Looking Ahead
With the reconciliation package signed into law, the U.S. House of Representatives is in recess and will return on July 14, 2025. In the interim, the U.S. Senate will focus on the appropriations bills for fiscal year (FY) 2026 and begin negotiating a potential continuing resolution, as current funding expires on Sept. 30, 2025.
Hearings This Week
On July 9, 2025, the Senate Committee on Health, Education, Labor and Pensions (HELP) will vote on the nomination of Dr. Susan Monarez to be director of the Centers for Disease Control and Prevention (CDC).
On July 9, 2025, the Senate Committee on Appropriations will hold a hearing titled, "A Future Without Type 1 Diabetes: Accelerating Breakthroughs and Creating Hope."
On July 10, 2025, the Senate Committee on Appropriations will mark up three appropriations bills: the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2026; the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2026; and the Legislative Branch Appropriations Act, 2026.
Many hearings scheduled in House committees have been canceled or postponed, given that the House is in recess until next week.
Week in Review
President Donald Trump signed H.R. 1, known as the One Big Beautiful Bill Act, into law on July 4, 2025. The Senate passed the legislation by a 50-50 vote, with Vice President J.D. Vance casting the tiebreaking vote in the affirmative on July 1, 2025. The legislation was passed after more than 26 hours and 49 votes on amendments and procedural motions. The "vote-a-rama" broke records both for being both the longest vote-a-rama in history and the vote-a-rama with the most votes held. The House passed the legislation on July 3, 2025, by a vote of 218-214.
Administrative Updates
Executive Order Updates
The Trump Administration has continued to release wide-ranging executive orders (EOs). For the most recent updates, see our "Trump's 2025 Executive Orders: Updates and Summaries" tracking chart.
Personnel Updates
- Chair of the House Committee on Energy and Commerce Subcommittee on Health Rep. Buddy Carter (R-Ga.) announced on July 2, 2025, that he would step down as chair of the subcommittee. Rep. Morgan Griffith (R-Va.) will take over as chair of the Health Subcommittee.
- Mike Davis will return to the U.S. Food and Drug Administration (FDA) to become director of the Center for Drug Evaluation and Research (CDER). Dr. Jacqueline Corrigan-Curay who previously served as acting director of the CDER recently announced she would depart the agency.
Legislative Updates
Final Package: What Was Included, What Was Not
The One Big Beautiful Bill Act extends tax cuts from President Trump's 2017 Tax Cuts and Jobs Act and makes significant changes to federal healthcare programs, including Medicaid/Children's Health Insurance Program (CHIP), Medicare and the Affordable Care Act (ACA). In the coming weeks, Holland & Knight's Healthcare practice will provide additional in-depth analyses on the provisions, how the provisions may impact healthcare stakeholders as they take effect, and how to remain nimble as the Trump Administration and states work to implement new requirements for and changes to federal healthcare programs.
Major Changes to Federal Healthcare Programs
H.R. 1 makes significant changes to Medicaid, CHIP, Medicare and ACA. Changes include new requirements states must meet to maintain federal support for the Medicaid programs, as well as more strict criteria beneficiaries must meet to qualify for and maintain enrollment in federal healthcare programs.
Medicaid/CHIP
- "Community Engagement" Requirements. Able-bodied adults must affirm monthly that they spend no less than 80 hours per month working, participating in a work program, completing community service, participating in an educational program or participating in a combination of those activities. Exceptions are made for certain individuals including those under 19 years of age and individuals experiencing certain short-term hardship events.
- Limits Certain Noncitizen Access to Federal Health Services. Prevents certain non-citizens from enrolling in or receiving benefits under Medicaid/CHIP.
- Enrollment Changes. Requires states to complete quarterly reviews of Death Master Files to verify deceased beneficiaries and providers do not remain enrolled in Medicaid programs.
- Eligibility Redeterminations. To be conducted every six months, starting on or after Dec. 31, 2026.
- Preventing Dual Enrollment. States are required, beginning no later than Oct. 1, 2029, to submit to the U.S. Department of Health and Human Services (HHS) secretary information to determine whether an enrollee continues to be eligible for Medicaid and prevent dual enrollment of individuals in multiple Medicaid programs. Funding of $30 million for implementation is provided, including $10 million for FY 2026 to establish the system and an additional $20 million for FY 2029 to maintain the system.
- Limits Payments to "Prohibited Entities." No federal funding may be used to make payment to prohibited entities, including 501(C)(3) nonprofit organizations, essential community providers primarily engaged in providing family planning services, reproductive health or related services, or entities that provide abortions except under certain circumstances.
- Federal Matching Assistance Percentage (FMAP) Reductions. Sunsets the FMAP incentive offered to states that elect to expand their Medicaid programs after Jan. 1, 2026.
