Insights^

On August 4, 2026, the Senate Budget Committee held a hearing to examine the Medicaid program. There were bipartisan concerns about fraud in Medicaid, with Republicans focused on the impact of Medicaid Fraud Control Units while Democrats highlighted staffing changes with Inspectors General and pardoning of fraudsters. Other topics covered included a discussion about federal match rates for various Medicaid populations, Medicaid eligibility, and the impacts of H.R. 1 on Medicaid.

OPENING STATEMENTS

• Ranking Member Jeff Merkley (D-OR)

WITNESS TESTIMONY

• Mr. Brian Blase, PhD, President, Paragon Health Institute – Testimony
• Mr. Johnathan Ingram, JD, Vice President of Policy and Research, Foundation for Government Accountability – Testimony
• Mr. Andy Schneider, JD, Research Professor of the Practice, Center for Children and Families, McCourt School of Public Policy, Georgetown University – Testimony

MEMBER DISCUSSION

Federal Match Rates

Republican Committee members focused their concerns on differences in federal matching for Medicaid populations, specifically highlighting that traditional Medicaid receives an average $1.33 match for every $1 spent, while Medicaid expansion populations receive $9 for every $1 spent. Chairman Johnson and Sen. John Kennedy (R-LA) questioned if the match rates should be equalized. Dr. Blase argued that the match rates between the traditional and expansion populations should be equalized because the difference in rates creates a perverse incentive for states to cheat and overenroll able-bodied Americans to receive increased federal funding. In contrast, Mr., Schneider stated that he does not believe states are cheating in Medicaid administration.

Eligibility

Chairman Johnson asked the panel if they agree with the practice of redetermining Medicaid eligibility. Mr. Schneider stated that redetermining eligibility is important but checking more than once a year can be hard. Ranking Member Jeff Merkley (D-OR) asked Mr. Schneider to expand. Mr. Schneider shared that often there is a lot of fluctuation in income month-to-month for families at the eligibility threshold, and the constant checking increases administrative burden and stress from needing to constantly refile.

Fraud

There was bipartisan agreement in wanting to reduce fraud in Medicaid but differences in proposed solutions. Sen. Rick Scott (R-FL) asked about state Medicaid Fraud Control Units, specifically about the effectiveness of the New York unit. Mr. Ingram shared that, in his opinion, the New York unit was poorly run and, in general, the units are costing more to run then they are recovering in fraudulent payments. Mr. Ingram recommended increasing oversight for Medicaid fraud control units.

Sens. Chris Van Hollen (D-MD) and Patty Murray (D-WA) shared their concerns about fraud in Medicaid. However, they questioned the wisdom of firing of various Inspectors General and the pardoning of Medicaid fraudsters by the Trump administration if the goal is to combat fraud.

Impacts of H.R. 1

Democratic Committee members used the hearing as an opportunity to highlight funding changes to the Medicaid program enacted under H.R. 1, otherwise known as the One Big Beautiful Bill Act. Sen. Tim Kaine (D-VA) shared that 12 hospitals in rural Virginia have announced their closures since July 2025 and have cited H.R. 1 as the reason. He also shared that an additional 12 hospitals are at risk of closure. Sens. Kaine and Ben Ray Lujan (D-NM) expressed the view that H.R. 1 has just shifted Medicaid spending to states that do not have the funds to increase state taxes to make up for the increased costs. Dr. Blase stated that the shift is a complicated problem. Sens. Sheldon Whitehouse (D-RI) and Ron Wyden (D-OR) expressed that Medicaid work requirements reporting will greatly increase administrative burden and cause complications for beneficiaries.

On July 31, 2026, the Centers for Medicare and Medicaid Services (CMS) released the Fiscal Year 2027 Medicare Hospital Inpatient Prospective Payment System (IPPS) Final Rule. A CMS fact sheet is available here. The complete text of the final rule is available here. The final rule takes effect on October 1, 2026.

UPDATES TO IPPS PAYMENT RATES

As part of the final rule, CMS increases payment rates by 2.3% for general acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful users of electronic health records (EHRs) under the Medicare Promoting Interoperability Program. The final update is 0.1% lower than the 2.4% update in the proposed rule. It reflects the same projected FY 2027 hospital market basket increase of 3.2%, reduced by a 0.9% productivity adjustment rather than the 0.8% adjustment in the proposed rule.

Overall, CMS estimates that the final changes in IPPS payment rates, together with other policy changes, will increase hospital payments by approximately $2.1 billion in FY 2027, up from the $1.4 billion estimate in the proposed rule. CMS separately estimates that payments for inpatient cases involving new medical technologies will increase by approximately $779 million in FY 2027, primarily driven by new approvals for new technology add-on payments. Including operating, capital, new technology, uncompensated care, and other payment changes, CMS estimates that acute care hospital payments will increase by $2.9 billion in FY 2027.

CMS finalized the FY 2027 outlier fixed-loss threshold at $49,346, lower than the proposed $51,704, based on updated data. The final threshold continues to target outlier payments at approximately 5.14% of total operating DRG payments, after incorporating an estimate of outlier reconciliation. In its final impact analysis, CMS estimates that total FY 2027 operating payments, including uncompensated care payments, will increase by 1.7% relative to FY 2026, up from the 1.2% estimate in the proposed rule.

