Looking Ahead: Byrd Bath Provision Meetings
Staff from U.S. Senate committees held meetings with the Senate parliamentarian over the weekend of June 20-22, 2025, to complete the "Byrd bath," a process by which committee staff make their case to the Senate parliamentarian regarding whether provisions in the reconciliation package meet specific requirements and should be retained in the final package. Additional meetings, including those on healthcare provisions from the Senate Committee on Finance's jurisdiction of the package, are expected to be held this week. If a provision is found not to comply with specific process requirements, it loses the ability to be passed with a simple majority and becomes subject to the 60-vote threshold.
Once the Senate parliamentarian has issued rulings on the provisions, the Senate may bring the reconciliation package to the Senate floor, which could be as soon as June 26, 2025. Congressional Republican leadership and the White House seek to pass the reconciliation by July 4, 2025.
In the U.S. House of Representatives, additional hearings on the fiscal year (FY) 2026 budget request for federal agencies are expected, as well as additional committee activity to advance appropriations bills. The House is also scheduled to consider the first appropriations bill for FY 2026 – the Military Construction-Veterans Affairs appropriations bill. Two healthcare bills – the Charlotte Woodward Organ Transplant Discrimination Prevention Act (H.R. 1520) and the Shandra Eisenga Human Cell and Tissue Product Safety Act (H.R. 1082) – were passed by voice vote.
Hearings This Week
The House Committee on Appropriations held a full committee markup at 7:30 p.m. on June 23, 2025, of the FY 2026 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Bill. The bill was advanced in a 35-27 vote.
The House Committee on Energy and Commerce Subcommittee on Health held a hearing at 10 a.m. on June 24, 2025, titled "The Fiscal Year 2026 Department of Health and Human Services Budget." U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. was expected to testify.
The House Committee on Oversight and Government Reform held a hearing at 10 a.m. on June 24, 2025, titled "Locking in the DOGE Cuts: Ending Waste, Fraud, and Abuse for Good."
The House Committee on Ways and Means Subcommittee on Health will hold a hearing at 9 a.m. on June 25, 2025, titled "Health at Your Fingertips: Harnessing the Power of Digital Health Data."
The House Committee on the Budget will hold a hearing at 10 a.m., on June 25, 2025, titled "Reversing the Curse: Rooting Out Waste and Fraud and Restoring the Dignity of Work."
The Senate Committee on Health, Education, Labor and Pensions (HELP) will hold a hearing at 10 a.m. on June 25, 2025, titled "Nomination of Susan Monarez to be Director of the Centers for Disease Control and Prevention, Department of Health and Human Services."
The Senate Special Committee on Aging will hold a hearing at 3:30 p.m. on June 25, 2025, titled "Hearings to Examine How Sports Medicine Can Improve Health Outcomes for Seniors."
The Senate Committee on Veterans' Affairs will hold a hearing at 4 p.m. on June 25, 2025, to examine correcting mismanagement of the veterans crisis line.
