Holland & Knight Health Dose: November 4, 2025

Looking Ahead

This week, the government shutdown entered its fifth week and, on Nov. 4, 2025, became the longest in history, beating a 34-day-plus record set during President Donald Trump's first term. Meanwhile, the Open Enrollment Period (OEP) began on Nov. 1, 2025, allowing consumers to view, choose and enroll in coverage through the Affordable Care Act (ACA) marketplaces. Many consumers are seeing increased costs due to the expiration of the Advanced Premium Tax Credits (APTCs), which remain at the center of the fight over government funding. The U.S. Senate returned to session on Nov. 3, 2025, with many anticipating progress toward ending the funding impasse to be made this week. Also top of mind will be the outcome of gubernatorial elections in Virginia and New Jersey, along with other state and local races in both states as well as New York City, Pennsylvania, Texas and California.

Upcoming Events

The Senate Committee on Health, Education, Labor and Pensions will hold a full committee hearing titled "Registered Apprenticeship: Scaling the Workforce for the Future" on Nov. 5, 2025 at 10 a.m.

The Senate Special Committee on Aging will hold a full committee hearing titled "Renewing Our Commitment: How the Older Americans Act Uplifts Families Living with Aging-Related Diseases" on Nov. 5, 2025 at 3:30 p.m.

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.

Personnel Updates

• George Tidmarsh, director of the Center for Drug Evaluation and Research (CDER), was placed on administrative leave and is said to have resigned from the U.S. Food and Drug Administration (FDA) on Nov. 2, 2025, following a complaint filed by a drug company alleging Tidmarsh had acted improperly to cause a negative financial impact on said company.

Legislative Updates

Senate Aging Committee Leaders Send Letters to Leading Pharmaceutical Distributors

Senate Special Committee on Aging Chairman Rick Scott (R-Fla.) and Ranking Member Kirsten Gillibrand (D-N.Y.) sent letters to four leading pharmaceutical distributors on Oct. 30, 2025, requesting information on vulnerabilities in the U.S. pharmaceutical generic drug supply chain. This letter builds on previous hearings and the release of a committee report outlining potential areas for reform to strengthen the U.S. drug supply chain.

Bipartisan Principles to Temporarily Extend and Reform Affordable Care Act Enhanced Premium Tax Credits

A bipartisan group of U.S. House of Representatives members led by Reps. Jeff Hurd (R-Colo.), Don Bacon (R-Neb.), Thomas Suozzi (D-N.Y.) and Josh Gottheimer (D-N.J.) unveiled principles on Nov. 3, 2025, for a two-year extension of enhanced ACA premium subsidies with new income caps and oversight reforms, a move signaling cross-party cooperation on health policy but one unlikely to influence or expedite an end to the ongoing government shutdown. For more information on APTCs and potential paths forward, see the Holland & Knight alert, "Open Season Nears: Advanced Premium Tax Credits and Potential Paths Forward."

Regulatory Updates

CMS, Treasury, DOJ Partner to Address Skin Substitutes, DME

Centers for Medicare & Medicaid Services (CMS) Administrator Mehmet Oz said a new joint plan with the U.S. Department of the Treasury and U.S. Department of Justice (DOJ) to curb Medicare fraud will be unveiled in two weeks, claiming gaps in the current system allow payments to flow before fraud and abuse is detected. The forthcoming initiative will focus on areas deemed "high-risk" such as skin substitutes and durable medical equipment (DME). Administrator Oz said the new approach will emphasize real-time data analysis and cross-agency coordination to "stop the money from leaving the building."

CMS Releases 8 Plans for Participation in HRSA 340B Rebate Model Pilot Program

The Health Resources and Services Administration (HRSA) announced on Oct. 30, 2025, that it has approved eight plans for participation in the 340B Rebate Model Pilot Program, which is slated to begin on Jan. 1, 2026. The plans include the following brand name drugs:

• Eliquis
• Enbrel
• Farxiga
• Imbruvica
• Januvia
• Jardiance
• Novolog, Novolog Flexpen, Novolog Penfill, Fiasp, Fiasp Flextouch, Fiasp Penfill
• Stelara
• Xarelto