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

The MDH program provides enhanced payments to small rural hospitals with 100 or fewer beds that are not Sole Community Hospitals and that derive at least 60% of inpatient days or discharges from Medicare patients. Qualifying hospitals are paid the higher of the federal rate or a blended rate composed of 75% of the federal rate and 25% of a hospital-specific rate based on historical costs. The low-volume hospital adjustment offsets the higher per-case costs of rural hospitals with low annual discharge volumes through a percentage add-on to IPPS payments. The add-on currently follows a sliding scale of up to 25%.

As in the proposed rule, the final rule makes no substantive policy changes to either the MDH program or the low-volume hospital adjustment. CMS finalized, as proposed, the conforming regulatory changes reflecting current law, under which both policies were extended through December 31, 2026, first by the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026, and then by the Consolidated Appropriations Act, 2026. CMS had stated in the proposed rule that it would revise the regulatory language if Congress extended the programs before the rule was finalized; no further extension was enacted, and the final rule reflects current law without revision. Absent further congressional action, the MDH program will expire beginning January 1, 2027, and formerly qualifying hospitals will be paid solely under the federal rate. The temporary low-volume hospital policy will revert on that date to the permanent statutory criteria, under which a hospital must have fewer than 200 total discharges and be located more than 25 road miles from another subsection (d) hospital to receive the 25% adjustment.

The final rule updates the impact estimates. CMS now estimates that extending both policies through the end of FY 2027 would provide affected hospitals with approximately $0.3 billion in additional payments, down from the $0.4 billion estimate in the proposed rule. Under current law, CMS estimates that 81 of the 166 current MDHs would otherwise be paid under the blended rate and will experience an overall payment reduction of approximately $94 million, compared with the proposed rule estimate of approximately $110 million for roughly 80 hospitals. CMS continues to estimate that expiration of the temporary low-volume policy will reduce aggregate payments by approximately $258 million in FY 2027, with approximately 589 hospitals expected to lose qualification under the stricter post-January 1 criteria. The final rule notes that approximately 55 of those 589 hospitals have 200 or fewer total discharges and could continue to qualify if they also meet the 25-road-mile criterion, but CMS is unable to estimate how many will do so because the distance determination is made by each hospital’s Medicare Administrative Contractor.

DISCONTINUATION OF THE LOW-WAGE INDEX HOSPITAL POLICY

The low-wage index hospital policy was established in the FY 2020 IPPS final rule as a temporary, budget-neutral initiative to address wage index disparities, benefiting rural hospitals by raising their wage indices to mitigate the impacts of lower payments. 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.

In the FY 2026 final rule, CMS formally discontinued the low-wage index hospital policy and its associated budget-neutrality adjustment for FY 2026 and subsequent fiscal years. At the same time, CMS finalized a narrow, budget-neutral transitional payment exception for FY 2026 for certain hospitals experiencing significant decreases in their wage index resulting from the policy’s discontinuation. Under that transition, eligible hospitals could receive additional FY 2026 payments if their wage index otherwise would have fallen by more than 9.75% from their FY 2024 wage index, with payments calculated as if the hospital’s FY 2026 wage index were equal to 90.25% of its FY 2024 wage index.

For FY 2027, CMS finalized the proposed transition policy without modification and did not reinstate the low-wage index hospital policy. Hospitals whose FY 2027 wage index would be more than 14.2625% below their FY 2024 wage index will receive FY 2027 payments as if their wage index were equal to 85.7375% of their FY 2024 wage index. CMS will implement the transition in a budget-neutral manner after applying the 5% cap on wage index decreases, along with a budget-neutral equivalent exception under the capital IPPS. CMS estimates that 54 hospitals, out of the more than 3,000 hospitals paid under the IPPS, will receive FY 2027 transitional exception payments. In response to commenters challenging its authority to apply the transition in a budget-neutral manner, CMS maintained that section 1886(d)(5)(I)(i) of the SSA provides that authority. CMS declined requests to extend the transition beyond FY 2027 but stated that it may consider an extension in future rulemaking.

HOSPITAL INPATIENT QUALITY REPORTING (IQR) PROGRAM

CMS finalized the broad set of updates to the Hospital IQR Program from the proposed rule, in nearly all respects as proposed. CMS adopted three new measures: the Excess Days in Acute Care After Hospitalization for Diabetes measure beginning with the FY 2029 payment determination, and the Hospital Harm–Postoperative Venous Thromboembolism electronic clinical quality measure (eCQM) and Advance Care Planning eCQM beginning with the FY 2030 payment determination. CMS also finalized the adoption of modified versions of five mortality measures beginning with the FY 2028 payment determination (acute myocardial infarction (AMI), heart failure, pneumonia, chronic obstructive pulmonary disease (COPD), and coronary artery bypass grafting (CABG) mortality) adding Medicare Advantage patients and shortening the applicable performance period from three years to two years, together with a technical update replacing hierarchical condition categories with individual ICD-10 codes in the risk adjustment methodology. CMS finalized the same modifications to the three Excess Days in Acute Care measures (for AMI, heart failure, and pneumonia), also beginning with the FY 2028 payment determination, and finalized the removal of three eCQMs beginning with the FY 2030 payment determination: VTE-1, VTE-2, and STK-02.

