Top News
Centers for Medicare & Medicaid Services Tightens Affordable Care Act Exchange Rules by Targeting Fraud and Cutting Costs
The Centers for Medicare & Medicaid Services (CMS) issued a final rule to strengthen oversight of the Affordable Care Act (ACA) health insurance exchanges. The rule aims to strengthen program integrity, expand consumer protections, promote plan innovation and consumer choice, and restore greater authority to states.
The rule’s central provisions focus on tightening eligibility verification and expanding state oversight of ACA exchange operations. To that end, CMS reinstated pre-enrollment verification for Special Enrollment Periods and will require additional income documentation for certain applicants. The rule also aligns subsidy eligibility with restrictions established under the recently passed Working Families Tax Cut legislation. On plan design, the rule eases federal oversight, giving Qualified Health Plan (QHP) issuers more latitude to offer non-standardized and non-network plans, as well as longer-term catastrophic coverage options, a shift the agency argues will foster competition and broaden consumer choice.
On costs, the rule lowers exchange user fees to 1.9% for Federally-Facilitated Exchanges (FFE) and 1.5% for State-based Exchanges on the federal platform (SBE-FPs), down from 2.5% and 2.0% in 2026, respectively. CMS projects the reductions will ease premium pressure when the 2027 plan year takes effect. The rule also removes the transition period previously required for states moving from an FFE to an SBE-FPs, streamlining the process for states seeking greater autonomy over exchange operations and oversight. Beginning in plan year 2028, states will also have to cover the costs of state-mandated benefits that exceed Essential Health Benefits (EHB) requirements, signaling a broader push by CMS to shift more operational and financial responsibility to states to ensure the long-term sustainability of the ACA marketplace.
CMS Releases State-Directed Payments Proposed Rule
On Wednesday, May 20th, The Centers for Medicare & Medicaid Services (CMS) released the Medicaid Managed Care State Directed Payments (SDP) and Medicaid Fee-For-Service Targeted Medicaid Practitioner Payments Proposed Rule. The One Big Beautiful Bill Act (OBBBA) directed the Health and Human Services (HHS) Secretary to revise regulations capping the total payment rate for certain state directed payments. The law also includes a temporary grandfathering provision that allows some existing SDPs to remain in place under prior terms for a limited period.
The Rule proposes to:
- Extend the payment rate limit under the law to all SDPs for all services in all states, the District of Columbia, and territories for rating periods beginning on or after January 1, 2029.
- Grant a grandfathering period for various SDPs meeting certain criteria.
- Decrease the total dollar amount of a grandfathered SDP by 10 percentage points annually beginning with the first rating period on or after January 1, 2028, until the payment rate limit is reached.
- Permit states to adopt minimum or maximum fee schedules that are no greater than the applicable payment rate limit without CMS prior approval for rating periods beginning on or after January 1, 2028.
- Establish a limit for targeted Medicaid payments equal to 100% of the total published Medicare payment rate for an expansion state, or 110% of the total published Medicare payment rate for a non-expansion state.
Taking the proposals together, the rule aims to strengthen oversight of Medicaid spending by establishing clearer limits on supplemental payments and improving transparency in how federal and state funds are allocated across the program. Comments are due 60 days after the date of publication in the Federal Register.
Administrative Action
TrumpRx adds Generic Drugs to Platform
On Monday, May 18, The White House announced a major expansion of TrumpRx, the administration’s prescription drug discount platform, adding more than 600 generic medications to the site, nearly seven times its previous inventory. The platform, which launched in February with 43 branded drugs, now features two categories of medications: “Presidential Deals” for branded drugs and “Standard Prices” for generics. Administration officials framed the expansion as a step toward making prescription drugs more accessible, with Centers for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz noting that roughly one in three Americans are unable to afford the medications their doctors prescribe. Entrepreneur Mark Cuban appeared alongside President Trump at the rollout to publicly endorse the platform, calling the initiative something that could benefit Americans across party lines. Cuban operates a similar venture called Cost Plus Drugs and has previously voiced support for TrumpRx, stating that anything that saves patients money is a win. Additionally, discounts offered by Amazon Pharmacy, Cost Plus Drugs, and GoodRx will be integrated into TrumpRx.
