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On July 31, 2025, the Centers for Medicare and Medicaid Services (CMS) released the Fiscal Year 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) Final Rule. A fact sheet from CMS can be found here. The final rule takes effect on October 1, 2025.

UPDATES TO IPPS PAYMENT RATES

As part of the final rule, CMS finalized a 2.8% increase in payment rates for FY26 under the IPPS for acute care hospitals that meet the Hospital Inpatient Quality Reporting Program and meaningful EHR use requirements, effective for discharges on or after October 1, 2025. This update reflects a projected FY26 hospital market basket increase of 3.3%, reduced by a 0.5% productivity adjustment. The final rule also sets a fixed loss threshold for outlier payments at $43,663 (slightly lower than the FY25 threshold of $46,217) to maintain outlier payments at 5.1% of total IPPS payments. Total IPPS payments are projected to increase by approximately $4 billion, including $1.5 billion in uncompensated care payments to disproportionate share hospitals.

Compared to the proposed rule’s 2.4% payment rate increase (based on a 3.2% market basket increase minus a 0.8% productivity adjustment), the final rule’s 2.8% update reflects a higher market basket projection of 3.3% and a lower productivity adjustment of 0.5%, incorporating more recent 2024 data. The fixed loss outlier threshold decreased from the proposed $44,305 to $43,663, driven by updated cost and charge data. The $4 billion total payment increase aligns with the proposed rule’s estimate, but the uncompensated care payment rise reflects a refined projection of an 8.5% uninsured rate for CY26

MEDICARE-DEPENDENT HOSPITALS (MDHS) AND LOW-VOLUME HOSPITALS

The MDH program provides enhanced payments to small rural hospitals (≤100 beds, not Sole Community Hospitals) where at least 60% of inpatient days or discharges are attributable to Medicare patients, using a blended rate that includes 75% of the federal rate plus 25% of the hospital-specific rate based on historical costs. The low-volume hospital adjustment offers percentage add-ons to IPPS payments for rural hospitals with low annual discharges to offset higher per-case costs, currently on a sliding scale up to 25% for facilities with fewer than 3,800 discharges and more than 15 road miles from another subsection (d) hospital.

Both programs are set to expire at the end of FY25 (September 30, 2025). In the FY26 final rule, CMS notes that if Congress does not extend the Medicare-Dependent Hospital (MDH) program, approximately 150-160 hospitals will lose their MDH payment adjustment. Similarly, failure to renew the low-volume hospital payment adjustment would cause around 600 hospitals to miss out on additional payments in FY26. The combined loss in funding would total approximately $500 million in FY26. At this stage, we anticipate Congress will extend both programs as part of “extenders” legislation addressing expired or soon-to-expire healthcare policies (as Congress has done on a bipartisan basis for both the MDH and low-volume add-ons for several years now). However, there will be some uncertainty around this given the partisan dynamics of the appropriations process and the fact that lawmakers are likely to enact at least one (if not more) continuing resolutions before full-year FY26 appropriations legislation (to which extenders would likely be attached) will be enacted into law.

DISCONTINUATION OF THE LOW-WAGE INDEX HOSPITAL POLICY

The low wage index hospital policy was established in the FY20 IPPS final rule as a temporary, budgetneutral initiative to address wage index disparities, which benefited rural hospitals by raising their wage indices to mitigate lower payment impacts. This policy adjusted the wage index for hospitals in the bottom quartile, setting a floor at the 25th percentile value, which was offset by a corresponding reduction for higher-wage hospitals. However, in July 2024, the U.S. Court of Appeals for the D.C. Circuit in Bridgeport Hosp. v. Becerra ruled that CMS lacked the statutory authority under sections 1886(d)(3)(E) or 1886(d) (5)(I) of the Social Security Act (SSA) to implement this policy, vacating both the policy and its budget neutrality adjustment.