On reporting requirements, CMS finalized mandatory reporting of the Malnutrition Care Score eCQM beginning with the FY 2030 payment determination and the policy under which Hospital Harm eCQMs become mandatory after two years of self-selected reporting, beginning with the FY 2030 payment determination. CMS modified the latter policy in one respect relative to the proposed rule: data will be publicly reported on the Provider Data Catalog for the first year of mandatory reporting before being reported on the Care Compare tool at Medicare.gov, including the Hospital Star Ratings, beginning with the second year of mandatory reporting. CMS also finalized, as proposed, the update to the Maternal Morbidity Structural Measure, beginning with the FY 2028 payment determination, requiring hospitals to identify which perinatal quality collaborative program they participate in.

MEDICARE PROMOTING INTEROPERABILITY PROGRAM

CMS finalized the proposed changes to the Medicare Promoting Interoperability Program, with one timing modification affecting the electronic referral loops measures.

• CMS finalized, as proposed, the updated definition of certified electronic health record technology (CEHRT), aligning with changes proposed by Office of the National Coordinator (ONC), including removing references to several certification criteria from the program’s CEHRT definition. CMS stated that ONC need not finalize its proposed rule for CMS to finalize these revisions.
• CMS finalized, as proposed, the removal of the ONC Direct Review and ONC-Authorized Certification Body surveillance attestations beginning with the CY 2026 EHR reporting period.
• CMS finalized removal of the Support Electronic Referral Loops by Sending Health Information and Support Electronic Referral Loops by Receiving and Reconciling Health Information measures with a modification: in response to comments on operational readiness and transition timing, removal takes effect with the CY 2029 EHR reporting period, one year later than the proposed CY 2028 period.

CMS also finalized the more targeted policy updates as proposed.

• CMS finalized the modifications to the Electronic Prior Authorization measure, including revising the measure language to require that prior authorization be requested electronically through a Prior Authorization API using CEHRT and changing the reference from “discharge” to “encounter.”
• CMS finalized making that measure optional and worth 10 bonus points for the CY 2027 EHR reporting period, with hospitals required to attest “Yes” beginning with the CY 2028 EHR reporting period. The measure will remain unscored in CY 2028 and subsequent years for purposes of point allocation. CMS stated that it is strongly considering proposing, in the FY 2028 IPPS rulemaking, to require use of the functionality in the three ONC electronic prior authorization certification criteria.
• CMS finalized adoption of the Unique Device Identifiers for Implantable Medical Devices measure under the Public Health and Clinical Data Exchange objective beginning with the CY 2027 EHR reporting period. Hospitals will attest “Yes” or “No” or claim an applicable exclusion to fulfill the measure requirements.
• In alignment with the Hospital IQR Program, CMS finalized adoption of two new eCQMs (the Hospital Harm–Postoperative Venous Thromboembolism eCQM and the Advance Care Planning eCQM) and removal of three eCQMs (VTE-1, VTE-2, and STK-02), each beginning with the FY 2030 payment determination.

HOSPITAL READMISSIONS REDUCTION PROGRAM

CMS finalized adoption of the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Sepsis Hospitalization measure in the Hospital Readmissions Reduction Program (HRRP), but modified the implementation timeline relative to the proposed rule. The proposed rule provided for a single early look for the FY 2028 program year, with the measure used for payment adjustment beginning in FY 2029. The final rule instead provides two years of confidential early look reports, which will include estimated HRRP payment adjustments with the sepsis measure added, for the FY 2028 program year (applicable period of July 1, 2024 through June 30, 2026) and the FY 2029 program year (applicable period of July 1, 2025 through June 30, 2027).

The measure will first be used for payment adjustment beginning with the FY 2030 program year (applicable period of July 1, 2026 through June 30, 2028). During the early look periods, data will not be publicly reported or used for payment adjustment. CMS retained its position, over commenter objections, that the measure should enter HRRP directly rather than first passing through a reporting-only program, citing the morbidity, mortality, and cost associated with sepsis readmissions. CMS estimates no financial impact from the HRRP changes for the FY 2027 payment determination.

HOSPITAL-ACQUIRED CONDITION (HAC) REDUCTION PROGRAM

Consistent with the proposed rule, the final rule makes no changes to the HAC Reduction Program for FY 2027. Under the existing statutory framework, hospitals in the worst-performing quartile of Total HAC Scores receive a 1% reduction in overall Medicare fee-for-service payments. In its impact analysis, CMS estimates that 721 of the 2,891 non-Maryland hospitals with an estimated FY 2027 Total HAC Score would be in the worst-performing quartile and subject to the payment reduction, with actual results to be determined in the fall of 2026 following a 30-day review and corrections period.

HOSPITAL VALUE-BASED PURCHASING (VBP) PROGRAM

As proposed, the final rule makes no changes to the current Hospital VBP measure set for the FY 2027 program year. CMS estimates that the total amount available for value-based incentive payments for FY 2027 is approximately $1.9 billion under the program’s budget-neutral structure. CMS finalized, as proposed, the substantive updates to five existing mortality measures in the Clinical Outcomes domain, beginning with the FY 2032 program year: the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following AMI Hospitalization, Heart Failure Hospitalization, Pneumonia Hospitalization, COPD Hospitalization, and CABG Surgery measures.