The release of the eight plans appears to indicate HRSA will move forward with implementation of the 340B Rebate Model Pilot Program, though time remains for them to change course if they choose to do so given significant pushback received from a variety of stakeholders. The 340B Rebate Model Pilot Program is intended to be a voluntary program to allow drug manufacturers to provide post-sale rebates to entities participating in the 340B Drug Pricing Program instead of up-front discounts. Under the Model Pilot Program, pharmaceutical manufacturers may provide after-the-fact rebates for pharmaceutical drugs subject to the Medicare Drug Price Negotiation Program. Instead of receiving up-front discounts for drugs subject to the Model Pilot Program, covered entities would submit claims data to manufacturers within 45 calendar days of the date an eligible drug is dispensed to claim a rebate. Manufacturers would pay approved rebates within 10 calendar days of receiving claims data from covered entities. The deadline for drug manufacturers to apply to participate in the Model Pilot Program was Sept. 15, 2025.

Education Department Issues Final Regulations to Make Significant Changes to PSLF Program

The U.S. Department of Education issued final regulations on Oct. 30, 2025, that establish new requirements on the Public Service Loan Forgiveness (PSLF) program in the Direct Loan Program under 34 C.F.R. 685.219, which takes effect July 1, 2026. Beginning July 1, 2026, the final rule removes PSLF eligibility for borrowers when they are employed by organizations that are deemed to have engaged in enumerated illegal activities. Once that determination is made, borrowers will no longer receive credit toward loan forgiveness for the months after the date that the Education secretary determines an employer is declared ineligible. Borrowers would receive credit for work performed prior to such date. The final regulations assume savings will total $1.616 billion over 10 years resulting from reductions in transfers from the federal government given changes in employer eligibility. The final regulations denote that 163,900 borrowers have received forgiveness within the healthcare employment sector, with an average forgiveness amount of $89,400. The final regulations have already been challenged in federal court, with state attorneys general and stakeholder groups filing suit, who argue the changes are unlawful and would allow the administration to target entities with policies the administration disagrees with.

In the final regulation, the Education Department argues it is a "necessary evolution of PSLF oversight" and largely made no changes to the final regulations despite public comments submitted. However, one notable change in the final regulations is a clarification that makes it clear that "the opportunity to respond is called the 'employer reconsideration process,'" which will allow entities to respond to any findings before a final action is taken. The regulations exclude employers that engage in specific enumerated illegal activities that the Education Department considers to have a substantial illegal purpose, including:

• aiding and abetting violations of federal immigration laws
  • means any violation of the Immigration and Nationality Act (8 U.S.C. 1105 et seq.) or any other federal immigration laws
• supporting terrorism or engaging in violence for the purpose of obstructing or influencing federal government policy
• engaging in the chemical and surgical castration or mutilation of children in violation of federal or state law
  • Chemical castration or mutilation means the use of puberty blockers, including gonadotropin-releasing hormone (GnRH) agonists and other interventions, to delay the onset or progression of normally timed puberty in an individual who does not identify as his or her sex, and the use of sex hormones, such as androgen blockers, estrogen, progesterone or testosterone, to align an individual's physical appearance with an identity that differs from his or her sex.
  • Surgical castration means surgical procedures that attempt to transform an individual's physical appearance to align with an identity that differs from his or her sex or that attempt to alter or remove an individual's sexual organs to minimize or destroy their natural biological functions.
• engaging in the trafficking of children to another state for purposes of emancipation from their lawful parents in violation of federal or state law
• engaging in a pattern of aiding and abetting illegal discrimination, and engaging in a pattern of violating state laws

The Education Department notes there is ambiguity in considering certain activities to be illegal conduct and notes "where an activity is limited and not central to the organization's primary mission or operations, the employer would not be considered to have substantial illegal purpose." While the Education Department notes PSLF disqualification will not rest on "mere allegations or politically motivated lawsuits," the department states it will view any of the following as conclusive evidence that an employer is engaged in enumerated illegal activities:

• a final judgment by a state or federal court, whereby the employer is found to have engaged in activities that have a substantial illegal purpose
• a plea of guilty or nolo contendere, whereby the employer admits to having engaged in activities that have substantial illegal purpose or pleads nolo contendere to allegations that the employer engaged in activities that have substantial illegal purpose
• a settlement that includes admission by the employer that it engaged in activities that have a substantial illegal purpose

An entity that loses eligibility for the program may regain eligibility to become a qualifying employer after:

• 10 years after determination made by the education secretary, or at or after that time, an entity certifies on a borrower's application that the entity is no longer engaged in activities with a substantial illegal purpose
• the education secretary approves a corrective action plan signed by the employer to include certification that the entity is no longer engaged in substantial illegal activities and the entity meets "any other terms or conditions imposed by the Secretary designed to ensure that employers do not engage in actions or activities that have a substantial illegal purpose"

Changes to the PSLF program and eligibility for employers are likely to have a substantial impact on healthcare entities as well as nonprofit organizations, given the focus on targeting entities that provide gender-affirming care.