For FY26, CMS finalized the discontinuation of the low wage index hospital policy. To cushion the abrupt payment reductions for affected low-wage hospitals, CMS adopted a budget-neutral narrow transitional payment exception specifically for FY26 IPPS calculations. This exception replicates the interim transitional policy from the FY25 interim final rule with comment period (i.e., if the hospital’s FY26 wage index is decreasing by more than 9.75% from the hospital’s FY24 wage index, then the transitional payment exception for FY26 for that hospital is equal to the additional FY26 amount the hospital would be paid under the IPPS if its FY26 wage index were equal to 90.25% of its FY24 wage index).

UPDATE TO THE IPPS LABOR-RELATED SHARE

In the IPPS final rule, CMS finalized a reduction in the labor-related share from 67.6% to 66.6% for hospitals with a wage index greater than 1.0 and from 62% to 60.9% for those with a wage index of 1.0 or less, based on a rebased and revised 2023-based IPPS market basket. This adjustment aligns payments more closely with updated labor cost data. Still, it reduces the portion of payments adjusted by the wage index, likely lowering reimbursements for hospitals in high-wage areas.

HOSPITAL INPATIENT QUALITY REPORTING (IQR) PROGRAM

CMS finalized modifications to several existing measures in the Hospital IQR Program:

• For the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic Stroke Hospitalization (MORT-30-STK) measure, changes include incorporating Medicare Advantage patients, shortening the performance period to two years (July 1, 2023–June 30, 2025), transitioning to ICD-10 risk adjustment, and removing COVID-19 exclusions, effective for FY27 payment determinations
• The Hospital-Level, Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty (COMP-HIP-KNEE) measure was updated similarly with Medicare Advantage inclusion, a two-year performance period (April 1, 2023–March 31, 2025), ICD10 risk adjustment, and COVID-19 exclusion removal, also effective FY27.
• For the Hybrid Hospital-Wide Readmission (HWR) and Hybrid Hospital-Wide Mortality (HWM) measures, submission thresholds were lowered to 70% for core clinical data elements and linking variables, allowing up to two missing lab results or vital signs, effective for FY28 payment determinations (July 1, 2025–June 30, 2026).

CMS also finalized the elimination of multiple measures from the Hospital IQR Program. The Hospital Commitment to Health Equity (HCHE), COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP), Screening for Social Drivers of Health, and Screen Positive Rate for Social Drivers of Health measures were removed effective for the CY24 reporting period and FY26 payment determination.

As part of the final rule, CMS finalized enhancements to the Extraordinary Circumstances Exception (ECE) policy in the Hospital IQR Program to provide greater flexibility and reduce penalties during disruptions. The ECE request submission deadline was extended from 90 to 180 days, and partial exceptions for individual measures were allowed rather than requiring all-or-nothing requests, effective immediately upon f inal rule publication. Hospitals can now receive ECEs for up to three consecutive years, with exceptions due to public health emergencies and data submission delays. The post-event request deadline was extended to 60 days, and full cost reporting period exceptions were permitted for widespread impacts.

MEDICARE PROMOTING INTEROPERABILITY PROGRAM

As part of the final rule, CMS made several modifications to the Medicare Promoting Interoperability Program:

• CMS finalized the definition of the EHR reporting period for CY26 and subsequent years as a minimum of any continuous 180-day period within the calendar year for eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program. This change, codified at 42 CFR 495.4, provides greater flexibility in selecting reporting windows to accommodate operational needs. It maintains consistency with CY25 requirements while supporting EHR vendors in certification processes.
• CMS modified the Security Risk Analysis measure to require eligible hospitals and CAHs to attest “Yes” to both conducting a security risk analysis and performing security risk management activities, in accordance with 45 CFR 164.308(a)(1)(ii)(A) and (B), starting with the EHR reporting period in CY26. This includes addressing the security of data created or maintained by CEHRT, such as encryption under 45 CFR 164.312(a)(2)(iv) and 164.306(d)(3). Attesting “No” to either component results in failing the measure and potential downward payment adjustments. The update enhances cybersecurity practices without adding economic impacts beyond existing requirements.
• CMS updated the Safety Assurance Factors for EHR Resilience (SAFER) Guides measure, mandating eligible hospitals and CAHs to attest “Yes” to completing an annual self-assessment using all eight 2025 SAFER Guides at any point during the calendar year, effective for the EHR reporting period in CY26 and beyond. The 2025 Guides are streamlined to address high-risk issues through technology or practice changes, focusing on foundational, infrastructure, and clinical processes. No specific implementation status is required, and the change does not increase burden estimates. This promotes proactive EHR safety assessments to mitigate common vulnerabilities.
• CMS introduced an optional bonus measure under the Public Health and Clinical Data Exchange objective, allowing eligible hospitals and CAHs to earn five bonus points for exchanging health information with a public health agency using the Trusted Exchange Framework and Common Agreement (TEFCA), beginning with the EHR reporting period in CY26. Requirements include being a signatory to a Framework Agreement, not suspended, submitting data consistent with exchange measures, achieving active engagement under Option 2, and using CEHRT functions. No exclusions were proposed, and attestation is voluntary with no additional burden for those already using TEFCA. This incentivizes advanced interoperability while accommodating varying hospital capabilities.

Separately, CMS reflected on the comments it received in response to three requests for information (RFIs) relating to potential future policy changes regarding the interoperability program:

• Commenters supported transitioning the Query of PDMP measure to a performance-based format for better accountability in tracking queries and preventing opioid misuse and expanding the measure to include additional drug types. However, opponents highlighted increased administrative burdens, especially for rural hospitals, along with concerns over privacy, legal barriers, data accuracy, and interoperability issues with state PDMP systems. Suggestions included phased implementation, technical assistance, EHR integration, federal funding, and pilot testing to ensure smoother adoption.
• Many commenters endorsed moving the Medicare Promoting Interoperability Program’s objectives and measures toward performance-based reporting to align with value-based care, reduce administrative burdens, and provide real-time metrics that benefit low-volume hospitals. Opponents raised issues about heightened reporting complexity, resource strains on smaller practices, data reliability, and potential unfair penalties due to readiness disparities. Recommendations focused on phased rollouts, technical support, risk adjustments, clear thresholds, and pilot testing.
• Stakeholders advocated for improvements in health information exchange quality and completeness through standardized APIs, real-time data sharing, and updated standards like USCDI Version 3 and FHIR, which would enhance care coordination, public health reporting, and address technology disparities. Concerns centered on implementation costs, data security/privacy risks, survey fatigue, and the immaturity of certain standards. Suggestions included provider education, incentives for early adopters, robust security measures, phased approaches, and the collection of disaggregated data.

HOSPITAL READMISSIONS REDUCTION PROGRAM

In the final rule, CMS finalized updates to the Hospital Readmissions Reduction Program by modifying all six condition-specific readmission measures (AMI, HF, PN, COPD, THA/TKA, CABG) to include Medicare Advantage (MA) beneficiaries in performance calculations starting FY27, using a shortened twoyear applicable period (July 1, 2023–June 30, 2025), while removing COVID-19 diagnosis exclusions and updating risk adjustment to individual ICD-10 codes. Due to concerns about data reliability from commenters, CMS did not finalize including MA data in aggregate payment calculations for excess readmissions. The rule extends the Extraordinary Circumstances Exception (ECE) submission deadline from 30 to 60 days, allowing CMS discretion to grant extensions or exceptions proactively for systemic issues.