For these five measures, CMS finalized adding MA beneficiaries to the measure population and shortening the performance period from three years to two years, along with the related technical update replacing hierarchical condition categories with individual ICD-10 codes in the risk adjustment methodology. Consistent with the statutory requirement that measures be publicly reported before use in the VBP Program, CMS finalized adoption of the modified measures in the Hospital IQR Program for the FY 2028 through FY 2031 payment determinations, with the measures then removed from the IQR Program and modified in the VBP Program beginning with the FY 2032 program year (initial VBP performance period of July 1, 2028 through June 30, 2030). CMS noted that the performance standards established for the FY 2032 program year do not yet reflect the finalized modifications and that updated standards will be provided in the FY 2028 IPPS rulemaking.

COMPREHENSIVE CARE FOR JOINT REPLACEMENT EXPANDED (CJR-X) MODEL

The final rule finalizes the expansion of the Comprehensive Care for Joint Replacement (CJR) Model into CJR-X, a mandatory nationwide bundled-payment model for Medicare fee-for-service beneficiaries undergoing lower extremity joint replacements (hip, knee, and ankle procedures) performed in inpatient or hospital outpatient settings, tested under section 1115A of the SSA. Participating acute care hospitals will be accountable for the cost and quality of care from the inpatient admission or outpatient procedure through 90 days after discharge. The model applies to acute care hospitals paid under the IPPS and Outpatient Prospective Payment System (OPPS), with limited exclusions; CMS finalized, as proposed, the exclusion of hospitals participating in TEAM and hospitals located in Maryland.

CMS modified the start date relative to the proposed rule: in response to comments on implementation readiness, CJR-X will begin on January 1, 2028, rather than the proposed October 1, 2027. Hospitals will be assessed on five quality measures combined into a composite quality score. Target prices will be regional and risk-adjusted, incorporating capped normalization and trend factors, with separate pricing accommodations for low-volume and safety net hospitals. CMS will permit overlap with most other models and will allow participant hospitals to enter financial arrangements. The final rule also waives certain Medicare program requirements, provides for beneficiary-identifiable and regional aggregated data sharing, and gives participants options for Alternative Payment Model participation. Hospitals may earn reconciliation payments if episode spending is below the applicable target price and quality requirements are met or owe repayments to CMS if spending exceeds the target.

REQUESTS FOR INFORMATION (RFIS)

CMS did not finalize policy through the RFIs included in the proposed rule. The final rule summarizes the comments received on each RFI and describes CMS’s response as follows.

• Measuring Emergency Care Access and Timeliness in the Hospital IQR and VBP Programs: Commenters were largely opposed to including the Emergency Care Access & Timeliness eCQM in the VBP Program, citing factors outside hospital control such as behavioral health patients awaiting placement, lack of post-acute or supportive housing options, and non-deferrable trauma volume, and stated that any adoption should follow at least two years of reporting in the IQR Program. CMS responded that it is not responding to specific comments in the final rule but will take the input into account in future development and consideration of the measure for both programs.
• Potential Future Use of the Adult Community-Onset Sepsis Standardized Mortality Ratio Measure in the IQR Program: Commenters generally supported the transition from process to outcome measures but raised concerns regarding feasibility and implementation burden, particularly for rural hospitals; the need for further pilot testing, clear technical specifications, and risk adjustment methodology detail; and the influence of transfer patterns and factors outside the inpatient facility’s control on sepsis outcomes. CMS responded that it is not responding to specific comments in the final rule but will take the input into account in future development and consideration of the measure.
• Birthing-Friendly Hospital Designation Modification to Expand Designation Criteria: Commenters supported moving beyond a binary scoring structure but raised concerns with the potential scoring framework, including the interpretability of k-means clustering, the combined effects of clustering and peer grouping, and the possibility that hospitals performing poorly on the Cesarean Birth or Severe Obstetric Complications eCQMs could receive a designation icon; several recommended a z-score methodology, minimum thresholds, or absolute criteria, and many urged that any updates be fair to rural, safety net, and other hospitals serving complex patient populations. CMS responded that it is not responding to specific comments in the final rule but will take the input into account in the future development of the designation.
• Ambulatory Surgical Center (ASC) Episodes in TEAM: CMS stated that, due to the breadth of topics covered and the variety of viewpoints expressed, it is not responding to specific comments. CMS acknowledged the input on the parameters under which ASCs could be incorporated into TEAM, including the degree to which adding ASCs would necessitate a separate model test, and stated that it is conducting an in-depth review of the comments, which may inform potential future rulemaking proposals.
• Hospitals with Physician Ownership in TEAM: CMS responded to comments in detail and stated that it intends to propose in future rulemaking a policy allowing physician-owned hospitals (POHs) not located in mandatory TEAM Core-Based Statistical Areas to participate voluntarily in TEAM. In responding to commenters’ concerns regarding patient selection, referral patterns, beneficiary choice, and model evaluation, CMS stated that it intends to address beneficiary protections, monitoring requirements, and the potential for remedial action or participant termination in that future rulemaking, and that it may align the terms of POH participation with existing TEAM participation requirements where possible and appropriate.

On July 22, 2026, the Senate Health, Education, Labor, and Pensions (HELP) Committee held an executive session to consider health care legislation including three bills aimed at increasing price transparency and improving workforce shortages. Those bills were batched together and were agreed to, as amended, by a roll call vote of 21-1, with Sen. Rand Paul (R-KY) voting no. Please see below for a description of each of those bills, any notable discussion, and amendments considered.