HHS OIG Releases Audit on Improper Payments to Certain Medicare Suppliers

The U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) released a new audit on Oct. 29, 2025, which found that Medicare improperly paid suppliers $22.7 million over seven years for DME, prosthetics, orthotics and other supplies to Medicare beneficiaries during inpatient stays from 2018 through 2024. The audit found that none of the $22.7 million should have been paid and that suppliers may have incorrectly collected up to $5.9 million in deductible and coinsurance payments from enrollees or representatives of the enrollee. Included among HHS OIG's recommendations is a direction that CMS have Medicare DME contractors to recover from suppliers up to the $22.7 million in identified improper payments, as well as a recommendation for suppliers to refund the improperly collected $5.9 million.

FDA Releases Draft Guidance in Demonstrating Biosimilarity

FDA issued draft guidance on Oct. 29, 2025, for industry titled "Scientific Considerations in Demonstrating Biosimilarity to a Reference Product: Updated Recommendations for Assessing the Need for Comparative Efficacy Studies." The issuance of the draft guidance represents a new effort by the Trump Administration to expand access to biosimilars and reduce prescription drug prices. The draft guidance outlines FDA's updated thinking around considerations for sponsors regarding comparative clinical studies to substantiate that a product is biosimilar. Under the new guidance, most biosimilar applications will no longer be required to complete comparative efficacy studies if certain other data shows a product is biosimilar to a reference product.

FDA Commissioner Martin Makary also indicated that FDA intends to release final guidance within the next three to six months that will eliminate the distinction between interchangeable biologics and biosimilars. FDA had previously issued draft guidance on the topic and had previously requested a change in legislative authority as part of FDA's annual budget request.

FDA Seeks to Limit Ingestible Fluoride Uses

FDA announced on Oct. 31, 2025, that it would take additional action to restrict the sale of ingestible fluoride prescription drug products. This announcement builds on previous efforts to remove certain fluoride tablet products from the U.S. market. FDA has now sent notices to four companies outlining its intent to take certain enforcement actions against them and noting that it will pursue action against products that are "for children under three years of age" or those that do "not limit use to children at high risk for dental caries, such as those who have a history of tooth decay and lack access to fluoridated drinking water." The warning letters give each entity 30 days to respond with a plan of action to FDA.

CMS Releases Final Medicare PFS Rule

CMS released the final Medicare Physician Fee Schedule (PFS) rule to set physician payment for 2026. Additional payment rules are expected to be finalized in the coming days. Consistent with requirements established under the Medicare Access and Children's Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA), CMS finalized the following two conversion factors (CFs) for calendar year (CY) 2026:

• $33.5675 for items and services furnished by Qualifying Alternative Payment Model (APM) Participants, reflecting a 3.77 percent increase relative to the 2025 CF
• $33.4009 for all other items and services, reflecting a 3.26 percent increase relative to the 2025 CF

MACRA provides a 0.75 percent base payment update for Qualifying APM Participants and a 0.25 percent base payment update for all other items and services. The CF also reflects a +0.49 percent budget neutrality adjustment and a 2.5 percent temporary increase for 2026 provided under H.R. 1.

Efficiency Adjustment

CMS finalized a 2.5 percent efficiency adjustment to work Relative Value Units (RVUs) and corresponding intra-service physician time for non-time-based services beginning in CY 2026. The policy applies broadly but exempts time-based codes (e.g., evaluation and management (E/M), care management, behavioral health), maternity codes (MMM global periods), telehealth services and – importantly – new CY 2026 codes. This means that newly established codes for CY 2026 will be exempt from the 2.5 percent reduction, even if they would otherwise be classified as non-time-based services. This adjustment reflects cumulative productivity gains under the Medicare Economic Index (MEI) and is expected to result in redistribution across specialties, with most experiencing no more than a ±1 percent impact overall.

