Holland & Knight Health Dose: September 30, 2025

A meeting between President Donald Trump and congressional leaders on Sept. 29, 2025, failed to produce an agreed-upon path forward for government funding, leaving the federal government on track to shut down following the expiration of the current continuing resolution (CR) should no additional action occur on Sept. 30, 2025. The meeting with President Trump included U.S. Senate Majority Leader John Thune (R-S.D.), Senate Minority Leader Chuck Schumer (D-N.Y.), U.S. House of Representatives Minority Leader Hakeem Jeffries (D-N.Y.) and House Speaker Mike Johnson (R-La.). The Senate plans to vote again on the CR that was passed by the House prior to the congressional recess. A vote on the CR is slated for the afternoon or evening of Sept. 30, 2025. The CR funds the government through Nov. 21, 2025, and does not include any additional policies that Democrats are advocating for, such as an extension of the advanced premium tax credits (APTCs) for plans available through the Affordable Care Act (ACA).

As of writing, none of the fiscal year (FY) 2026 appropriations bills have been enacted, although a formal conference began prior to the congressional recess on full-year appropriations for the Agriculture-U.S. Food and Drug Administration (FDA), Legislative Branch and Military Construction-Veterans Affairs bills, though an agreement among senior appropriations leaders may be close. There is a possibility these three bills could be attached to a CR, but the next few days will be critical. For more information, see Holland & Knight's alert, "Government Shutdown Advisory: Summary of Possible Lapse in Appropriations," Sept. 29, 2025.

Upcoming Events

Holland & Knight's Hospitals and Health Systems Team will host its second annual Hospital Horizons Symposium, where attendees will hear from an impressive list of speakers who will provide healthcare regulatory, legislative and policy updates that are impacting hospitals and health systems. The event will begin with a reception on Oct. 6, 2025, and will continue with a full day of programming on Oct. 7, 2025.

Administrative Updates

Executive Order Updates

The Trump Administration has continued to release wide-ranging executive orders (EOs). For the latest updates, see our "Trump's 2025 Executive Orders: Updates and Summaries" tracking chart.

• President Trump issued an EO on Sept. 19, 2025, titled "Restriction on Entry of Certain Nonimmigrant Workers." The EO focuses on the H-1B nonimmigrant visa program, which was created to bring high-skilled workers into the U.S. on a temporary basis. A vast majority of H-1B visas have been used to hire workers in the science, technology, engineering, math (STEM) and healthcare fields. The EO requires entities seeking to obtain an H-1B visa to pay a fee of $100,000 starting Sept. 21, 2025, and lasting for 12 months. The EO does, however, provide a potential pathway for certain industries to seek an exemption if hiring workers is "in the national interest and does not pose a threat to the security or welfare of the United States." Finally, the EO directs a variety of rulemaking activities, including amending prevailing wage levels and prioritizing the admission of nonimmigrants. For additional information, see Holland & Knight's previous alert.

Personnel Updates

• Casey Means, President Trump's nominee to be U.S. surgeon general, filed ethics and financial paperwork on Sept. 16, 2025, making a nomination hearing possible as soon as this fall.

Legislative Updates

Government Funding Showdown Continues, No Deal for Now

Prior to the congressional recess, the House passed a CR that would fund the government through Nov. 21, 2025, without any extemporaneous policy provisions. Meanwhile, the Senate voted on the House-passed CR, as well as a counter-proposal offered by Senate Democrats, which funded the government through Oct. 31, 2025, permanently extended enhanced APTCs and rolled back Medicaid provisions included in the One Big Beautiful Bill (OBBB) Act (H.R.1). Neither CR proposals met the 60-vote threshold – a requirement for any CR to pass the Senate.

At the time of writing, congressional leaders do not have agreement on a CR to keep the government funded beyond Sept. 30, 2025, and a shutdown is slated to begin Oct. 1, 2025. Any potential shutdown will continue until an agreement is reached. Democrats continue to support a solution that includes an extension of APTCs for health plans purchased through ACA marketplaces. The Senate is scheduled to hold another vote on the House-passed CR, which may see several additional Democratic votes due to growing concerns about the potential impact of a shutdown. These concerns include the possibility of additional rounds of reductions in force (RIFs), threatened by the Trump Administration following a memo issued by the Office of Management and Budget (OMB) directing larger RIFs in the event of a shutdown.