OPENING STATEMENTS

• Chairman Bill Cassidy (R-LA)
• Ranking Member Bernie Sanders (D-VT)

SELECT LEGISLATION ADVANCED IN THE MARKUP

S. 2355, Patients Deserve Price Tags Act (Sen. Roger Marshall (R-KS), Sen. John Hickenlooper (D-CO), and Sen. Maggie Hassan (D-NH)), to enforce health care price transparency by requiring hospitals, labs, and surgical centers to publish upfront, actual dollar amounts for services.

• Sen. Paul shared his view that the problem is that prices are fixed by insurers (either government or private) and simply publicizing prices won’t change them.

S. 4110, EMPOWER for Health Act (Sen. Jack Reed (D-RI) and Sen. Lisa Murkowski (R-AK)), to reauthorize Title VII health professions workforce development programs through FY2030 to address medical provider shortages and diversify the health care workforce.

• Sen. Lisa Blunt Rochester (D-DE) offered an amendment to give the Health Resources Services Administration (HRSA) the authority to create a federal nursing data collection center.
• The amendment passed by voice vote.

S. 1847, Title VIII Nursing Workforce Reauthorization Act (Sen. Jeff Merkley (D-OR)) to reauthorize HRSA nursing education through federal funding and expanded access to clinical training in underserved areas.

• Sen. Blunt Rochester offered an amendment to establish a state and regional nursing workforce center data collection pilot program.
  • The amendment passed, with Sen. Paul recorded as nay.
• Sen. Murkowski offered an amendment to provide for a wage differential program to support new nursing school faculty members.
  • The amendment passed, with Sen. Paul and Sen. Alan Armstrong (R-OK) recorded as nay.

On July 20-21, 2026, the House Energy and Commerce Committee held a markup that included several pieces of legislation related to Medicare Advantage, health care price transparency, and illicit drugs. The Improving Seniors’ Timely Access to Care Act, along with several other bills, were incorporated by an amendment into the larger Lower Costs, More Transparency Act. All the bills passed unanimously, except for the Prices on the Wall Act. Democratic members of the Committee opposed this bill because of concerns that the bill’s requirements would cause confusion for patients and deter them from seeking care. You can see a list of select bills included in the markup below, along with any notable discussion and the vote tallies.

OPENING STATEMENTS

• Chairman Brett Guthrie (R-KY-2)
• Ranking Member Frank Pallone (D-NJ-6)

SELECT LEGISLATION INCLUDED IN THE MARKUP

H.R. 2004, Tyler’s Law (Reps. Ted Lieu (D-CA-36) and Robert Latta (R-OH-5)), to direct the Secretary of Health and Human Services to issue guidance on whether hospital emergency departments should implement fentanyl testing as a routine procedure for patients experiencing an overdose.

• The bill passed out of Committee by a vote of 46-0

H.R. 9390, the Prices on the Wall Act (Rep. Mariannette Miller-Meeks (R-IA-2)), to require hospitals, ambulatory surgical centers, and labs to post the discounted cash price in dollar amount on the wall for each service they provide.

• Ranking Member Pallone stated that while he supports price transparency, he has strong concerns that implementation of the bill will be impractical, will cause more confusion for patients, and will deter patients from seeking care. Ranking Member Pallone highlighted H.R. 9393, the Lower Costs, More Transparency Act, as a more useful approach to price transparency.
• The bill passed out of Committee by a vote of 24-21, along party lines, with Republicans voting for the bill and Democrats voting against it.

H.R. 9393, the Lower Costs, More Transparency Act of 2026 (Reps. Guthrie (R-KY-2) and Pallone (D-NJ-6)), to require hospitals, surgical centers, labs, and imaging providers to post prices and require health plans to disclose negotiated rates, cost-sharing estimates, and pharmacy benefit manager (PBM) spread pricing.

• Chairman Guthrie offered an amendment, which was adopted by voice vote, to include the following legislation as part of this bill:
  • H.R. 9397, the Premium Transparency Act (Reps. August Pfluger (R-TX-11) and Nathanial Moran (R-TX-1)), to ensure health insurer accountability through publishing of overhead costs and claim payments.
  • H.R. 9396, the Prior Authorization Accountability Act (Rep. Craig Goldman (R-TX-12)), to require insurers to display which services were subject to prior authorization, the percentage of requests approved or denied, and the average amount of time between the request submission and determination.
  • H.R. 3514, Improving Seniors’ Timely Access to Care Act of 2025 (Reps. Mike Kelly (R-PA-16) and Suzan DelBene (D-WA-1)), to require plans to establish, and evaluate the implementation of, an electronic prior authorization.
  • H.R. 9392, the Medicare Advantage Cost Transparency Act (Reps. Diana DeGette (D-CO-1) and John Joyce (R-PA-13)), to require the inclusion of certain information in Medicare Advantage encounter data.
  • H.R. 5243, to require each Medicare Advantage plan to submit eligibility for supplemental benefits, types of benefit categories offered, and data on utilization of and payments for such benefits (Rep. Jennifer McClellan (D-VA-4)).
• The amendment pushed back dates for certain provisions within these bills. For example, the amendment changed the Improving Seniors’ Timely Access to Care Act so the prior authorization requirements would be in effect for any applicable item or service during a plan year beginning on or after January 1, 2029, instead of January 1, 2028, for the electronic prior authorization program and January 1, 2027, for the transparency requirements.
• Rep. Jake Auchincloss (D-MA-4) spoke positively of the amendment but requested that the Committee consider more pharmacy benefit manager (PBM) reforms.
• Rep. John James (R-MI-10) offered an amendment to include H.R. 5582, the Patients Deserve Price Tags Act, as he believes that would improve price transparency for consumers more than H.R. 9393. However, the amendment was withdrawn.
• The Lower Costs, More Transparency Act, as amended by Chairman Guthrie, was passed out of Committee by a vote of 45-0.