HOSPITAL ACQUIRED CONDITION (HAC) REDUCTION PROGRAM

For FY26, CMS will maintain the 1% payment reduction for hospitals in the worst-performing quartile based on measures including CMS PSI 90 and CDC NHSN HAI indicators such as CAUTI, CLABSI, SSI, MRSA Bacteremia, and CDI. The rule updates the Extraordinary Circumstances Exception (ECE) policy by extending the submission deadline from 30 to 60 days after public comments, allowing CMS to grant extensions or ECEs proactively for systemic issues, and clarifying notification processes. It also provides notice of rebasing NHSN HAI measures using CY22 data (effective for FY28 program year scoring with CY24-25 performance periods) and removes COVID-19 diagnosis exclusions from PSI 90 and other measures starting FY27. Scoring methodology remains unchanged, with equal weighting of domains and public reporting on Hospital Compare.

HOSPITAL VALUE-BASED PURCHASING (VBP) PROGRAM

CMS finalized modifications to several retained measures in the Hospital VBP Program:

• The Hospital-Level Risk-Standardized Complication Rate Following Elective Primary THA/TKA (COMPHIP-KNEE) was updated to include Medicare Advantage beneficiaries, shorten the performance period to two years (April 1, 2023–March 31, 2025), transition to ICD-10 risk adjustment, and remove COVID-19 exclusions, effective for the FY33 program year.
• Similarly, the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic Stroke (MORT-30-STK) incorporated Medicare Advantage patients aged 65+, reduced the performance period to two years (July 1, 2023–June 30, 2025), updated risk adjustment to ICD-10 codes, and eliminated COVID-19 exclusions, starting FY27.
• For the Hybrid Hospital-Wide Readmission (HWR) and Hybrid Hospital-Wide Mortality (HWM) measures, submission thresholds for core clinical data elements and linking variables were lowered to 70%, allowing up to two missing lab values or vital signs, effective FY28 with performance periods from July 1, 2025–June 30, 2026.

CMS eliminated several measures from the Hospital VBP Program:

• The Health Equity Adjustment (HEA) was removed effective FY26 to simplify scoring, as its impact on payment adjustments was minimal (0.168% vs. 0.170%).
• The Health Equity Adjustment (HEA) was removed effective FY26 to simplify scoring, as its impact on payment adjustments was minimal (0.168% vs. 0.170%).
• The Medicare Spending Per Beneficiary (MSPB) Hospital measure and Hospital-Level Risk-Standardized Complication Rate Following Elective Primary THA/TKA were eliminated effective FY28 to minimize overlap and address low case volumes with limited scoring impact.

TRANSFORMING EPISODE ACCOUNTABILITY MODEL (TEAM)

In the FY26 IPPS final rule, CMS finalized multiple updates to the Transforming Episode Accountability Model (TEAM), effective January 1, 2026, for five-episode categories (CABG, THA/TKA, spinal fusion, major bowel procedure, acute myocardial infarction), including:

• To support hospital participation, CMS introduced a limited deferment period for certain hospitals, excluded Indian Health Service hospitals, and eliminated downside financial risk for low-volume hospitals with fewer than 31 episodes.
• For quality and performance measurement, CMS added the Information Transfer Patient Reported Outcome-based Performance Measure, assigned neutral scores for participants with insufficient quality data, and removed health equity plans and social needs data reporting, alongside eliminating the Decarbonization and Resilience Initiative to streamline reporting.
• Risk adjustment and pricing were refined by adopting a 180-day lookback period with HCC version 28, replacing the Area Deprivation Index with the Community Deprivation Index, reconstructing normalization trend factors, and establishing a methodology for target pricing during coding changes.
• The SNF 3-day rule waiver was broadened to allow TEAM participants to bypass the 3-day inpatient hospital stay requirement for SNF admissions across all episode categories, modifying the primary care services referral requirement, and aligning episode attribution date ranges.

REQUESTS FOR INFORMATION (RFIS)

As part of the final rule, CMS includes an RFI on streamlining regulations and reducing administrative burdens for those participating in the Medicare program (a response to Executive Order (EO) 14192). To that end, CMS encourages interested stakeholders to submit feedback on that matter by September 15, 2025.