Indirect PE Allocation

CMS finalized its proposal to revise how indirect practice expenses are allocated for facility-based services. Beginning in CY 2026, CMS will reduce by 50 percent the portion of indirect Practice Expense (PE) RVUs that are tied to work RVUs for facility settings relative to non-facility settings. This revision is expected to slightly increase payments to office-based specialties and decrease those for facility-based specialties without affecting the overall conversion factor.

Valuation of Specific Codes

CMS finalized valuations for 149 codes across multiple specialties including:

• 46 new codes for lower extremity revascularization, replacing 16 legacy codes
• national pricing for previously contractor-priced services such as tympanostomy and prostate procedures
• updated valuations for codes reviewed by the American Medical Association (AMA) RVS Update Committee (RUC) and other stakeholders

CMS deferred a decision on magnetic resonance imaging (MRI)-Guided Ultrasound Ablation, citing the need for additional data. Of note, CMS finalized its proposal to use Outpatient Prospective Payment System (OPPS) Ambulatory Payment Classification (APC) relative weights instead of direct practice expense (PE) inputs to establish PE RVUs for radiation oncology services.

Ambulatory Specialty Model (ASM)

CMS Innovation Center will launch a new mandatory Ambulatory Specialty Model (ASM) on Jan. 1, 2027, running through 2031, to test whether adjusting Medicare Part B payments for specialists based on performance in quality, cost, care coordination and use of certified electronic health record systems (EHR) technology (CEHRT) improves outcomes and reduces costs for patients with heart failure and low back pain. The model would require individual clinician participation and aims to incentivize upstream chronic condition management, patient engagement and care coordination.

MIPS Program

To promote stability, CMS finalized only limited updates to the Merit-Based Incentive Payment System (MIPS). The performance threshold will remain at 75 points through the CY 2028 performance period (CY 2030 payment year). CMS also removed outdated measures and clarified that telehealth encounters may be included in quality reporting where clinically appropriate. CMS is also finalizing a proposal to include updating MIPS Value Pathways (MVP) group registration processes to add multispecialty self-attestation requirements and maintaining flexibility for multispecialty small practices (15 or fewer clinicians) to report MVPs as groups. CMS is developing six new MVPs for CY 2026: Diagnostic Radiology, Interventional Radiology, Neuropsychology, Pathology, Podiatry and Vascular Surgery.

Telehealth

CMS finalized several telehealth updates for CY 2026:

• increased the originating site facility fee to $31.85 (up from $31.01 in 2025)
• added five new services to the Medicare Telehealth Services List:
  • CPT 90849 – Multiple-Family Group Psychotherapy
  • Healthcare Common Procedure Coding System (HCPCS) G0473 – Group Behavioral Counseling for Obesity
  • HCPCS G0545 – Infectious Disease Add-On
  • CPT 92622 and 92623 – Auditory Osseointegrated Sound Processor Diagnostic Analysis and Programming
• removed frequency limits for subsequent inpatient visits, subsequent nursing facility visits and critical care consultations
• eliminated Step 4 (mapping service elements) and Step 5 (requiring evidence of analogous benefit) of the five-step process for evaluating additions to the Telehealth Services List
• CMS is finalizing a permanent policy allowing physicians and other supervising practitioners to meet direct supervision requirements via real-time, two-way audio-video communication (excluding audio-only). This applies to services under §§410.26, 410.32, 410.47 and 410.49, but excludes procedures with 010 or 090 global periods. Additionally, CMS will permanently allow teaching physicians to have a virtual presence in all teaching settings – but only when the service itself is furnished virtually.

Geographic Practice Cost Indices (GPCIs)

CMS finalized updated Geographic Practice Cost Indices (GPCIs) for CY 2026 using the latest available data with a two-year phase-in. Updates include revised wage and rent inputs, continued use of 2006-based MEI cost share weights and maintained policies for frontier states and U.S. territories. CMS is seeking comments on potential methodological refinements for future updates.

Drugs and Biological Products Paid Under Part B

CMS finalized maintaining the standard refund thresholds for discarded drug amounts, clarified average sales price (ASP) reporting for drugs sold at maximum fair price, defined "bundled arrangements" for discount allocation and reaffirmed existing definitions of bona fide service fees (BFSFs) – while now requiring certification letters. CMS also confirmed that tissue procurement costs for autologous cell-based therapies must be included in product payment and ASP calculations beginning in 2026.