On July 15, 2026, the House Select Committee on China, the House Energy and Commerce Health Subcommittee, and the Senate Aging Committee held hearings on the Federal Research Security Enterprise, the role of the Food and Drug Administration (FDA) in biomedical innovation, and foreign control of America’s drug supply. The hearings provided useful context on how members of these committees view the issues surrounding drug development and the threats posed by overreliance on foreign countries for the nation’s pharmaceutical supply chain.

HOUSE SELECT COMMITTEE ON CHINA HEARING ON THE FEDERAL RESEARCH SECURITY ENTERPRISE

Opening Statements

• Chairman John Moolenar (R-MI-2)
• Ranking Member Ro Khanna (D-CA-17)

Witness Testimony

• Jeremy Ison, Chief of Staff to the Under Secretary for Science, U.S. Department of Energy (DOE)
• Dr. Patricia Valdez, Chief Extramural Research Integrity Officer, National Institutes of Health (NIH)
• Dr. Rebecca Keiser, Acting Chief of Staff and Chief of Research Security Policy and Strategy, National Science Foundation (NSF)

Member Discussion

Throughout the hearing, members from both parties expressed concerns that the Chinese Communist Party is exploiting American taxpayer-funded research by leveraging universities, labs, and researchers to accelerate their own developments. Questions centered around research security protocols and the impact of funding and workforce cuts.

Research Security Protocols

Republicans focused on how the Department of Energy (DOE), National Institutes of Health (NIH), and National Science Foundation (NSF) utilize the Restricted Entity List to protect American advancements from foreign entities. Chairman John Moolenar (R-MI-2) opened by asking the witnesses about the current policies at their respective agencies for ensuring federal funding does not fund research involving entities on the list. Dr. Keiser described NSF’s Dear Colleague Letter from July 8 notifying the research community of a forthcoming policy to prohibit entities from using NSF funds to collaborate with entities on the restricted parties lists. However, Dr. Keiser said they are waiting on the comment period to finalize before moving forward. Dr. Valdez and Mr. Ison explained that NIH and DOE do not have their own policy, but they are actively reviewing NSF’s and have a series of risk mitigations in place. Rep. Darin LaHood (R-IL-16) and Rep. Ashley Hinson (R-IA-2) asked Mr. Ison to go into more detail about the current DOE guidance in place. He explained that they use physical and cyber security, counterintelligence, and a layered approach to assess conflict of interest and prior commitments. Mr. Ison further stated that they have an escalation clause to bring any findings to the correct federal office should they find high-risk influence.

Funding and Workforce

Democrats largely used their time to highlight funding and workforce cuts at NSF, DOE, and NIH. Ranking Member Ro Khanna (D-CA-17) and Rep. Tom Suozzi (D-NY-3) asked whether the witnesses were concerned about workforce and funding cuts affecting their agencies. Dr. Keiser explained that NSF has had 5 employees choose to leave since 2024, and they are currently working on rebuilding and ensuring all the research community takes responsibility for safe research practices. Dr. Valdez stated that NIH security team has not experienced any cuts, but she understands there have been cuts elsewhere. Mr. Ison explained DOE is executing the President’s budget and is adequately addressing security concerns.

HOUSE ENERGY AND COMMERCE HEALTH SUBCOMMITTEE HEARING ON FDA’S ROLE IN BIOMEDICAL INNOVATION

Opening Statements

• Health Subcommittee Chairman Morgan Griffith (R-VA-9)
• Health Subcommittee Ranking Member Diana DeGette (D-CO-1)
• Full Committee Chairman Brett Guthrie (R-KY-2)
• Full Committee Ranking Member Frank Pallone (D-NJ-6)

Witness Testimony

• Cynthia Verst, PharmD, MS, President, Design and Delivery Innovation, R&D Solutions, IQVIA
• Susan C. Winckler, RPh, Esq., CEO, Reagan-Udall Foundation for the FDA
• Aaron J. Kowalski, Ph.D., CEO, Breakthrough T1D
• Thomas Hwang, MD, Assistant Professor of Medicine, Brigham and Women’s Hospital and Harvard Medical School
• Thomas K. Bollyky, JD, Bloomberg Chair in Global Health, Senior Fellow for International Economics, Law, and Development; and Director of the Global Health Program, Council on Foreign Relations

Member Discussion

There was bipartisan support for increasing patient access to clinical trials as well as concerns about the impacts of drug research and development overseas. There was also bipartisan concern raised about uncertainty at the FDA and how it may be hurting pharmaceutical innovation.

