Costs and Volume Surging in the First Half of 2025
Researchers published in Health Affairs found that the volume of cases submitted to the Independent Dispute Resolution (IDR) process continue to exceed all expectations. Authorized under the No Surprises Act, the IDR process established a mechanism for providers and payers to resolve disputes over out-of-network rates beginning in April of 2022. Researchers found that 1.2 million new disputes were filed in the IDR portal in the first half of 2025, more than double the volume submitted in the first half of 2024. This follows the trend of unprecedented growth in the number of new filings, rising well beyond federal officials’ expectations of 17,000 disputes per year. Most notably, private equity-based providers and facilities initiated 99.9% of disputes, winning on average 88% of disputes. In response to these trends, plans have increasingly begun suing providers who they allege are weaponizing the IDR process by flooding the portal with claims that are ineligible for IDR to overwhelm the system, obtain default awards, and maximize reimbursement. The Coalition Against Surprise Medical Billing developed a series of No Surprises Act factsheets including one on the misuse of the IDR process and policies to address the problem.
Administrative Action
Insurer and Employer Groups Commend Trump Administration on Plans to Issue New Proposed Rule on Mental Health Parity
According to recent reporting, insurers and employer groups applauded the Trump Administration in response to recent court filings indicating the White House plans to issue a new proposed rule on the Mental Health Parity and Addiction Equity Act (MHPAEA). Insurers managing behavioral health benefits have argued that an informed approach to parity implementation that is workable and achieves the true goals of the statute is vital and does not increase administrative burden. Relevant federal agencies are expected to release a new proposal by the end of 2026. Some concerns from the industry centered on requirements related to non-quantitative treatment limitations, such as prior authorization and network adequacy standards, which insurers argue could drive up compliance costs and unintentionally reduce coverage offerings. Industry groups are also urging states to pause independent parity efforts to avoid a fragmented regulatory landscape while federal policy is in flux.
President Trump Signs Executive Order Placing Tariffs on Patented Drugs
On April 2, 2026, President Donald Trump signed an Executive Order Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients into the United States to address national security risks associated with U.S. reliance on foreign pharmaceutical supply chains. The Executive Order places a 100% tariff on imported patented pharmaceutical products, with multiple exemptions. Generic and biosimilar manufacturers are exempted from the tariffs alongside Most Favored Nation (MFN) participants. On the other hand, pharmaceutical companies with verified onshoring plans will be subject to a 20% tariff. The tariff will apply to 17 of the largest brand-name manufacturers’ products intended for consumption on or after July 31, 2026, and all remaining manufacturers will be subject to the tariffs beginning September 29, 2026.
The policy is expected to harm small- and mid-size manufacturers most because they do not have the same capabilities to negotiate with the Trump Administration for participation in the MFN initiative or do they have the reserves to move production to the U.S. The Executive Order follows a Department of Commerce investigation into imports of pharmaceutical drugs, active ingredients, and related inputs. President Trump attempted to establish international tariffs earlier in his second term; however, the Supreme Court ruled the tariffs were illegal under the law he cited. President Trump’s most recent wave of tariffs generally follows the same pattern of the first wave, but they use a different law as justification.
CMS Releases 2026 ACA Open Enrollment Period Report
Late last week, the Centers for Medicare and Medicaid Services (CMS) released the Health Insurance Exchanges 2026 Open Enrollment Report and public use files (PUFs). During the 2026 Open Enrollment Period (OEP), 23.1 million consumers selected or were automatically re-enrolled in health insurance coverage through the HealthCare.gov platform and State-based Exchanges (SBEs). The 2026 OEP saw approximately 1.2 million fewer enrollees than in 2025, a 5% decline. This drop in enrollment was largely driven by enforcement actions that removed nearly 1.5 million people found to be ineligible for the enhanced advanced premium tax credit (eAPTC). Despite the year-over-year dip from 2025, enrollment remains substantially higher than in prior years, with 6.8 million more sign-ups than the 2023 OEP.
CMS’ report analyzed enrollment by key demographic characteristics. Rural consumers saw disproportionately larger declines in enrollment compared to non-rural areas, and lower-income enrollees (those between 100–150% of the federal poverty level) continued to make up a growing share of plan selections, rising from 32% in 2021 to 46% in 2026. It is still unclear how much of the reduction in enrollments reflects individuals who obtained other insurance as opposed to those who are now uninsured; however, the Centers for Disease Control and Prevention (CDC) National Center for Health Statistics is expected to release data on the calendar year 2026 uninsured population in early 2027.
President’s FY 2027 Budget Proposes Significant Restructuring and Reductions at HHS
On Friday, the Administration released the President’s Fiscal Year (FY) 2027 Budget, outlining its policy and funding priorities for the coming fiscal year. The President’s budget is a proposal and messaging document but does not carry the force of law. Ultimately, Congress determines funding levels and programmatic changes through the appropriations process and may elect to follow or ignore the administration’s proposals.
In the FY 2027 budget, the Administration proposes a major restructuring of the U.S. Department of Health and Human Services (HHS), requesting $111.1 billion in discretionary funding, which is a $15.8 billion or 12.5 percent decrease from FY 2026 levels. The proposal is anchored in the Make America Healthy Again (MAHA) agenda, which emphasizes nutrition, chronic disease prevention, and food and drug safety. Central to the MAHA agenda is the creation of a new Administration for a Healthy America (AHA), which would consolidate multiple existing HHS agencies and programs to streamline operations and refocus federal health investments in preventative health, telehealth, and food safety. In FY 2026, the President’s budget also proposed creating AHA; however, Congress did not authorize or fund the restructuring.
The budget also prioritizes public health prevention and modernization initiatives including expanded access to nutrition services at community health centers, new investments in food safety and chemical oversight, and support for artificial intelligence (AI) applications at the Food and Drug Administration (FDA). Additional funding targets include antimicrobial resistance, environmental health risks, and chronic care management programs through the Centers for Disease Control and Prevention (CDC). Additionally, the budget focuses on addressing substance use and mental health challenges, prioritizing enforcement of illicit drug supply chains, particularly fentanyl, through coordination with the Drug Enforcement Administration (DEA). At the program level, the proposal would refocus activities previously housed within the Substance Abuse and Mental Health Services Administration (SAMHSA) by eliminating smaller or duplicative programs and consolidating funding into broader block grant structures to improve efficiency and national impact.
At the same time, the budget proposes substantial program eliminations and reductions that would significantly reshape the National Institutes of Health (NIH). The proposed reductions reflect a $5 billion cut, bringing total NIH funding to approximately $41 billion and signaling a significant shift in federal biomedical research priorities. The budget proposes eliminating several NIH institutes and centers including the National Institute on Minority Health and Health Disparities, the Fogarty International Center, and the National Center for Complementary and Integrative Health. These changes are framed as efforts to eliminate duplicative or non-core research activities and redirect resources toward higher-priority scientific investments. Additional cuts target emergency preparedness programs and behavioral health funding streams, which would be consolidated into the proposed block grant structure. Similar to AHA, the FY 2026 President’s Budget also proposed to significantly reduce NIH grant funding, which was outright rejected by Congress.
Although the federal government is still not fully funded for FY 2026 due to partisan disagreements on Department of Homeland Security funding, reporting indicates that Congress has begun negotiations for FY 2027 appropriations.
