Health Care Matters | September 26
ACA Tax Credits Central to Government Shutdown Negotiations
President Trump abruptly canceled a planned Thursday meeting with Democratic congressional leaders Chuck Schumer and Hakeem Jeffries after they had secured the meeting to negotiate a government funding deal, significantly increasing the likelihood of a government shutdown on October 1st. With the House having passed a stopgap funding bill through November 21st but the Senate lacking the 60 votes needed to advance it, and both chambers currently in recess until late next week, the standoff has little time left for compromise before the September 30th deadline. Read more here and here.
Why It Matters
This breakdown in negotiations raises the odds of at least a brief government shutdown, as there are now only days left before funding expires and both sides appear entrenched in their positions. The core dispute centers on health care policy, specifically whether to extend enhanced ACA premium tax credits that expire at year-end, which Democrats view as essential but Republicans reject. The most likely scenario is a brief shutdown lasting a few days, followed by intense pressure on both sides to reach a bare-bones deal that extends current funding levels without major policy additions. However, the health care fight over ACA subsidies may force a longer standoff, as Democrats see this as a critical issue they cannot compromise on while Republicans view it as budget-busting spending they won't accept.
Ways and Means Committee Advances Bill to Streamline ACO Quality Reporting Requirements
The House Ways and Means Committee has advanced H.R. 5347, the Health Care Efficiency Through Flexibility Act, a bipartisan bill that aims to streamline quality reporting requirements for ACOs participating in the Medicare Shared Savings Program. The legislation proposes two key reforms: standardizing quality measure collection types (including electronic clinical quality measures and MIPS clinical quality measures) for performance years 2025-2029, and establishing a pilot program from 2028-2032 that would allow selected ACOs to report on just two digital quality measures annually instead of the current comprehensive reporting requirements. The bill also includes protections against penalties for justified data exclusions and mandates technical assistance for participating organizations. Read here.
Why It Matters
The streamlined reporting requirements could encourage more health care organizations to participate in accountable care arrangements by lowering compliance costs and complexity, potentially accelerating the shift toward value-based care. Given the bill's bipartisan support and the Ways and Means Committee's focus on low-cost, high-impact health care legislation, H.R. 5347 has strong prospects for end-of-year consideration, especially if packaged with other Medicare-related measures.
States Are Cutting Medicaid Provider Payments Before Trump Cuts Hit
States across the U.S. are implementing significant cuts to Medicaid provider payments to address budget shortfalls, even before anticipated federal cuts under the Trump administration take effect. North Carolina announced a minimum 3% reduction in pay for all Medicaid providers starting October 1, with primary care doctors facing 8% cuts and specialists seeing 10% reductions, while Idaho implemented across-the-board 4% cuts to address an $80 million budget shortfall. The timing is particularly concerning as these state-level cuts precede an estimated $1 trillion reduction in federal Medicaid spending over the next decade under Trump's tax-and-spending law. Read here.
Why It Matters
These early state cuts expose the political compromise at the heart of the current health care policy landscape. The Rural Health Transformation Program was designed by Senate leadership as a sweetener to secure Republican votes for the OBBBA's broader Medicaid cuts, but the math reveals this political bargain may be inadequate. We can expect rural Republican lawmakers to face increasing pressure as immediate provider cuts and service reductions affect their constituents before any transformation benefits materialize in 2026. Idaho and North Carolina are the first states taking steps to offset the cuts, with Idaho hospitals already reporting cash flow problems and North Carolina facing provider network reductions. As the political coalition that supported this trade-off faces real health care access problems in their districts, other states will likely follow suit with similar preemptive cuts, creating a cascade of provider payment reductions across the country as states scramble to balance their budgets ahead of federal funding decreases, ultimately testing whether the transformation program can deliver on its political promise to rural America.
Look for the Helpers: New Mexico Pioneers Universal Childcare for All Families
New Mexico is launching the nation's first universal childcare and preschool program on November 1, offering free services to all resident families regardless of income, which will save families an average of $13,000 annually in a state where median income is just above $64,000. Governor Michelle Lujan Grisham views the program as an anti-poverty strategy, stating "We're not going to change educational outcomes in the way that we need to if we don't address poverty," as the state aims to improve from its last-place ranking in child well-being. This compassionate innovation demonstrates how dedicated leaders can create transformative change through bold policy solutions, turning oil and gas revenue into meaningful investment in families and children's futures while addressing systemic barriers to opportunity. Read here.
What We Are Digesting
Comments on the CY 2026 Physician Fee Schedule Proposed Rule
Stakeholder responses to CMS's 2026 MPFS proposed rule reveal broad consensus across several key areas, though with significant concerns about implementation details. There was widespread appreciation for the first conversion factor increase in six years, aided by Congressional action, with stakeholders recognizing this as a positive step toward payment stability. There was also widespread opposition to the proposed 2.5% efficiency adjustment, with stakeholders across specialties arguing it lacks empirical foundation, fails to account for safety constraints, and could create compounding downward payment pressure over time. Other areas of strong stakeholder alignment included support for telehealth policy simplifications, particularly removing the distinction between provisional and permanent services on the Medicare Telehealth Services List, and backing CMS's efforts to combat skin substitute fraud through standardized payment rates. Stakeholders also generally endorsed MIPS stability measures, including maintaining the 75-point performance threshold through 2028, while expressing shared concerns about mandatory subgroup reporting requirements and the transition away from traditional MIPS pathways. For more, read the following:
What We Are Reading
Toward Value and Sustainability: Medicare Part B Physician Payment and Related Reforms
The Bipartisan Policy Center's September 2025 report "Toward Value and Sustainability: Medicare Part B Physician Payment and Related Reforms" outlines bipartisan recommendations to modernize Medicare's physician payment system by aligning financial incentives to promote clinicians' participation in value-based alternative payment models, reducing administrative burdens, and improving model design to achieve better health outcomes while controlling costs. Read here.
Medicaid Take-Up Before and After the Affordable Care Act and During Unwinding
A Milbank Quarterly study found that Medicaid take-up rates among eligible individuals increased significantly from 76.5% pre-ACA to 85.0% post-ACA and remained high at 86.5% during the 2023 unwinding period, though persistent enrollment gaps remain among young adults, working adults, American Indian/Alaska Native individuals, and rural residents, findings that underscore the importance of continued outreach efforts as major Medicaid policy changes are being considered. Read here.
Estimates of the Extent and Effects of Physician Consolidation
A new GAO report finds that physician consolidation has accelerated dramatically, with at least 47% of physicians now employed by or affiliated with hospital systems in 2024 compared to less than 30% in 2012. This consolidation typically increases healthcare spending and prices while having no significant impact on care quality, though research gaps remain on how consolidation affects patient access to care. Read here.
What We Are Attending
FasterCures' Vital Voices Webinar Series Part 2: Just the Facts: Patient Experience Data to Inform CMS Decision-Making
FasterCures is hosting a webinar on Tuesday, September 30, from 1:00–2:00 PM ET, focused on how patient organizations can collect and present patient experience data to inform CMS engagement and coverage decisions. Register here.
Pop Health Podcast
Beyond the Hype: What GLP-1s Mean for Policy and Employers
GLP-1 medications like Ozempic and Wegovy have quickly moved from niche treatments to the center of high-stakes conversations across payers about cost, access, and coverage. In this episode, Coral Partner Alison Falb talks with Laura Rudder Huff, Vice President at Gallagher Research & Insights, about how the rise of GLP-1s is shaping employer benefit strategies, equity considerations, and policy debates.