Risks of Reduced US Innovation

There were bipartisan concerns raised about the impacts of drug research and development moving overseas, specifically to China. Full Committee Chairman Brett Guthrie (R-KY-2) asked what was risky about the US failing to remain competitive in clinical trials. Dr. Verst highlighted that while clinical trials are needed, the US also needs to encourage translational science and collaboration with biotech companies to ensure research and development remains domestic. Full Committee Ranking Member Frank Pallone (D-NJ-6) asked how important it was for the US to support biomedical innovation. Dr. Hwang highlighted that almost every new drug application includes research supported by the NIH and that increased Chinese investment will shift clinical trials overseas. Rep. Buddy Carter (R-GA-1) wanted to know which policies can ensure the US holds on to its competitive edge. Dr. Verst highlighted Operation TrialBlazer, a plan from the Department of Health and Human Services (HHS) to maintain U.S. leadership in early clinical research and development, and the importance of ensuring cooperative work across federal agencies.

Health Subcommittee Vice Chair Diana Harshbarger (R-TN-1) and Rep. Kim Schrier (D-WA-8) were especially worried about the effects of foreign-generated clinical data on drug safety and development. Dr. Hwang noted that foreign governments often have different data standards and that the FDA should be empowered to inspect foreign clinical sites to ensure US data standards are upheld. Ms. Winckler highlighted that when data is collected domestically, local researchers have a much better understanding of the product and better control of data procedures. Mr. Bollyky shared that foreign data needs to be scrutinized and held to high standards.

Clinical Trials

There was bipartisan support for increasing patient access to clinical trials, especially for those from rural areas and underrepresented populations. Subcommittee Chairman Morgan Griffith (R-VA-9) asked how to get more rural care sites involved in clinical trials. Ms. Winckler emphasized the positive impacts of hub-and-spoke models in allowing rural providers to engage their patients in clinical trials without many of the administrative burdens that follow trial design, as well as the potential positive impacts of remote patient monitoring technologies.

Reps. Raul Ruiz (D-CA-25) and Robin Kelly (D-IL-2) wanted to highlight the importance of diverse patient populations in clinical trials and how to best ensure minority communities are represented. Ms. Winckler shared that often the challenge is that community providers are not aware of what clinical trials their patients are eligible to participate in. Dr. Verst emphasized that diversity in clinical trials is critical for good science and results in increased success for drugs and that community physicians need increased support for improving the process of referring their patients to potential clinical trial investigators. Dr. Kowalski highlighted that Breakthrough T1D mandates representative trials with clear methods to ensure representation as part of its grant-agreement process. Rep. Kat Cammack (R-Fl-3) questioned how to improve the underrepresentation of women in clinical trials. Ms. Winckler suggested that clinical trial designs should be clear about how sponsors plan to address potential sex-based differences in their participant mix. Rep. Troy Balderson (D-LA-2) asked the panel what actions they would like to see Congress take to improve enrolling patients in clinical trials. Dr. Verst emphasized that guidance on patients’ access and standard of care for clinical trials, as well as the need for simple trial designs, are the most critical steps that Congress could take.

Federal Rulemaking

Multiple Democratic members took the opportunity to express concerns about the potential impacts of a rule proposed by the Office of Management and Budget (OMB) that expands agencies’ authority to suspend or terminate discretionary grant awards if it is determined that the grant no longer aligns with agency priorities or national interest. Subcommittee Ranking Member Diana DeGette (D-CO-1), as well as Reps. Lori Trahan (D-MA-3) and Troy Carter (D-LA-2) all asked witnesses to explain how this proposed rule could affect the grantmaking and peer review process. Dr. Kowalski highlighted that merit-based peer review is imperative for science and drives clinical benefits. Dr. Hwang shared that the proposed rule could potentially disrupt current clinical trials and could make it much harder for international collaboration and argued the proposed rule should be withdrawn.

FDA Uncertainty and the Impact on Drug Development

Members highlighted the ongoing uncertainty at the FDA. Rep. Debbie Dingell (D-MI-6) asked Dr. Kowalski if companies shared concerns about getting new therapies approved by the FDA. Dr. Kowalski shared that he is aware of multiple companies making contingency plans to get therapies approved in other countries if they cannot reach agreements with FDA regulators.

Reps. Tom Kean (R-NJ-7), Jake Auchincloss (D-MA-4), and Kevin Mullin (D-CA-15) asked for witness input on how to improve the FDA and modernize FDA processes. Ms. Winckler said we should encourage use of and conversations with patients about clinical trial endpoints as well as clarifications from the FDA on how to operationalize hub and spoke models. Ms. Winckler also emphasized the need for consistent messaging across the FDA, Congress, and stakeholders about what is expected during the drug development process. Dr. Verst shared that biotech companies are looking for greater certainty, clarity, and guidance on FDA processes.

Other Topics

• Rep. John Joyce (R-PA-13) discussed H.R. 9000, the SCREEN for Type 1 Diabetes Act, which would help ensure patients are properly screened for Type 1 diabetes. Dr. Kowalski voiced his support for the bill.
• Rep. Nick Langworthy (R-NY-23) asked about opportunities to reduce the use of animal models and encourage the adoption of new approach methodologies (NAMs). Dr. Verst shared that NAMs can speed drug development and that the FDA should provide guidance on their use.