Should there be a shutdown, healthcare agencies will see significant impacts, as only certain necessary functions or those that are funded outside of annual appropriations such as in the form of mandatory spending, will continue. In past shutdowns, most Centers for Medicare & Medicaid Services (CMS) operations and payments continued; however, there is uncertainty about whether a shutdown could result in larger numbers of federal employees being furloughed. The longer a shutdown lasts, the more significant the effects are likely to be.

The U.S. Department of Health and Human Services (HHS) released contingency staffing plans on Sept. 28, 2025, outlining how its agencies will function should there be a lapse in government funding. Under the Antideficiency Act, the federal government is prohibited from incurring additional expenditures during a shutdown, requiring agencies to identify activities that can continue with nondiscretionary or previously appropriated funding. The contingency plan includes separate plans for each agency. Below is a summary of the plans for CMS, FDA, Health Resources and Services Administration (HRSA), National Institutes of Health (NIH) and U.S. Centers for Disease Control and Prevention (CDC).

CMS Contingency Plan (FY 2026)

• Medicare: CMS confirms the Medicare program will continue during a lapse in appropriations.
• Medicaid: CMS has sufficient funding to cover Medicaid for the first quarter of FY 2026 (October 2025 through December 2025) due to the advance appropriation included in the Full-Year Continuing Appropriations and Extensions Act of 2025. Payments to states for Children's Health Insurance Program (CHIP) will also continue.
• Exchange: CMS will continue Federal Marketplace activities, such as eligibility verification, using Federal Marketplace user fee carryover.
• Other Activities Impacted: Facility surveys limited to the most serious complaints; policy and rulemaking delayed; oversight of contractors (e.g., Medicare Administrative Contractors, call centers, information technology (IT)) curtailed; outreach, education and beneficiary casework largely suspended.
• Staff: 3,311 staff members (53 percent) retained, including 3,105 exempt (50 percent) and 206 excepted (3 percent), plus 84 Commissioned Corps members. Exempt staff include those supported by nondiscretionary funds.

FDA Contingency Plan (FY 2026)

• User Fee Funding: The FDA collects user fees to review applications. These fees fund a large portion of the agency's workforce. As a result, FDA can continue work on "the review and approval of new medical products, the review of requests to conduct important clinical research, the issuance of guidance, and other necessary activities to help patients have access to new therapies and important generic and biosimilar treatment options."
• Activities that Continue: The agency also has some carryover balances from prior appropriations, which allow certain programs to continue operating even during a funding lapse. This includes reviewing and market authorization of new medical products, regulating tobacco products, issuing certain guidance/regulations and reviewing requests for important clinical research. Work continues "related to imminent threats to the safety of human life and the protection of property," such as recalls, outbreak response, for-cause inspections, import safety reviews and criminal enforcement.
• Activities that Pause: FDA cannot accept new drug, biologic, biosimilar, device or animal drug applications that require user fees. Hiring, recruitment, staff development and lab investments are paused for programs without carryover funds. Most unapproved drug activities and compounded drug oversight stop unless tied to imminent threats. Pre-market reviews of novel animal food ingredients and broader food safety policy initiatives are halted, leaving only emergency surveillance and responses.
• Staff: 86 percent of FDA staff will continue to work, including 66 percent who are exempt (funded by user fees or other ongoing sources) and 19 percent who are excepted (life-safety or property-protection functions).

HRSA Contingency Plan (FY 2026)

• Staff Retention: 53 percent (1,028 staff members) retained, including 822 exempt (43 percent) and 206 excepted (11 percent). About 47 percent furloughed. HRSA's 49 Public Health Service Commissioned Corps officers are also expected to continue working.
• Exempt Staff: Supported by mandatory, carryover or user-fee funding. Functions include oversight of the Health Centers program, Ryan White human immunodeficiency virus (HIV)/acquired immune deficiency syndrome (AIDS) Programs (Parts A & B), Ending the HIV Epidemic, Teaching Health Center Graduate Medical Education (GME), National Health Service Corps and the National Practitioner Databank.
• Excepted Staff: Perform tasks tied to imminent threats to human life, operations needed to support ongoing funded programs (administrative, grants oversight, IT support) and orderly phase-down of unfunded activities.
• Activities that Continue: Oversight and operations for programs already funded through nondiscretionary or carryover funds (e.g., Health Centers, Ryan White Parts A & B, Ending HIV Epidemic initiatives, Teaching Health Center GME and the National Practitioner Databank).
• Activities that Halt/Delay: Discretionary tasks such as issuing FY 2026 Notices of Funding Opportunity, reviewing discretionary grant applications, administrative/IT contracts, program expansions in maternal and behavioral health, workforce initiatives and litigation support.