Week in Review
The Senate Committee on Finance released text for its version of the reconciliation package. While many provisions in the Finance Committee version of the text align with the House-passed One Big Beautiful Bill Act (H.R. 1), in their intent, several other provisions reflect notable policy differences that will need to be reconciled during conference negotiations. In addition to the significant changes to Medicaid, the most striking distinctions lie in what the Senate bill omits compared to the House version. Healthcare provisions omitted from the Senate bill that were included in the House-passed version include:
- Part D Delinking (Sec. 44305): Requires pharmacy benefit managers (PBMs) in Medicare Part D to transparently share information relating to business practices with Medicare Part D Prescription Drug Plan Sponsors and prohibits compensation based on a drug's list price
- Physician Payment Update (Sec. 44304): Eliminates the dual conversion factor update of 0.25 percent of most physicians and 0.75 percent for Alternative Payment Model participants; physicians will receive 75 percent of the Medicare Economic Index (MEI) increase, while from 2027 onwards, they will receive 10 percent of the MEI increase
- Orphan Cures Act (Sec. 44301): Expands the exemption of orphan drugs from the Medicare Drug Price Negotiation Program from the Inflation Reduction Act (IRA) starting in 2028 to include drugs approved for one or more rare diseases, protecting multi-indication orphan drugs from price negotiation
- Health Savings Accounts (HSA): Multiple House provisions (e.g., Secs. 110204-110207) expand HSA access and flexibility
- Rural Emergency Hospital (REH) Fix (Sec. 111201): Allows rural hospitals that closed between 2014 and 2020 to reopen as REHs under new eligibility rules
- Exchange Eligibility Verification (Sec. 112201): Requires annual verification of eligibility for Affordable Care Act (ACA) premium tax credits, including income and enrollment status
- Medicaid Disproportionate Share Hospital (DSH) Delay (Sec. 44303): Delays $8 billion in annual DSH cuts to FY 2029-2031 and extends Tennessee's DSH program through FY 2028
- Kids' Access to Care (Sec. 44302): Streamlines Medicaid/Children's Health Insurance Program (CHIP) enrollment for certain out-of-state pediatric providers already enrolled in their home state's Medicaid and CHIP programs
- Medicaid Program Integrity (Secs. 44105-44106): Requires states to complete monthly checks for terminated providers and quarterly verify against the Social Security Death Master File to remove deceased providers
The Finance Committee text also includes significant changes to two Medicaid provisions to state provider taxes and state directed payment programs. Changes to those provisions have caused significant concern among some senators who represent large Medicaid populations and rural areas. Specifically, the language phases down the maximum allowable threshold for states to use provider taxes from 6 percent to 3.5 percent, reducing the maximum allowable rate by 0.5 percent annually until 2031. Also included is language to reduce the payment limit for state directed payments, depending on whether a state expanded its Medicaid program under the ACA. Expansion states would have payments limited to 100 percent of the Medicare payment rate, while non-expansion states would have payments limited to 110 percent of the Medicare payment rate. Both changes have also caused consternation among hospitals that are concerned about changes to limit state provider taxes, and state-directed payments could alter how states reimburse hospitals for treating Medicaid patients. To address concerns raised by hospitals about the changes to the Medicaid provisions, also under consideration is a provision creating a hospital relief fund to offset the potential immediate losses hospitals, especially those in rural areas, would face.
Personnel Changes
- Gary Andres was confirmed by the Senate on June 17, 2025, to be HHS Assistant Secretary of Legislation.
- Nicole Verdun, previously the U.S. Food and Drug Administration's (FDA) chief regulator of cell and gene therapy products, was placed on administrative leave. Other leaders within the cell and gene therapy program were also placed on administrative leave.
Administrative Updates
Executive Order Updates
The Trump Administration has continued to release wide-ranging executive orders (EOs). For brief overviews of the numerous orders published by the Trump Administration, see our "Trump's 2025 Executive Orders: Updates and Summaries" tracking chart.
Regulatory Updates
CMS Releases 2025 Marketplace Integrity and Affordability Final Rule
The Centers for Medicare & Medicaid Services (CMS) issued a final rule on June 20, 2025, titled "Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability." The rule outlines measures to reduce improper enrollments in plans available through the ACA marketplaces, reinstates legal interpretation to restrict Deferred Action for Childhood Arrivals (DACA) recipients from being eligible for plans through ACA exchanges, and bars federal subsidies from being used to cover the cost of certain procedures related to gender-affirming care. In addition, the final rule:
- repeals special enrollment periods (SEPs) for individuals with household incomes below 150 percent of the federal poverty level (FPL), intended to prevent brokers who receive commissions from enrolling patients in ACA plans from improperly enrolling individuals without their knowledge
- requires income verifications for premium subsidies
- eligibility verifications for individuals enrolling through SEPs
- reducing advanced payments of Advanced Premium Tax Credits (APTCs) by $5 a month for individuals who are auto-enrolled in fully subsidized plans without verification
- standardizes annual Open Enrollment Periods (OEPs) to end on Dec. 31, instead of mid-January when OEPs have previously been extended
CMS notes that a variety of the provisions finalized in the rule, including those related to eligibility verification, are temporary and will sunset at the end of 2026 to ensure the processes work efficiently and effectively. The text, fact sheet and CMS press release can be found online.