Skin Substitutes

Effective Jan. 1, 2026, CMS will begin paying separately for skin substitutes not licensed as biologicals under Section 351 of the Public Health Service Act, treating them as incident-to-supplies when furnished during a covered application procedure under the PFS in non-facility settings and under the OPPS. Products licensed as biologicals under Section 351 will continue to be reimbursed using the ASP methodology. CMS reiterates that significant payment differences across care settings should not drive site-of-service decisions or incentivize the use of higher-cost products without demonstrated clinical benefit.

CMS is also finalizing the classification and payment of skin substitute products into three categories based on FDA regulatory pathways:

1. premarket approval application (PMA)-approved devices
2. 510(k)-cleared devices (including De Novo)
3. self-determined 361 human cells, tissues, and cellular and tissue-based products (HCT/Ps)

This structure is designed to account for clinical distinctions, resource differences and the degree of regulatory oversight. For CY 2026, CMS will apply a single blended rate of $125.38 per cm² across all three categories, derived from volume-weighted ASP or mean unit cost data and hospital outpatient utilization patterns. In addition, CMS is finalizing the codification of "biological" to mean a product licensed under Section 351 of the PHS Act within the relevant regulatory text. The agency will preserve the current HCPCS coding structure and assign products to FDA-based categories for payment, rather than relying on the ASP methodology. Payment for new products will be determined according to their FDA categorization and updated annually. Beginning in January 2026, all skin substitute HCPCS applications will be processed through the biannual cycle, streamlining code assignment and valuation.

Extending Add-On and Bonus Ambulance Payments

CMS finalized proposals to codify the congressionally enacted ambulance payment add-ons:

• Section 2203 of the Full-Year Continuing Appropriations and Extensions Act of 2025 extends Medicare ground ambulance add-on payments through Sept. 30, 2025.
• Originally enacted in 2003, the Super Rural Bonus provides a 22.6 percent increase in the base rate for ground ambulance services originating in "qualified rural areas." Like the rural add-ons, this bonus was also extended through Sept. 30, 2025, under the same legislation. CMS will revise § 414.610(c)(5)(ii) to align regulatory text with these extensions.

USPSTF Meeting Canceled For Second Time

A late October 2025 meeting of the U.S. Preventive Services Task Force (USPSTF) was postponed due to the ongoing government shutdown. HHS Secretary Robert F. Kennedy Jr. had previously canceled a planned July 2025 meeting of the USPSTF, sparking significant concern among medical and provider associations. The USPSTF meets on a regular basis to make recommendations on preventive screenings and other services which must be covered by insurers at no cost to patients.

Legal Updates

Restraining Order Extended in Suit Against RIFs

A federal judge in California extended a restraining order on Oct. 28, 2025, for another two weeks in a lawsuit brought by federal employee unions against the Trump Administration. The restraining order prevents the Trump Administration from moving forward with additional reductions in force (RIFs) while the government is shut down. The Trump Administration had previously sought to terminate employees from across the HHS, including at Centers for Disease Control and Prevention (CDC). Additional federal employee unions have joined the suit since its initial filing.

Tariffs Get Day in Supreme Court

The U.S. Supreme Court will hear from state representatives and two sets of private companies on Nov. 5, 2025, who have challenged the legality of tariffs levied by President Trump. Three federal courts have previously ruled against President Trump's use of the International Emergency Economic Powers Act of 1977 (IEEPA) to impose reciprocal duties on various countries. IEEPA gave the president the ability to investigate, regulate or prohibit imports to deal with any "unusual and extraordinary threat" following declaration of a national emergency. Should the Supreme Court rule in favor of the states and the companies, refunds of tariffs already paid would have to be considered – potentially by lower courts – as well as a determination of how entities impacted should seek potential repayment. Should the Supreme Court rule in favor of the Trump Administration, the ruling will represent a dramatic expansion of the president's powers to levy tariffs in response to various emergencies. While the Supreme Court may release a decision by June 2026, given the new term just began, some hope a ruling is issued sooner due to the impact of tariffs. However, tariffs levied under other categories – such as Section 232 or Section 301 – would not be impacted, as the case is centered upon IEEPA tariffs.

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