- Increased Cost Sharing. Beginning Oct. 1, 2028, requires states to impose cost-sharing requirements or levy similar charges totaling no more than $35 for certain services, care or items furnished to Medicaid enrollees, excluding primary care, mental health, substance use disorder services, services provided by federally qualified health centers (FQHCs), certified community behavioral health centers (CCBHCs) or rural health clinics. Cost sharing may not exceed 5 percent of a family's income.
- Medicaid State Directed Payment Programs
(DPPs). Currently, a Medicaid DPP program can pay
providers up to average commercial rates (ACR). The bill
establishes a new cap on these rates at 100 percent of Medicare
payment rates for ACA expansion states and 110 percent for ACA
non-expansion states. If approved, such timely submitted programs
would be grandfathered and the reduction in payment limits would
not begin until the Jan. 1, 2028, rating period. Programs would
also be phased in through a 10 percent annual reduction in the DPP
program total payment amount until the required percentage of
Medicare rate is reached. However, the bill has language that would
grandfather DPP programs that meet certain submission/approval
deadlines:
- those approved (or applied for in good faith) before May 1, 2025
- those for rural hospitals submitted before the enactment date and as added at the last minute
- those submitted before the date of enactment
- State Provider Taxes. Current law allows provider taxes up to 6 percent of provider revenues. Starting in 2028, the bill limits provider taxes in ACA expansion states (that have an enacted provider tax as of the date of enactment of the bill) through a gradually decreasing cap – from 5.5 percent of net patient revenues in 2028 down to 3.5 percent by 2032. Non-expansion states will be prohibited from imposing new provider taxes in certain situations but are not subject to the graduated step down to a 3.5 percent cap. The bill also contains provisions preventing states from designing tax structures that are based on unit measures of Medicaid revenues. This directly impacts seven states that have enacted provider taxes that are assessed based on managed care organizations (MCOs), managed care revenues and will likely prohibit future approaches based on Medicaid revenue metrics.
- Budget Neutrality for Medicaid Demonstration Projects. Beginning Jan. 1, 2027, the secretary may not approve an application to begin or renew a demonstration project under Section 1115 unless it is budget neutral.
Medicare
- Limits Certain Noncitizen Access to Federal Health Services. Prevents certain noncitizens from receiving premium tax credits to reduce the cost under Medicare.
- Temporary "Doc Fix." Includes a temporary "doc fix" with a 2.5 percent increase under the Medicare Physician Fee Schedule for 2026. This increase is a one-time adjustment that is not being implemented as an inflationary adjustment.
- Exemption of Orphan Drugs from Medicare Drug Price Negotiation. The Inflation Reduction Act (IRA) exempted orphan drugs – medicines designed to treat rare diseases – from being subject to the Medicare Drug Price Negotiation Program if the drug was intended to treat only a single indication or condition. H.R. 1 expands the exemption to include orphan drugs approved for more than one rare disease starting in 2028. The language also extends the time that orphan drugs may be exempt from Medicare Negotiation if a nonrare disease indication is added to a drug.
ACA
- Limits Certain Noncitizen Access to Federal Health Services. Limits the availability of premium tax credits (PTCs) for plans through the ACA marketplaces to certain noncitizens, disallows the availability of PTCs during the time certain noncitizens are not eligible for Medicaid and requires monthly verification of eligibility for receipt of PTCs.
- Enhanced Advanced Premium Tax Credits. The bill does not extend enhanced advanced premium tax credits (APTCs) that are currently set to expire at the end of 2025.
Rural Health Transformation Program
The bill establishes a Rural Health Transformation Program that will provide $50 billion over five years to hospitals and other providers. To qualify for funding, states must submit a rural health transformation plan by Dec. 31, 2025, outlining how the plan will improve access to care, patient outcomes, and the long-term success and financial viability of rural hospitals. Applications will be approved or denied by Dec. 31, 2025. The annual funding distribution will be as follows:
- 50 percent of funds split equally among all approved states
- 40 percent of funds allocated based on factors, including:
- percentage of the state population living in rural census tracts
- proportion of rural health facilities within the state
- financial status of state hospitals
- additional factors as determined by the Centers for Medicare & Medicaid Services (CMS)
Delay of Rules Finalized by Previous Administration
Three rules and amendments finalized by the previous administration will not be enforced, implemented or administered until Sept. 30, 2034, rather than blocking the rules entirely as originally proposed. The three rules include Streamlining Medicaid: Medicare Savings Program Eligibility Determination and Enrollment (88 Fed. Reg. 65230); Medicaid Program: Streamlining the Medicaid, CHIP and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes (89 Fed. Reg. 22780); and Medicare and Medicaid Programs; Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting (89 Fed. Reg. 40876).
