Health Care Matters | October 17
Breaking News: CMS Directs Contractors to Hold Medicare Claims as Key Payment Provisions Expire
CMS has instructed Medicare Administrative Contractors (MACs) to temporarily hold claims dated October 1, 2025, and later for services affected by expired legislative payment provisions, including those under the Physician Fee Schedule, ground ambulance transport, and FQHCs, pending possible Congressional action. Telehealth flexibilities expanded during the pandemic have also lapsed for most non-behavioral health services, including those furnished in patient homes or outside rural areas, while MSSP ACOs retain authority to provide telehealth without geographic limits. Read more here.
Shutdown Stalemate Disrupts Health Programs and Coverage Planning
The ongoing government shutdown, now stretching into its third week, has halted funding for several CMS programs, including Medicare’s Acute Hospital Care at Home waiver. With no budget deal in sight, hospitals approved under the waiver have been instructed to suspend admissions and transfer existing patients back to inpatient settings. Systems such as UMass Memorial and ChristianaCare have already scaled down their programs, while vendors that provide home-based monitoring and logistics services brace for furloughs. The lapse comes amid rising inpatient volumes and seasonal respiratory illness surges, compounding pressure on hospital capacity. Read more here and here.
Why It Matters
Hospital-at-home programs have proven effective at reducing costs and improving outcomes, but their reliance on temporary congressional extensions has made them collateral damage in the budget standoff. The shutdown has frozen key Medicare flexibilities, exposing how fragile innovative care models remain when tethered to short-term policy renewals.
For hospitals, the lapse means redirecting staff, reabsorbing patients, and losing a critical capacity management tool. For vendors, it raises doubts about the federal innovation pipeline's stability. And for policymakers, it's a reminder: without longer-term authority, promising care models risk being undone by budget impasses rather than performance.
Medicare Star Ratings Stabilize, Forcing Strategic Shifts at Humana
The 2026 Medicare Advantage and Part D Star Ratings show a market returning to equilibrium after several years of volatility. The share of enrollees in 4-Star or higher plans rose only slightly to 64.7%, as performance gains were offset by higher cut points. Behind those stable averages, however, some payers saw meaningful shifts. Humana’s share of members in 4-Star or higher plans dropped to 20% following a failed legal challenge against CMS’s rating methodology, prompting the company to rethink its Medicare Advantage strategy heading into 2026. Read more here, here and here.
Why It Matters
Flat Star Ratings suggest the market is settling after recent turbulence, but the underlying dynamics tell a different story. Insurers like Humana are being forced to rethink their approach to quality improvement and plan design as they navigate tighter margins, higher medical costs, and greater CMS scrutiny. The lesson for other payers is clear: stability in averages masks uneven performance, and carriers will diverge sharply in their response with some spending the next year rebuilding quality programs while others double down on protecting high ratings. For providers and partner organizations, this recalibration will likely reshape contracting patterns, shift bonus structures, and intensify focus on patient experience measures that drive Star Ratings performance.
DSH Cuts Hit Safety-Net Hospitals Amid Shutdown Pressure
On October 1, scheduled reductions to Medicaid Disproportionate Share Hospital (DSH) payments took effect, an $8 billion annual cut intended under existing law. These cuts were previously delayed, but the latest extension expired, making this the first year the reductions land in full. As the government shutdown drags on, hospitals reliant on DSH funds are bracing for deeper financial stress, just as other federal supports (such as hospital-at-home reimbursement) also lapse. Some hospitals serving large Medicaid or uninsured populations already warn of tightening margins, scaled-back services, or increased risk of closure in low-margin service lines. Read here.
Why It Matters
DSH payments have long been a critical lifeline for safety-net hospitals, helping offset uncompensated care and Medicaid shortfalls. The timing of these cuts amid a federal funding standoff compounds vulnerability: as reimbursement disruptions ripple across telehealth and hospital-at-home programs, institutions serving vulnerable communities face a convergence of financial threats. For hospital systems with large Medicaid populations or rural footprints, this means reassessing capital plans, cutting discretionary services, or consolidating to survive.
The cuts also expose how structural reliance on periodic congressional delays leaves safety-net infrastructure vulnerable to political brinkmanship. Providers will need to ramp up advocacy and explore state-level relief in the short term, but durable reform may ultimately require redesigning how safety-net subsidies are anchored so they're insulated from recurring gridlock.
Look for the Helpers: Building Healthier Communities One Meal at a Time
At UC Davis Health, a new “Foodways to Health” initiative is redefining how Food Is Medicine programs can nourish both people and the planet. The program links patients with fresh produce and medically tailored meals while supporting local, climate-friendly agriculture and community engagement. By treating nutrition as both a clinical intervention and a sustainability strategy, UC Davis is showing how health systems can strengthen community resilience and environmental stewardship at the same time. Read more here.
What We Are Reading
Medicaid Expansion Boosted Specialty Treatment Episodes For Substance Use Disorder In Expansion States, 2010–22
A new Health Affairs study found that states that expanded Medicaid under the ACA saw a 28% increase in specialty substance use disorder treatment episodes compared with non-expansion states, along with greater financial protection for patients, underscoring Medicaid’s critical role in expanding access to care amid the ongoing overdose crisis. Read here.
PBGH Launches Data Project Arming Employers with Accurate Pricing Information
A Fierce Healthcare report highlights a new initiative from the Purchaser Business Group on Health (PBGH), which is combining hospital price transparency and Transparency in Coverage data to help employers access more accurate, comprehensive pricing information and better assess fair market rates for care. Read here.
Town Hall Ventures Announces $440 Million Fund IV to Advance AI and Healthcare Innovation for Underserved Communities
Town Hall Ventures is launching its fourth flagship healthcare fund, with a target around $400–440 million, to support AI-driven innovations and care models focused on underserved populations, reinforcing its mission to align private capital with health equity initiatives. Read here.
New Resource
CHCS Transforming Rural Health Care Through Medicaid Innovation
The Center for Health Care Strategies has released a new suite of resources exploring how states can leverage Medicaid to strengthen rural health systems. The series features new tip sheets offering practical strategies to improve access, sustainability, and equity in rural care, including:
Leveraging Community Health Workers to Address Health Care Needs
Leveraging Community Paramedicine to Address Health Care Needs
Deploying Tech-Enabled Solutions to Improve Care Quality and Access
Leveraging Peers and Lay Counselors to Address Behavioral Health Care Workforce Shortages
Using School-Based Services to Improve Access to Preventive Health for Children
Improving Access to Integrated Care for Dually Eligible Individuals
Together, these materials highlight actionable approaches for using Medicaid innovation to build stronger, more resilient rural health systems
Pop Health Podcast
Rural Health Transformation: How States Can Align Stakeholders for Lasting Change
The Rural Health Transformation Program represents a $50 billion investment in the future of rural health care. In this episode, we sit down with Caitlin Westerson, Senior Director for State Policy and Advocacy at United States of Care, to explore what this program means for states, providers, and communities. Together, we unpack the opportunities and challenges in applying for funding, the role of value-based care in building sustainable models, and how states can align stakeholders to create lasting change in rural health systems.