SENATE AGING COMMITTEE HEARING ON FOREIGN CONTROL OF AMERICA’S DRUG SUPPLY CHAIN

Opening Statements

• Chairman Rick Scott (R-FL)

Witness Testimony

• Nazak Nikakhtar, Partner & Chair of the National Security Practice, Wiley Rein LLP
• Stephen Ezell, Vice President for Global Innovation Policy, Information Technology and Innovation Foundation (ITIF)
• Edward You, Founder & Principal Consultant, EHY Consulting LLC
• Rush Doshi, Ph.D., C.V. Starr Senior Fellow for Asia Studies and Director of the China Strategy Initiative, Council on Foreign Relations, Assistant Professor, Georgetown School of Foreign Service

Member Discussion

Throughout the hearing, members from both parties expressed alarm that foreign ownership and investment, particularly from China, have created hidden vulnerabilities across the pharmaceutical and biotechnology supply chain, extending beyond visible drug ingredients to clinical trial data, corporate ownership structures, and biomanufacturing capacity. Committee Chairman Rick Scott (R-FL) and Committee Ranking Member Kirsten Gillibrand (D-NY) both emphasized that current law is not sufficient to identify these risks, and members discussed the newly introduced Pharmaceutical Investment Oversight and Accountability Act as a first step toward addressing the gap.

Foreign Investment and CFIUS Oversight Gaps

Chairman Scott, Ranking Member Gillibrand, and Sen. Elizabeth Warren (D-MA) announced the Pharmaceutical Investment Oversight and Accountability Act, which would require the Federal Trade Commission (FTC) and the Committee on Foreign Investment in the United States (CFIUS) to report annually to Congress on foreign investment in pharmaceutical manufacturing and related technologies. Ms. Nikakhtar testified that CFIUS jurisdiction does not extend to most greenfield investments and joint ventures, board seats obtained without an equity stake, or licensing and data-access deals that involve no investment, and that many qualifying transactions are simply never filed for review. She recommended a presumption of denial for Chinese biotech transactions that do fall under CFIUS jurisdiction and urged Congress to pass legislation to close the greenfield and joint-venture gap. Senator Warren pressed Ms. Nikakhtar on why biotech acquisitions continue to escape review despite 2018 reforms expanding CFIUS’s scope; Ms. Nikakhtar attributed the gap to voluntary filing, executive branch self-limiting of its own authority, and China’s use of legal counsel to structure deals around CFIUS jurisdiction.

Supply Chain Dependency and Weaponization Risk

Chairman Scott and Mr. Ezell highlighted that China controls 94% of the key starting materials (KSMs) for amoxicillin, 74% of heparin, and effectively all of the KSMs for common blood pressure medications, and that nearly 700 medicines approved for use in the United States depend on at least one upstream input produced solely in China. Dr. Doshi warned that “Made in America” labeling can mask upstream dependency on Chinese-sourced KSMs and active pharmaceutical ingredients (APIs). Mr. Ezell, Ms. Nikakhtar, and Mr. You each warned that China is positioning these chokepoints as leverage over the United States, comparable to its dominance in rare earths and critical minerals, and could restrict supply at a time of its choosing.

Biotech Innovation and Clinical Trial Data

Mr. You testified that clinical trial data generated by American patients in FDA-authorized trials can legally flow to Chinese-linked companies with no federal agency able to stop it, citing FDA-cleared Chinese CAR-T cell therapy startups whose U.S. trial data feeds back into Chinese drug development while U.S. companies license and Medicare reimburses the resulting products. Dr. Doshi added that China’s looser regulatory requirements for first-in-human trials let American pharmaceutical companies obtain de-risked clinical data faster from Chinese assets than from domestic ones, a dynamic that has driven $53 billion in U.S. licensing deals with Chinese biotech over the past five years that now account for one-third of new drug pipelines. Mr. Ezell and Mr. You both flagged Chinese “brand obfuscation,” citing BGI’s Complete Genomics and WuXi AppTec as companies with undisclosed ties to the Chinese Communist Party (CCP) and the People’s Liberation Army (PLA) that operate within the U.S. pharmaceutical supply chain.

Legislative and Policy Responses

Senator Warren discussed her broader Pharmaceutical Supply Chain Defense and Enhancement Act, which would pair the Pharmaceutical Investment Oversight and Accountability Act’s investment transparency requirements with greater use of federal procurement power to build sustained domestic demand for allied-sourced medicines. Witnesses recommended complementary measures, including passage of the Biotech Investment National Security Act (BINSA), expanded export controls on biological materials and data, “clear labels” legislation to expose upstream KSM and API dependencies, tariff and reimbursement incentives favoring allied inputs, and a Manufacturing USA institute for critical minerals and APIs. Several witnesses urged deeper coordination with allies, including South Korea, Mexico, and India, to diversify away from Chinese-controlled inputs.

Other Topics

• Senator Warren asked how two recent Chinese decrees, 834 and 835, could affect U.S. regulators’ ability to inspect Chinese API facilities. Mr. Ezell warned the decrees create legal risk for any U.S. company operating in China and urged Congress to insist on continued inspection access and to properly resource the FDA’s foreign inspection program.
• Senator Warren also asked which federal agency should be accountable for mapping foreign ownership across the drug supply chain. Dr. Doshi called for a White House-level coordinating body to combine FDA, Commerce, and Customs data, while Ms. Nikakhtar argued that any new designation authority should be structured, like CFIUS determinations, to be non-litigable.
• Senator Jon Husted (R-OH) asked what the offshoring of pharmaceutical manufacturing has cost the United States in engineering and manufacturing talent, drawing a parallel to the semiconductor industry. Mr. Ezell and Ms. Nikakhtar agreed that the U.S. lost significant manufacturing talent and investor expertise in other sectors, but noted that biotech talent can still be rebuilt if reinvestment continues.