Health Secretary Robert F. Kennedy, Jr. Fires Two Leaders of U.S. Preventive Services Task Force
Secretary Robert F. Kennedy (RFK) Jr. fired the chair and deputy chair of the U.S. Preventive Services Task Force. The group consists of 16 experts who decide what services are considered preventive care and, therefore, must be fully covered by insurers under the Affordable Care Act (ACA). Secretary Kennedy has clashed with the group in the past when he threatened to replace all members of the task force last year and when he criticized their failure to recommend early screening for Alzheimer’s disease. Other advocacy groups and policymakers have praised the task force and expressed concerns that Kennedy is seeking to shape the membership into one that will endorse his personal views about what constitutes preventive care. These firings came two days before the May 23 deadline for nominations of new task force members.
Healthcare Advisory Committee Meets for the First Time
The Department of Health & Human Services (HHS) held the inaugural public meeting of the Healthcare Advisory Committee (HAC) on Monday, May 18th. The HAC is composed of leaders from across the American health care sector, appointed to advise Secretary Kennedy and CMS Administrator Dr. Oz on ways to improve and modernize the health care system. Unlike traditional federal advisory bodies, the committee is designed to produce ongoing recommendations throughout its two-year term rather than issue a single final report.
The first meeting covered four key areas: introducing the full committee membership, outlining the committee’s charge, adopting its governing bylaws, and defining the scope of six working groups that will carry out the committee’s core work. Those working groups will focus on chronic disease prevention, administrative burden, real-time data, vulnerable populations, Medicare Advantage, and fraud, waste, and abuse. The date of the next working group meeting will be posted to the HAC website.
Congressional Action
Congress Enters Recess Early Without Vote on Reconciliation Package to Fund ICE and Border Patrol
Congress adjourned early for the Memorial Day recess on Thursday, May 21st after the Senate opted to punt a vote on the reconciliation package to fund Immigration and Customs Enforcement (ICE) and Border Patrol funding. The decision to delay the vote on the package mainly stemmed from a move by the Trump Administration to establish a 1.7 billion fund to compensate individuals who the White House says were wrongfully targeted by the Biden-era Department of Justice (DOJ). After a heated closed-door meeting with Attorney General Todd Blanche, GOP Senators announced there would not be a vote – meaning the reconciliation package would not meet the President’s June 1 deadline.
The GOP conference has previously discussed putting forward a third, more broad reconciliation package that would include a variety of Republican legislative priorities – which would have undoubtedly included healthcare provisions focused on combatting fraud and abuse. With the second reconciliation bill now stalled, the likelihood of Republicans being able to successfully push through a third budget framework has diminished significantly. Upon their return to Capitol Hill, lawmakers will have just over seven weeks before the August recess, and only three weeks after that before they adjourn again in October ahead of midterm elections. Recent polling shows that midterm elections will likely lead to a lame-duck session, which is expected to close the door on any opportunity for major healthcare legislation to advance in the remainder of the 119th Congress.
House Committee Advances Bipartisan Bill Targeting Medicare Physician Payment Volatility
On Thursday, May 21st, the House Ways & Means Committee unanimously voted to approve legislation designed to make Medicare physician reimbursement more predictable and reduce payment swings that many lawmakers and provider groups say are contributing to increased consolidation. Starting in 2028, the Provider Reimbursement Stability Act (H.R. 8163) would more than double the threshold to trigger Medicare budget neutrality adjustments while also limiting sudden yearly changes to physician payment rates. It would require the Centers for Medicare & Medicaid Services (CMS) to regularly reassess practice expense data used in reimbursement calculations and establish a process for correcting inaccurate utilization estimates that can affect physician payments.
Supporters of the bill argued the proposal would help independent practices better manage long-term financial planning and reduce pressures pushing physicians toward hospital systems, insurers, or private equity-backed organizations. The committee vote came one day after a House Energy & Commerce Committee hearing on Medicare physician payment reform, where witnesses similarly raised concerns about reimbursement instability and increased conflict created by the current system. The legislation advances amid broader congressional discussions on payment reform, with a larger bipartisan physician payment package reportedly expected to be introduced later this month.