On July 31, 2025, the Senate Health, Education, Labor, and Pension (HELP) Committee held a hearing titled making health care affordable to lower costs and empower patients. Members of the committee heard testimony regarding the impact of health care costs on patient care. There was bipartisan agreement that the cost of health care is too high and there must be a solution to lower the costs.

OPENING STATEMENTS

• Chairman Bill Cassidy (R-LA)

WITNESS TESTIMONY

• Ms. Chris Deacon, Principal and Founder at VerSan Consulting – Testimony
• Dr. Benedic Ippolito, Senior Fellow at American Enterprise Institute – Testimony
• Dr. Brian Miller, Associate Professor of Medicine, Practicing Hospital Medicine Physician – Testimony
• Mr. Wendell Potter, Center for Health and Democracy – Testimony
• Dr. Adam Gaffney, Assistant Professor of Medicine at Harvard Medical School – Testimony

MEMBER DISCUSSION

Health Care Transparency

Chairman Bill Cassidy (R-LA) opened the discussion by asking how price transparency could reduce the cost of care. Ms. Deacon explained that while employers pay premiums on behalf of employees, they often lack the ability to control hospital costs. Transparency would allow insurers and patients to compare prices, identify the best deals, and better understand what is being paid for.

Sen. John Hickenlooper (D-CO) highlighted the importance of maintaining broad health coverage, noting that Medicare and Medicaid remain major revenue sources for providers. He characterized transparency as a central issue and inquired whether future legislation could expand it. Ms. Deacon expressed strong support, emphasizing that giving patients access to clear “price tags” could be transformative.

Sen. Roger Marshall (R-KS) further advocated for the concept, referencing his bipartisan Patients Deserve Price Tag Act with Sen. Hickenlooper, and asked how greater transparency could influence consumer decisions and overall health care costs. Ms. Deacon responded that patients would evaluate both cost and value when making choices. She added that if all members had access to this information, it would drive down costs and potentially lower insurance premiums.

Other witnesses echoed support for greater transparency. Dr. Miller stated that withholding price information is unethical, and Dr. Ippolito agreed that transparency would assist in making informed decisions. Mr. Potter added that transparency would be broadly helpful, while Dr. Gaffney cautioned that transparency alone would not prevent some individuals from becoming uninsured.

PBM Reform

Sen. Marshall raised concerns about pharmacy benefit managers (PBMs), referencing his bill to delink PBM’s and noting that PBMs often create formularies that can prevent patients from accessing generic drugs, emphasizing the importance of legislative oversight. Mr. Potter added that PBMs “suck so much money from the pharmacy supply chain,” highlighting their significant financial impact. Sen. Marshall then asked what value PBMs provide to patients. Dr. Miller explained that PBMs primarily serve as the constructor of formularies.

Sen. Andy Kim (D-NJ) shifted the discussion to retrospective reviews, asking Dr. Miller to elaborate. Miller responded that while the Federal Trade Commission (FTC) previously blocked some hospital mergers, PBM mergers were approved under the assumption that they would lower drug prices. In retrospect, Dr. Miller argued, this analysis was flawed, as PBM consolidation has not delivered the expected price reductions.

340B Drug Pricing Program

Sen. Jon Husted (R-OH) raised concerns about the effectiveness of the 340B drug pricing program, stating, that “340B is not working,” and asked for recommendations to improve it. Dr. Ippolito explained that the program’s original goal is to help hospitals afford care for vulnerable populations. He suggested that tying 340B subsidies more directly to patient care could better align the program with its intended purpose.

On June 25, 2025, the House Ways and Means Health Subcommittee held a hearing on the role of digital health in improving patient outcomes. Members from both parties asked questions related to improving chronic disease, rural health, and data privacy and security. Ultimately, there was bipartisan agreement that digital health is vital for improving access to health care.

