Health Policy Report – December 2, 2025

CMS Releases Hospital Outpatient Prospective Payment Schedule Final Rule

On November 21, the Centers for Medicare & Medicaid Services (CMS) released the final rule for the Hospital Outpatient Prospective Payment System (HOPPS) finalizing site-neutral payments for drug administration in excepted off-campus provider-based departments.

The HOPPS final rule took further steps toward site neutral payment policy, finalizing a proposal to equalize drug administration services provided in off-campus hospital outpatient departments (HOPDs) and the physician office setting. Despite some site neutral reforms passed in the Bipartisan Budget Act of 2015, most hospital outpatient departments currently remain eligible to bill Medicare and enrollees at much higher rates than physician offices.

The final rule aligns with Executive Order 14273 (“Lowering Drug Prices by Once Again Putting Americans First”), which directed CMS to evaluate policies that prevent inappropriate shifts from physician offices to higher-cost hospital outpatient settings. By targeting drug administration, CMS is addressing a service family that is safely and predominantly performed in community settings—68 percent of such services occur in physician offices, according to external studies cited in the rule.

In addition, CMS announced two 340B-related updates: it will conduct a survey of acquisition costs for separately payable drugs, including those acquired under the 340B program, beginning late CY 2025 through early CY 2026, with results intended to inform policy for the CY 2027 OPPS/ASC proposed rule. CMS also confirmed it will not finalize its proposal to increase the annual offset percentage for non-drug items and services from 0.5% to 2%, opting instead to maintain the previously finalized 0.5% reduction and revisit a larger adjustment for CY 2027.

“We continue to advance Medicare payment reform by advancing policies that help prevent services from unnecessarily being performed in hospitals when they can be safely provided in less intensive settings, streamlining hospital billing systems, and ensuring patients receive transparent, accurate pricing information,” Chris Klomp, CMS deputy administrator and director of the Center for Medicare, said in a statement.

Hospital groups slammed the policy, claiming that it will limit patient access to hospital-based care. “Specifically, we oppose expanding ‘site-neutral’ cuts and eliminating the inpatient-only list,” said Ashley Thompson, senior vice president of public policy and analysis at the American Hospital Association, in a statement. “Both policies ignore the important differences between hospital outpatient departments and other sites of care. The reality is that hospital outpatient departments serve Medicare patients who are sicker, more clinically complex, and more often disabled or residing in rural or low-income areas than the patients seen in independent physician offices.”

To read more, CLICK HERE.

To read the complete final rule, CLICK HERE.

To read The Network’s comments on the OPPS proposed rule, CLICK HERE.

Trump Administration Weighs Plan to Extend Subsidies

The White House is weighing a proposal to extend the Affordable Care Act (ACA) enhanced subsidies that were at the center of the debate during the government shutdown. If Congress does not act by the end of the year, ACA health insurance enrollees are set to face a spike in premium payments. As part of the deal to end the shutdown, Senator Majority Leader John Thune (R-SD) promised to hold a vote on a bill of Democrats’ choosing to extend the tax credits.

Congressional Republicans, including Senator Bill Cassidy, MD (R-LA), have proposed replacing the ACA premium tax credits with pre-paid health savings accounts (HSAs). While HSAs would not help pay for monthly premiums, they may help reduce the cost of co-pays, deductibles, and co-insurance. This proposal is still being discussed, and nothing has materialized. 

The Trump Administration was reported to be considering a proposal that would extend the premium tax credits for two years, with certain restrictions. The plan would cap eligibility at incomes of 700% of the federal poverty level. The proposal would also include an option to use the subsidies to fund HSAs. However, the White House still has not committed to a final proposal following discussions with Congressional leadership.

The White House has not published a proposal, so details are subject to change.

To read more, CLICK HERE.