NIH Contingency Plan (FY 2026)

• Activities that Continue: NIH Clinical Center patient care, safety of animals and ongoing experiments and maintenance of infrastructure (labs, IT, property). Critical systems (clinical records, networks) needed for patient care and clinical trials remain operational.
• Activities Suspended: Peer review meetings, advisory councils and issuance of new grants or awards. Admission of new patients (unless medically necessary) and initiation of new clinical protocols generally cease. Basic and translational research, training programs, scientific meetings, travel, most administrative functions and many veterinary services curtailed or halted.
• Staff Retention: 4,477 staff members (24.54 percent) retained. Only five staff members are "exempt," with 4,472 designated "excepted."
• Excepted Staff: Providing care to existing patients (inpatient and outpatient) will require the hospital to operate at least initially at approximately 90 percent of the normal patient load.

CDC/ATSDR Contingency Plan (FY 2026)

• Activities that Continue: Outbreak response and programs funded outside annual appropriations (e.g., U.S. President's Emergency Plan for AIDS Relief (PEPFAR), World Trade Center Health Program, Energy Employees Occupational Illness Compensation Program Act (EEOICPA), Vaccines for Children (VFC) program).
• Activities Suspended: CDC and Agency for Toxic Substances and Disease Registry (ATSDR) Subject Matter Expert (SME) guidance to state/local health departments, public communication, applied research, surveillance data analysis and preparation of new grant funding announcements.
• Staff: 4,891 staff members (36 percent) retained: 2,063 exempt (funded outside appropriations) and 2,828 excepted. Of the 8,742 staff to be furloughed, approximately 1,563 are in RIF status.

Sen. Wyden, Smith Request GAO Investigation as RHTP Funding Announced

Senate Committee on Finance Ranking Member Ron Wyden (R-Ore.) and Sen. Tina Smith (D-Minn.) sent a letter to the comptroller general of the U.S. Government Accountability Office (GAO) on Sept. 12, 2025, to request an independent analysis of the implementation of the Rural Health Transformation Program (RHTP). The RHTP was established by the OBBB and will provide $50 billion in funding to states from FY 2026 through FY 2030. The letter notes the CMS administrator has significant flexibility to implement the fund and requests the GAO provide answers to 14 questions:

1. What were the key decisions made by CMS in implementing the RHTP, including those for establishing an application process, determining the criteria and the application of those criteria for approving applications and determining the amount of funds to be allotted to each state?
2. How and when did CMS communicate the requirements of the application process for approving applications and determining the amount of funds to be allotted to states?
3. Are the administrative costs associated with the RHTP reasonable compared to other programs?
4. How do the CMS administrator's criteria for implementing the RHTP (e.g., application requirements, criteria for selection, transparency of the determination process, appeals process, etc.) compare to the criteria for other CMS grant programs?
5. How much funding was allotted to each state, and what factors did the CMS administrator consider in determining the recipients and amounts?
6. Did CMS award at least $100 million per year to each state with an approved application?
7. How does CMS determine that a state's use of funding from the RHTP is improper and should be clawed back?
8. What are the trends in the types of services or issues (e.g., access to care, financial instability, service line closures) that states described in their rural health transformation plans?
9. Are certain regions disproportionately benefiting from or being excluded from accessing the RHTP?
10. What process exists, if at all, for states to appeal approval decisions, withdrawal decisions and/or the number of allotments to them as part of the RHTP?
11. How does CMS plan to monitor and oversee states' use of funds to ensure consistency with the detailed plans in their applications?
12. How did CMS use the $200 million in implementation funding for the RHTP? Was this funding used to support CMS employees or third-party contractors? Was this funding made available to states?
13. Are there documented improvements in patient health outcomes or quality care metrics associated with the RHTP?
14. What risks does GAO foresee for future misuse, mismanagement or underperformance of the RHTP?