FDA Commissioner Announces New Priority Review Voucher Program
The FDA announced the establishment of the Commissioner's National Priority Voucher (CNPV) program on June 17, 2025, which aims to reduce review time of select drug applications from "approximately 10-12 months to 1-2 months following a sponsor's final drug application submission." Vouchers under the CNPV program will be awarded "to companies aligned with U.S. national priorities," including but not limited to the following topic areas:
- addressing a health crisis in the U.S.
- delivering more innovative cures for the American people
- addressing unmet public health needs
- increasing domestic drug manufacturing as a national security issue
To be eligible, sponsors must submit the Chemistry, Manufacturing and Controls (CMC) section of the application, along with draft labeling, at least 60 days prior to submitting the final application. They must also remain available for ongoing communication and respond promptly to FDA inquiries throughout the CNPV review process. The FDA may extend the review timeline if 1) the submitted data or application components are incomplete or insufficient, 2) pivotal trial results are inconclusive or 3) the review presents unusual complexity.
Vouchers may be redeemed for drugs at any stage of development and for any medical focus area. Notably, the program does not currently apply to devices or drug-device applications.
TEFCA Reassembles
During a recent stakeholder convening hosted by a leading health data interoperability collaborative, the Assistant Secretary for Technology Policy Dr. Thomas Keane shared that the formal announcement of the Trusted Exchange Framework and Common Agreement (TEFCA) governing council is expected imminently. This forthcoming announcement is widely viewed as a strong signal of the Trump Administration's efforts to advance the Information Health Exchange (IHE) framework.
Social Security and Medicare Trustees Reports Released
The 2025 Social Security and Medicare Trustees Reports were released on June 18, 2025. The reports are released annually and provide an overview of the financial operations and actuarial status of the trust funds. The report this year projects that the Hospital Insurance (HI) Trust Fund will be able to cover 100 percent of scheduled benefits through 2033 – three years earlier than projected in last year's report. After that time, the HI Trust Fund will not be able to pay 100 percent of benefits to beneficiaries. This earlier depletion date is primarily attributed to higher-than-expected expenditures in 2024 and increased projected spending on inpatient hospital and hospice services. In 2024, Medicare provided coverage to 67.6 million individuals, with total program expenditures reaching $1.122 billion. The Supplemental Medical Insurance (SMI) Trust Fund is projected to be adequately financed.
The reports note, as they have previously, that "Current-law projections indicate that Medicare still faces a substantial financial shortfall that needs to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers." Additional key items from the Medicare Trustees Report include:
- Physician Services Payments: Payment updates are set at 0.75 percent annually for physicians in advanced alternative payment models (APMs) and 0.25 percent for those in the Merit-Based Incentive Payment System (MIPS). Over time, physician payment growth is projected to decline from 3.1 percent in 2049 (GDP minus 0.5 percent) to 2.8 percent in 2099 (GDP minus 0.9 percent).
- Medicare Advantage Enrollment Growth: The proportion of Medicare beneficiaries enrolled in private health plans is projected to rise from 50.5 percent in 2024 to 57.8 percent by 2034.
- Part D: The Medicare Trustees project that the IRA's drug negotiation provisions will not impact long-term Part D growth rates. However, the inflation rebate provisions are expected to modestly reduce spending growth compared to previous projections.
The Social Security Trustees Report indicates the Old-Age and Survivors Insurance (OASI) program, which provides monthly incomes to insured workers and their families at retirement, death or disability, is projected to be depleted by 2033, while the Disability Insurance (DI) program that provides monthly benefits to disabled workers and their families is projected to be stable.