Senate Democrats Seek to Force a Vote on Artificial Intelligence Model in Traditional Medicare
On Wednesday, May 20th, Senate Finance Committee Ranking Member Ron Wyden (D-OR), along with other Senate Democrats, introduced a resolution to invoke the Congressional Review Act to repeal the WISeR model. The WISeR (Wasteful and Inappropriate Service Reduction) Model leverages Artificial Intelligence and Machine Learning to adjudicate prior authorization claims for Medicare patients across six states: Arizona, New Jersey, Oklahoma, Ohio, Texas, and Washington. Reporting has found that patients using the WISeR Model in Washington have been waiting two to four times longer for care due to authorization delays made by the Model. Following a determination last week by the Government Accountability Office that the WISeR model is subject to the Congressional Review Act, a 60-day period has begun during which Democrats can force a vote on the resolution of disapproval to end the WISeR model. A companion resolution was introduced in the House as well.
Senate Finance Committee Democrats Announce Agenda on Long-Term Care
On Wednesday, May 20th, Senate Finance Committee Ranking Member Ron Wyden (D-OR), alongside 16 Senate Democrats, released a comprehensive long-term care reform agenda focused on expanding affordable care access for seniors and people with disabilities. The proposal calls for increased investment in home- and community-based services (HCBS), stronger oversight and staffing standards for nursing homes, and enhanced support for family caregivers and workforce development in the long-term care space. Amid ongoing Republican efforts to roll back and restrict federal healthcare programs, Democrats argue that long-term care investments are increasingly urgent to protect patients.
This is the third initiative announced by Senate Finance Democrats as part of a broader healthcare agenda. In February, Sen. Wyden (D-OR) released a proposal focused on lowering prescription drug costs by expanding Medicare drug pricing reforms and reducing out-of-pocket expenses for patients. The following month, in March, the committee unveiled a second framework centered on insurance coverage reforms and lowering healthcare costs. Together, the three initiatives outline Senate Finance Democrats’ broader policy priorities related to healthcare affordability, coverage expansion, and care access. In the coming weeks, more information will be released regarding office hours, which will be held in June and July, for community and stakeholder engagement with Senate Finance Democrats as they develop their plan.
Judicial Action
Supreme Court Declines to Hear Appeal of Pharmaceutical Manufacturers, Allows Medicare Drug Price Negotiations to Continue
The Supreme Court declined to hear appeals from several major pharmaceutical manufacturers, including AstraZeneca, Johnson & Johnson, Bristol Myers Squibb, Novo Nordisk, Boehringer Ingelheim, and Novartis, effectively allowing the Medicare Drug Price Negotiation Program established under the Inflation Reduction Act of 2022 to move forward. The decision leaves intact the lower court rulings that upheld the program, which permits CMS to negotiate prices for high-cost Medicare drugs lacking generic or biosimilar competition. Supporters argue the policy is already generating substantial federal savings and lowering out-of-pocket costs for Medicare beneficiaries, with additional negotiated prices, including for GLP-1 medications, scheduled to take effect in coming years. Pharmaceutical manufacturers and industry groups, including Pharmaceutical Research and Manufacturers of America (PhRMA), continue to argue the policy functions as government price setting that could contribute to higher premiums, increased utilization management, and reduced coverage flexibility within Medicare Part D plans.
Industry Updates
New Workgroup Focused on AI Regulation in Clinical Practice Launched by Federation of State Medical Boards (FSMB)
On Tuesday, May 19th, the Federation of State Medical Boards (FSMB) announced the creation of a new workgroup that will support state medical boards with the integration of artificial intelligence (AI) into patient care and help develop regulatory guidance on uses of AI in medical practice, specifically agentic or autonomous tools. The initiative reflects increasing concern among medical regulators that current oversight frameworks may not be sufficient to address rapidly evolving healthcare technologies.
The workgroup will assess the existing regulatory landscape surrounding AI-enabled care delivery and identify gaps related to physician accountability, informed consent, disclosure of AI involvement in care, documentation standards, practitioner oversight, and compliance with standards of care. FSMB emphasized that while innovation in healthcare technology remains important, clear accountability structures will be necessary to ensure patient safety as AI systems become more integrated into clinical practice. The announcement builds on FSMB’s 2024 guidance regarding the ethical integration of AI into healthcare and is expected to shape future recommendations for state medical boards as policymakers continue debating how best to regulate AI in clinical settings. Additional details regarding the workgroup’s timeline and membership are expected in the coming months.
Save the Date: 2026 Annual Conference
HealthCare Roundtable 22nd Annual Conference
November 4-6, 2026
The Mayflower Hotel
Washington, D.C.