GAO Releases Report on Healthcare Consolidation

The GAO released a new report on Sept. 22, 2025, about consolidation in the healthcare industry, particularly among physician practices within Medicare and Medicaid markets and the contributing role that private equity may play. The report was directed by the FY 2023 appropriations package and found that physicians have become increasingly consolidated – that is, working for practices that are owned by other entities – with at least 47 percent of physicians being consolidated with health systems as of 2024, an increase from under 30 percent in 2012. The report also found that private equity ownership of physician practices is approximately 6.5 percent as of 2024, varying by physician specialty and geographic area.

Regulatory Updates

CDC ACIP Announces New Vaccine Recommendations

The CDC's Advisory Committee on Immunization Practices (ACIP) on Sept. 19, 2025, made several new recommendations related to vaccine guidelines. Though these decisions represent shifts in vaccine policy, they may still change and are not yet final until being approved by CDC Acting Director Jim O'Neill. The ACIP voted unanimously to shift away from broad recommendations that all patients receive a COVID-19 vaccine. Instead, the ACIP recommends "shared clinical decision-making" based on conversations between patients and their physicians. The ACIP, however, did not agree on requiring a prescription to receive a COVID-19 vaccine. The ACIP postponed a vote on recommendations regarding hepatitis B vaccines for newborns. Currently, newborns are given a hepatitis B shot at birth, but the ACIP considered delaying the provision of the hepatitis B vaccine until newborns are one month old. The ACIP also voted to restrict access to the measles, bumps, rubella and varicella (MMRV) vaccine to patients older than four years old, citing risks of febrile seizures in young children.

The FDA has previously announced changes to who may access COVID-19 vaccines by limiting how vaccines are approved to include the provision of the vaccines to individuals ages 65 or older, or individuals between six months to 64 years old with at least one underlying condition. A major industry trade group representing some of the largest health insurers in the nation previously issued a statement committing to covering all immunizations recommended by ACIP prior to Sept. 1, 2025, through the end of 2026 with no cost to patients.

HHS Announces Efforts Related to Autism

The HHS announced new actions on Sept. 22, 2025, related to incidences of autism spectrum disorder (ASD). As part of the announcement, the HHS announced the FDA would publish in the Federal Register a notice outlining changes to the label for leucovorin for cerebral folate deficiency, specifically to allow potential treatment for speech-related deficits related to ASD. The NIH will also launch confirmatory trials and new research into the impact of leucovorin to include safety studies. In addition, the FDA will issue a separate notice on the use of acetaminophen to potentially reduce its use; however, the announcement also notes that "that there are contrary studies showing no association and that there can be risks for untreated fever in pregnancy, both for the mother and fetus." Finally, the NIH announced 13 projects will receive a total of $50 million as part of the Autism Data Science Initiative (ADSI) to support autism research. A full list of recipients is available online.

FDA Announces ADUFA V Public Meeting

The FDA announced the availability of the Animal Drug User Fee Act (ADUFA) V Third-Party Assessment Report on Sept. 23, 2025, as well as a related virtual public meeting on Oct. 30, 2025, at 10 a.m. EST. The ADUFA authorizes the FDA to collect fees for certain new animal drug products that supplement the FDA's review processes. The third-party assessment was agreed upon in 2023 during negotiations regarding the reauthorization of ADUFA and is intended to evaluate the effectiveness of ADUFA from January 2024 to December 2024. The report will inform future reauthorizations of ADUFA.

Direct-to-Consumer Drug Advertisements: FDA Releases Letters to Companies

Following its announcement that the FDA would increase scrutiny on direct-to-consumer (DTC) drug advertisements, the FDA released warning letters on Sept. 16, 2025, sent to more than 70 companies, ranging from large pharmaceutical manufacturers to telehealth companies that market compounded drug products to consumers. The letters outline the FDA's rationale for targeting the individual companies, ranging from concerns that advertisements are misleading and misrepresent the efficacy of a drug product, to addressing claims that compounded drug products are the same as FDA-approved products. Notably, companies in receipt of warning letters have 15 business days to respond to the FDA, which should be monitored closely moving forward. Warning letters may be found on the FDA's website.

FDA Releases Three Guidance Documents Related to CGTs

The FDA published three draft guidance documents on Sept. 25, 2025, related to the development of cell and gene therapies (CGTs) to treat rare diseases, post-approval studies of CGTs and expediting the time it takes for regenerative medicines to reach the market.