OPENING STATEMENTS

• Health Subcommittee Chair Vern Buchanan (R-FL)
• Health Subcommittee Ranking Member Lloyd Doggett (D-TX)

WITNESS TESTIMONY

• Kristen Holmes, Ph.D. Global Head of Human Performance and Principal Scientist of WHOOP – Testimony
• Josh Phelps, President of Winchester Metals Inc. – Testimony
• Andrew Zengilowski, CEO and Co-Founder of CoachCare – Testimony
• Dr. Jackie Gerhart, Chief Medical Officer and VP of Clinical Informatics Epic Systems – Testimony
• Sabrina Corlette, Research Professor and Co-Director at the Center on Health Insurance Reforms, Georgetown University McCourt School of Public Policy – Testimony

MEMBER DISCUSSION

Rural Health Care

Rural access and infrastructure were central concerns during the hearing. Health Subcommittee Ranking Member Lloyd Doggett (D-TX) asked what sustained funding cuts would mean for providers under the House reconciliation bill. In response, Ms. Corlette explained that the bill would trigger annual 4% mandatory cuts to providers, placing rural hospitals under significant financial strain. She warned that repeated reductions would make it difficult for rural facilities to maintain operations and services.

Rep. Greg Steube (R-FL) expressed skepticism about the practical benefits of digital health technologies if rural hospitals lack the capacity to implement them. He asked what specific steps could be taken to support rural health providers. Dr. Gerhardt emphasized the need for continued innovation, noting that small and rural providers must be empowered to tailor digital solutions to their communities’ needs.

When Rep. Kevin Hern (R-OK) raised questions about bipartisan collaboration for Rep. David Kustoff (RTN) bill H.R. 3108 which addresses the impact of remote monitoring devices on patient outcomes, Mr. Zengilowski explained how providers contact patients directly when digital readings fall out of range. Still, he warned that many small practices simply cannot afford to absorb the financial loss of adopting new technologies without policy support.

Chronic Disease

Rep. Brian Fitzpatrick (R-PA) spotlighted the alarming prevalence of chronic disease, citing Centers for Medicare and Medicaid Services (CMS) data that 60% of Americans suffer from one or more chronic conditions. He asked how digital tools and data-sharing can enhance care coordination and outcomes. Dr. Gerhardt pointed to diabetes and prediabetes management as examples where digital monitoring has been especially effective. Dr. Gerhardt said that by regularly reviewing patients’ data, providers can make informed decisions more quickly and adjust treatment plans as needed.

Rep. Fitzpatrick also asked about the barriers doctors face in adopting digital tools in rural areas. Witnesses pointed to workflow challenges, limited reimbursement, and the steep learning curve for providers unfamiliar with technology integration. Without incentives and clear guidance, many providers struggle to fully incorporate digital solutions into their practice.

Data Privacy and Security

Data privacy emerged as another central concern throughout the hearing, with members from both sides voicing alarm over the increasing vulnerability of health records in the digital age. Rep. Judy Chu (DCA) raised concerns about the proliferation of wearable health devices, questioning whether companies collecting this data adequately safeguard users. She warned that as more patients are pushed toward digital tools, particularly in the wake of potential rollbacks to the Affordable Care Act (ACA) subsidies and health coverage, many may not fully understand how their information is being used or shared.

Ms. Corlette responded by emphasizing that when individuals lose access to health insurance, they are not only less likely to receive in-person care, but also less able or willing to engage with digital health solutions. This disengagement, she noted, carries implications for both health outcomes and privacy, as patients may resort to unregulated tools or delay care altogether. The issue of health data being collected by devices such as fitness trackers, mobile health apps, and wearable devices, outside of traditional Health Insurance Portability and Accountability Act (HIPAA) protections, was raised multiple times. Several witnesses highlighted that these platforms operate in a legal gray area, where user data is often shared with third parties for marketing or analytics purposes without the explicit consent of patients.