Congress has consistently considered legislation to improve and extend the financial solvency of the Medicare and Social Security Trust Funds, but it is unlikely that comprehensive legislation to address pending insolvency will be considered in the short-term.
Major Health Insurers Commit to Prior Authorization Changes
A trade association representing major health insurance companies in the U.S. announced on June 23, 2025, that more than 50 health plans have signed a commitment to simplify prior authorization processes. The announcement was heralded by the HHS at an event held by HHS Secretary Kennedy and CMS Administrator Dr. Mehmet Oz. Insurers offering commercial, Medicare Advantage and Medicaid-managed care plans will implement these changes. By committing to institute changes, insurers will standardize electronic prior authorization by implementing new submission requirements by Jan. 1, 2027, reduce the scope of claims subject to prior authorization by Jan. 1, 2026, institute transition periods to ensure change of insurance don't impact treatment access, provide clear rationale for prior authorization determinations including appeals, expand real-time responses to prior authorization requests and institute medical reviews for requests that are not approved.
Legal Updates
Supreme Court Rules in Favor of Vapor, Tobacco Retailers
The U.S. Supreme Court ruled in a 7-2 decision on June 20, 2025, that tobacco retailers can challenge FDA rulings that adversely impact their financial viability. A major tobacco company appealed the FDA's rejection of marketing applications for several e-cigarette products. The FDA rejected the marketing applications based on findings that the company had not provided sufficient information proving how they would mitigate the risks the e-cigarette products posed to children and youth. In its ruling, the Supreme Court found that the Family Smoking Prevention and Tobacco Control Act's allowance for "any person adversely affected" by an FDA denial order may petition for judicial review. However, the Supreme Court largely ignored questions in the case regarding where a case may be filed.
Tennessee Law Prohibiting Certain Medical Treatments Upheld By Supreme Court
The U.S. Supreme Court ruled in a 6-3 decision on June 18, 2025, that Tennessee's Senate Bill (SB) 1, which prohibited certain medical treatments for transgender minors, was not subject to heightened scrutiny under the equal protection clause of the 14th Amendment. SB 1 prohibits healthcare providers from prescribing, administering or dispensing puberty blockers or hormones to any minor to affirm an individual's identity that is not consistent with their biological sex or to treat a purported discomfort from a discordance between the minor's biological sex and sexual identity. The Supreme Court held that because SB 1 classifies based on age and medical use, the Supreme Court is not compelled to provide a higher scrutiny of review to the case. It is likely the outcome of this case could lead additional legislatures to consider and advance similar legislation, given focus on laws outlining healthcare services for transgender individuals.
Supreme Court Asked to Weigh Intervention in HHS Reorganization
There are several cases currently pending regarding the reorganization of the HHS, including cases brought by HHS employees who are alleging they were terminated improperly, state attorneys general who have challenged layoffs of HHS staff and cuts to healthcare funding, and others. The Trump Administration recently submitted a petition to the Supreme Court asking for an emergency stay of a district court order blocking the reorganization. As the Supreme Court wraps up the current term, it is likely existing and additional cases and motions in cases challenging the legality of the reorganization will be heard.
Reproductive Health Care Privacy Rule Vacated by Texas Court
A district court in Texas issued an order on June 18, 2025, vacating the Health Insurance Portability and Accountability Act (HIPAA) Privacy final rule, which was published on April 26, 2024. The final rule intended to strengthen privacy protections for health information related to reproductive healthcare and protect patients against the disclosure of reproductive health information to state attorneys general and law enforcement entities. The court left in place portions of the rule related to substance use disorder records. Pursuant to the ruling, HIPAA-regulated entities are no longer prohibited from disclosing patient information to law enforcement entities. Previously, law enforcement entities were required to obtain an attestation stating the disclosed information would not be used to investigate reproductive healthcare provided legally. For additional information on the ruling, see Holland & Knight's previous alert, "HIPAA's Reproductive Health Rule Is Vacated Nationally," June 20, 2025.
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