• Draft guidance, "Innovative Designs for Clinical Trials of Cellular and Gene Therapy Products in Small Populations," provides recommendations to clinical trial sponsors who intend to conduct clinical trials involving cell and gene therapy products intended for use in a rare disease or condition that impacts a small population. Recommendations include diverse clinical trial designs, as well as potential consideration of the entire treatment landscape and a patient's overall symptoms, and whether symptoms are overall representative of a particular disease when deciding whether to enroll patients.
• Draft guidance, "Postapproval Methods to Capture Safety and Efficacy Data for Cell and Gene Therapy Products," discusses methods and approaches to capture post-approval safety and efficacy data for CGT products. Because CGT clinical trials often involve a small patient population prior to approval, it is becoming increasingly pressing to monitor safety and gather other long-term data after a product receives FDA approval. The guidance seeks to develop new methods for capturing adverse event data and encourages sponsors to review real-world data and evidence through sources such as electronic health records (EHRs), claims data and other sources.
• Draft guidance, "Expedited Programs for Regenerative Medicine Therapies for Serious Conditions," provides guidance to clinical trial sponsors developing regenerative medicine therapies for serious or life-threatening conditions. The 21st Century Cures Act allowed regenerative medicine advanced therapies (RMATs) the ability to use FDA's accelerated approval pathway. The guidance seeks to outline how RMATs may qualify for the pathway and potentially the FDA's Platform Technology Designation Program.

Interested stakeholders have until Nov. 24, 2025, to provide comments in response to each of the three guidance documents.

New RFI on Regulatory Barriers for AI

The Office of Science and Technology Policy (OSTP) announced a new request for information (RFI) on Sept. 25, 2025. The RFI requests comments from interested stakeholders regarding "existing Federal statutes, regulations, agency rules, guidance, forms, and administrative processes that unnecessarily hinder the development, deployment, and adoption of artificial intelligence (AI) technologies within the United States." The information collected will inform "priorities for such regulatory reform or other agency action necessary to promote AI innovation and adoption." The publishing of this RFI follows the July 2025 release of the America's AI Action Plan. The RFI specifically invites comments about the following:

1. What AI activities, innovations or deployments are currently being inhibited, delayed or otherwise constrained due to federal statues, regulations or policies? Please describe the specific barrier and AI capability or application that would be enabled if it was addressed. The barriers may directly hinder AI development or adoption, or indirectly hinder through incompatible policy frameworks.
2. What specific federal statutes, regulations or policies present barriers to AI development, deployment or adoption in your sector? Please identify the relevant rules and authority with specificity, including a cite to the Code of Federal Regulations (C.F.R.) or the U.S. Code (U.S.C.) where applicable.
3. Where existing policy frameworks are not appropriate for AI applications, what administrative tools (e.g., waivers, exemptions, experimental authorities) are available but underutilized? Please identify the administrative tools with specificity, citing the C.F.R. or U.S.C. where applicable.
4. Where specific statutory or regulatory regimes are structurally incompatible with AI applications, what modifications would be necessary to enable lawful deployment while preserving regulatory objectives?
5. Where barriers arise from a lack of clarity or interpretive guidance on how existing rules cover AI activities, what forms of clarification (e.g., standards, guidance documents, interpretive rules) would be most effective?
6. Are there barriers that arise from organizational factors that impact how federal statues, regulations or policies are used or not used? How might federal action appropriately address them?

Section 232 National Security Investigation of Imports of PPE, Medical Consumables and Medical Equipment, Including Devices

The U.S. Department of Commerce secretary initiated a new Section 232 investigation into "the effects on the national security of imports of personal protective equipment (PPE), medical consumables, and medical equipment (including devices)." Please note this is distinct from the ongoing pharmaceutical-related Section 232 investigation, which still awaits further details. This investigation has been initiated under Section 232 of the Trade Expansion Act of 1962, as amended (Section 232). Interested parties are invited to submit written comments, data, analyses or other information pertinent to the investigation to the Commerce Department's Bureau of Industry and Security (BIS) and Office of Strategic Industries and Economic Security (SIES). This notice identifies issues in which the Commerce Department is especially interested in obtaining the public's views.

The Commerce Department will have up to 270 days to provide its policy recommendations to President Trump. Stakeholders may notice the following definitions on page three:

• PPE including, but not limited to, surgical masks, gloves, gowns and similar protective items
• medical consumables including, but not limited to, IV bags, catheters, gauze, diagnostic supplies and laboratory reagents
• medical devices including, but not limited to, pacemakers, insulin pumps, heart valves, MRI machines and related equipment

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