Rep. Brian Fitzpatrick (R-PA) asked whether HIPAA needs to be updated to reflect the current digital health ecosystem. Dr. Gerhart affirmed that while HIPAA still provides a baseline of protections, it does not adequately address the types of data now routinely gathered by consumer-facing technologies. She urged Congress to consider modernizing the law to extend protections beyond the walls of traditional clinical settings. This includes establishing clearer rules for data collection, use, and storage by thirdparty tech companies that are not classified as health care providers or insurers but still handle sensitive health information.

Rep. Mike Thompson (D-CA) questioned whether federal agencies outside of the Department of Health and Human Services (HHS)—such as the Department of Government Efficiency (DOGE) should have access to any form of health-related data. Though witnesses did not have insight into the specific agency reference, they echoed a broader concern about cross-agency data sharing without public transparency. Calls for comprehensive federal privacy legislation were repeatedly echoed throughout the hearing, with panelists warning that piecemeal regulations would not be sufficient to address emerging threats, such as hacking, unauthorized use of biometric data, and data aggregation from multiple sources.

On June 25, the House Budget Committee held a hearing on work requirements in federal programs, including Medicaid. This hearing takes place as the Senate prepares to consider its version of reconciliation legislation, following the House’s passage of its bill in May. The hearing included both sides accusing the other of misleading the public about the impact of the House reconciliation bill. Any person(s) or organization(s) wishing to submit written comments for the hearing record can do so by emailing Ryan.Bailey@mail.house.gov by the close of business on June 27, 2025.

OPENING STATEMENTS

• House Budget Committee Chair Jodey Arrington (R-TX)
• House Budget Committee Ranking Member Brendan Boyle (D-PA)

WITNESS TESTIMONY

• Dr. Brian Blase Ph.D., President, Paragon Health Institute
  • See Witness Support Document #1
• Mr. Nick Stehle, Vice President of Communications, Foundation for Government Accountability
• Mr. Matthew Dickerson, Director of Budget Policy, Economic Policy Innovation Center
• The Honorable Robert Gordon, Duke Distinguished Visiting Fellow, McCourt School of Public Policy, Georgetown University

MEMBER QUESTIONS

The hearing provided Republicans an opportunity to defend provisions they argue will address waste, fraud, and abuse within federal programs. Republicans praised the provisions to strengthen eligibility verification, prevent undocumented immigrants from accessing federal benefits, and limit certain state f inancing options, such as provider taxes and state-directed payments, which they argued have been used by states like California to secure more Medicaid funding. They also argued the bill does not cut Medicaid but ensures the program can provide care to those who genuinely need it. Republicans, such as Chair Jodey Arrington (R-TX) and Rep. Ralph Northam (R-SC), also said that the bill could go further to address waste, fraud, and abuse in federal programs. Reps. Chip Roy (R-TX) and Andrew Clyde (RGA) expressed concerns that a Senate proposal to change the expanded Federal Medical Assistance Percentage (FMAP) for the Medicaid expansion population does not go far enough in addressing their concerns about spending in the program.

Democratic members responded to these arguments by stating that these Medicaid and SNAP work requirements will increase bureaucratic burden and will cause Americans to lose access to legitimate benefits in order to fund tax cuts for the wealthy, and that most people impacted by the bill will be citizens and legal residents. Additionally, Democrats argued that instead of enacting the work requirements in the House reconciliation bill, Congress should focus on eliminating what they see as real waste, fraud, and abuse, including examples they cited within the Trump administration. Notably, Rep. Lloyd Doggett (D-TX) and Pramila Jayapal (D-WA) argued that there should be an increased focus on provider and insurer fraud. Chairman Arrington noted that he and other Republicans have an interest in addressing concerns about fraud and abuse within the Medicare Advantage program. Reps. Jimmy Panetta (D-CA), John McGarvey (D-KY), Veronica Escobar (D-TX), and Marcy Kaptur (D-OH) also argued that Medicaid provisions in the House’s bill would lead to hospital closures, especially in rural and underserved areas.