Expanded Access to Health Savings Accounts (HSAs)
H.R. 1 expands access to HSAs for patients with high-deductible health plans (HDHPs) and patients with bronze and catastrophic-level plans through the ACA marketplaces. HSAs allow individuals to put pre-tax dollars into an HSA for use in paying for qualified medical expenses. An unused HSA may be rolled over year over year. Under H.R. 1, patients with HSAs under newly eligible plans may also now use HSAs to pay for direct primary care, which is when patients pay a set monthly or annual fee to their primary care physician instead of having care reimbursed through their health insurance plan. In addition, H.R. 1 includes a provision allowing telehealth services to be covered on a pre-deductible basis for individuals enrolled in HDHPs.
Provisions Struck from the Senate Substitute Amendment
Several provisions included in prior versions of H.R. 1, including versions passed by the House and released by the Senate Committee on Finance were ultimately struck from the bill before passing the Senate. Provisions no longer included in the legislation are:
- prohibiting federal financial participation under Medicaid and CHIP for individuals without verified citizenship, nationality or satisfactory immigration status
- removal of the federal medical assistance percentage (FMAP) penalty for states that use state funding to provide access to Medicaid for certain immigrant
- banning spread pricing in Medicaid
- ACA Cost-Sharing Reduction payments
- prohibiting federal funding for gender affirming care
- 10-year moratorium on federal artificial intelligence (AI) regulation and a 500 million investment to modernize federal information technology infrastructure
Regulatory Updates
CMS Launches Prior Authorization Pilot
The CMS announced on June 27, 2025, a new Innovation Center model within Original Medicare titled "Wasteful and Inappropriate Service Reduction (WISeR)." The model will utilize various technologies to test ways to expedite prior authorization processes for certain services and in certain states to improve access to care and reduce improper spending, including skin and tissue substitutes, electrical nerve stimulators, services for the treatment of knee osteoarthritis and others. Providers and supplies within Original Medicare have the choice to either submit a prior authorization (PA) request for the items and services selected by the model, or be subject to post-service and pre-payment medical review. The model will run for six performance years, from Jan. 1, 2026, to Dec. 31, 2031.
CMS is accepting applications for companies interested in participating. Applications are due by July 25, 2025.
FDA Consultation Meetings for GDUFA
The FDA announced on June 26, 2025, it will hold consultation meetings with interested parties, including patient and consumer groups, healthcare professionals, and scientific and academic experts on the reauthorization of the Generic Drug User Fee Amendments (GDUFA) for FYs 2028-2032. Current authorities allowing the FDA to collect human generic drug user fees expire at the end of September 2027 and new legislation will be required to extend that authority for future FYs. Individuals who wish to participate in the series of meetings, which will be held monthly beginning in the fall, should register interest at GDUFAReauthorization@fda.hhs.gov. In addition, meetings will be held in-person at the FDA's White Oak Campus in Silver Spring, Maryland. Participation in the meeting can inform ongoing negotiations between the FDA and regulated industries.
FDA Seeks Input on New Post-Market Food Chemical Surveillance Tool
The FDA requested input on June 18, 2025, on the proposed use of a new, systematic tool to guide how the FDA will rank and prioritize substances in food for post-market safety reviews. The tool will use two categories of criteria – public health criteria and other decisional criteria – to provide scores to chemicals used in foods and determine how existing food chemicals should be prioritized for further review. Though the proposed tool would not be used to evaluate all existing food chemicals, the tool indicates the FDA is shifting its treatment of food chemicals from being reactive to being proactive, using advanced data analytics and expert evaluation to identify substances of greatest concern. The framework aligns with principles used by other global authorities, including the European Food Safety Authority's (EFSA) reevaluation of legacy additives and Toxic Substances Control Act's (TSCA) prioritization under the U.S. Environmental Protection Agency's (EPA) risk-based approach.
For more information, see Holland & Knight's previous alert, "Food and Chemical Update: FDA Unveils Data-Driven Assessment Tool to Rank Food Chemicals," July 1, 2025. Public comments on the proposed tool are due by July 18, 2025.
HRSA Moves to Implement Portions of Drug Pricing EO
The Health Resources and Services Administration (HRSA) announced on June 24, 2025, that it will require health centers receiving funding from HRSA to provide insulin and injectable epinephrine to low-income patients at or below the price paid by the center through the 340B Drug Pricing Program. Low-income patients include those with high cost-sharing requirements for either product, high unmet deductibles or no healthcare insurance. Health centers are required to meet the terms as a condition of receiving their funding. The announcement implements a directive included in EO 14273 "Lowering Drug Prices by Once Again Putting Americans First." Additional actions are expected to be announced in the weeks ahead as the HHS seeks to meet the deadlines outlined by the EO.