Crapo, Wyden Set to Introduce Bipartisan PBM Reform Legislation
On November 19, the Senate Finance Committee held a hearing to discuss policies to make healthcare more affordable for Americans. During the hearing, Senate Finance Chair Mike Crapo (R-ID) announced plans to reintroduce bipartisan legislation with Ranking Member Ron Wyden (D-OR) to reform the role of pharmacy benefit managers (PBMs) in the healthcare system.

The legislation Senator Crapo teased would be similar to the PBM bill that passed the Senate Finance Committee on a 26-1 vote in 2023 and was included in Congress’ year-end package in 2024 but was ultimately removed from consideration at the last minute.

If reintroduced with similar provisions, the new PBM reform package would require Medicare Part D plans to provide a flat fee to PBMs for the drugs they help negotiate, which would de-link their compensation from the price of the drugs. The forthcoming package may also ban spread pricing, increase transparency and reporting requirements, and require PBMs to pass through 100% of the rebates they receive from pharmaceutical companies to Medicare Part D sponsors.

To read more on the issue, CLICK HERE.

To watch the full hearing, CLICK HERE.

To read the text of the “The Modernizing and Ensuring PBM Accountability Act,” which was introduced by Senators Crapo and Wyden in the 118^th Congress, CLICK HERE.

House Ways & Means Subcommittee Holds Hearing on Chronic Disease

On November 19, House Committee on Ways and Means Chairman Jason Smith (R-MO) and Health Subcommittee Chairman Vern Buchanan (R-FL) held a Subcommittee on Health hearing to address the prevention of chronic disease by improving care coordination and delivery. According to the committee, the hearing focused on “how improving care coordination provides better outcomes for patients and fragmented care contributes to medical errors, unnecessary visits, redundant or repeated services, avoidable hospitalizations, and suboptimal care.”

Lawmakers and witnesses discussed how coordinated care promotes quality over quantity, supports health workforce collaboration and patient access, and enables more timely access to warning signs that can save patients’ lives. Specifically related to rural healthcare, hearing participants agreed telehealth and remote patient monitoring have the capacity to catch and treat serious health issues before they escalate. 

During the hearing, a bipartisan group of lawmakers appeared to agree on several issues, including the need to make Medicare telehealth flexibilities permanent and strengthen alternative payment models. More partisan, hot-button issues including the expiration of the Affordable Care Act (ACA) enhanced premium tax credits and Health Savings Accounts (HSAs) as a substitute were also debated during the hearing.

Witnesses at the hearing included Dr. Michael Hoben, M.D., Chief Medical Officer of Population Health Services, Novant Health, Mrs. Allison Reichert, PharmD, Pharmacist, Bode Drug, Dr. Ashish Parikh, M.D., Chief Population Health Officer, Summit Health, and Mr. Brian Connell, Vice President of Federal Affairs, Blood Cancer United.

To watch the hearing and access witness testimony, CLICK RE.

To read a hearing recap from the committee, CLICK HERE.

House Democrats Introduce Lowering Drug Costs for American Families Act
On November 20, House Democrats introduced a new bill aimed at expanding Medicare drug price negotiation to commercial markets. The bill was introduced by Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ), Ways and Means Committee Ranking Member Richard E. Neal (D-MA), and Education and Workforce Committee Ranking Member Robert C. “Bobby” Scott (D-VA).

The Lowering Drug Costs for American Families Act seeks to expand Medicare’s ability to negotiate drug prices, increasing the total number of negotiable drugs from 20 to 50, and caps insulin out-of-pocket costs at $35 per month. If enacted, the legislation would also close the loophole that exists for “orphan drugs” that enables pharmaceutical manufacturers to avoid negotiations. This is the second Congress the Democratic Ranking Members have introduced this legislation, which would build on the IRA Medicare drug negotiation program by increasing the annual number of drugs selected for negotiation from 20 to 50.

While this legislation is unlikely to advance in the current Congress, it provides potential insight into the health policy priorities Democrats may pursue if they regain the majority in the future.

To read more, CLICK HERE.