Judicial Updates
Supreme Court Upholds Constitutionality of U.S. Preventive Services Task Force
The U.S. Supreme Court issued a 6-3 decision on June 27, 2025, in a major case regarding whether the structure of the U.S. Preventive Services Task Force (USPSTF) – an independent entity convened by the federal government that makes recommendations for preventive services that nearly all private insurances must cover without cost-sharing – violates the U.S. Constitution's Appointments Clause. The court reversed the U.S. Court of Appeals for the Fifth Circuit, ruling that USPSTF members are "inferior officers" who may be appointed by the HHS secretary – without requiring presidential nomination or Senate confirmation. Though the ruling maintains the ACA's requirement that most private health plans cover USPSTF-recommended preventive services rated "A" or "B," it affirms the secretary's authority to both replace Task Force members and prevent their recommendations from taking effect.
The Supreme Court also highlights the secretary's ability to block a Task Force recommendation from taking effect as further evidence that Task Force members are inferior officers. The court notes that, "in this statutory scheme, the Secretary can use his at-will removal power to stop any preventive-services recommendations contrary to his judgement from taking effect." As a result, the secretary retains ultimate responsibility over whether Task Force recommendations become final decisions that mandate no cost coverage by health insurers.
The court also cites provisions in the ACA giving the secretary the power to "establish a minimum interval" between the time the Task Force issues an "A" or "B" recommendation and the time insurers must cover the recommended service. During this time, the secretary may request the Task Force revise or withdraw a recommendation. The law gives the secretary discretion to set a minimum interval that is longer than a year. Specifically, the secretary can request that the Task Force reconsider or withdraw a recommendation that he or she disfavors. The secretary has time to remove and replace Task Force members who refuse and can then request that the reconstituted Task Force modify or rescind the recommendation.
Moving forward, the court's decision is likely to embolden secretaries to exert additional power over the appointment and termination of Task Force members. Secretaries may also be more likely to make requests that the Task Force revise or withdraw a larger number of recommendations, particularly recommendations the secretary does not agree with.
Supreme Court Rules that Nationwide Injunctions Should be Limited
In a 6-3 decision on June 27, 2025, the Supreme Court ruled that nationwide injunctions may only apply to the specific states, groups or individuals who bring a lawsuit, effectively limiting their scope. The case stemmed from a challenge to President Trump's EO on birthright citizenship; however, the Court did not address the constitutionality of the order itself. The ruling significantly curtails the power of federal trial courts by ending the practice of nationwide injunctions issued by a single judge.
Rooted in a strongly originalist interpretation, the decision emphasizes that courts can grant relief only to the parties before them, rather than considering the broader, practical impact of executive actions. This has significant implications for litigation involving EOs – especially as such executive orders become increasingly common and powerful – including those related to gender-affirming care, the National Institutes of Health and other areas.
Judge Rules in Favor of HHS, Hospitals in Case Challenging 340B Rebate Model
A U.S. district court judge ruled on June 27, 2025, against a major pharmaceutical manufacturer that participates in the 340B Drug Discount Program. The pharmaceutical manufacturer had previously sought to change how it provided rebates for prescription drugs to 340B covered entities by requiring covered entities to purchase certain drugs at full price up front and receive a rebate at a later date. Under existing statute, manufacturers are required to offer covered entities covered outpatient drugs for purchase at or below the applicable ceiling price if the drug is made available to any other purchaser.
The HHS is expected to issue forthcoming guidance on rebate models, as previously noted in a court filing, including how potential changes to rebate models may be implemented.
Supreme Court Agrees to Hear Cases Regarding Bans on Transgender Athlete Participation in Sports
Though there remain several orders on the Supreme Court's emergency docket from this term, the Supreme Court has agreed to hear two cases related to bans on transgender athletes competing on sports teams consistent with their gender identity in the upcoming term, which begins October 2025. The court agreed to hear two cases that ask whether the 14th Amendment's equal protection clause and Title IX, which bars discrimination based on sex, bars states from implementing laws to require transgender athletes to compete on sports teams consistent with their biological sex, rather than gender identity.
Federal Judge Rules Administration's Firing of HHS Personnel Likely Illegal
A federal judge ruled on July 1, 2025, that recent layoffs of personnel from the HHS were likely unlawful and ordered the Trump Administration to halt plans to reorganize and further reduce HHS' workforce. The federal judge issued a preliminary injunction following a request by a coalition of states in a lawsuit in May. The judge notes in its ruling that, "HHS' action was both arbitrary and capricious as contrary to law." In addition, the judge requested that the states and the Trump Administration provide interpretations by July 11, 2025, regarding whether the Supreme Court's recent ruling to limit the applicability of universal injunctions should apply in this case.
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