Weekly Health Care Policy Update – April 3, 2026

April 10, 2026

In this update:  

  • Trump Administration
    • Trump Administration Announces 100% Tariffs on Imported Brand Name Drugs
  • Federal Agencies
    • CMS Will Require Hospitals to Meet Federal Dietary Guidelines
    • CMS Issues 2026 Open Enrollment Report
    • Treasury Department Issues Advisory on Health Care Fraud
    • Treasury Proposes Rule to Pay Whistleblowers
    • GAO Report Shows Increased Spending at CMMI
    • CMS Announces Relief for ACOs on Suspicious Billing
    • CMMI Introduces Substance Access Beneficiary Engagement Incentive
    • CMMI Publishes LEAD Model RFA
    • CMS Releases Proposed Hospice Payment and Quality Reporting Rule
    • CMS Releases 2027 Medicare Advantage and Part D Final Rule
    • CMS Releases 2027 SNF Proposed Rule
  • Other
    • KFF Publishes Report on ACA Plan Denials
    • KFF Publishes Report on Hospital Consolidation
    • Electronic Frontier Foundation Sues CMS over WiSER
    • Leading Medical School Accreditor Drops Health Equity Requirement; DOJ Investigates Medical School Admissions
    • Hospitals Sue HHS Over Medicare DSH Changes
  • New York State
    • Senator Rivers Introduces Legislation to Preserve Health Plan Coverage Following H.R.1 and Essential Plan Changes
    • OMH Issues Proposed Updates to MHOTRS Regulations

Trump Administration

Trump Administration Announces 100% Tariffs on Imported Brand Name Drugs
On April 2nd, the Trump Administration announced 100% tariffs on imported brand name drugs. According to the announcement, drug manufacturers who have previously made deals with the White House are exempt from the policy, as long as they honor commitments to build factories in the United States. Other manufacturers can reduce their tariff to 20% by pledging to bring production to the United States. Large companies have 120 days to make such a deal with the White House; smaller companies have 180 days. The 100% tariff will also not apply broadly to countries that have made trade deals with the White House, including the European Union, Japan, South Korea, and Switzerland; their tariff remains at 15%. Overall, more than 80% of pharmaceutical imports originate in countries with such trade deals.
 
The White House announcement is available here.

Federal Agencies

CMS Will Require Hospitals to Meet Federal Dietary Guidelines
On March 30th, CMS issued a Quality & Safety Special Alert Memo to all hospital and critical access hospital providers, reminding them of their obligations related to patient food and nutrition services under Medicare’s Conditions of Participation. The memo advises hospital leadership and nutrition departments to evaluate various elements of the Dietary Guidelines for Americans (DGAs), released January 7th, in relation to their inpatient menus. The memo places emphasis on guidelines to avoid highly processed foods, limit sugar-sweetened beverages, reduce refined carbohydrates, prioritize fiber-rich whole grains, and emphasize minimally processed, nutrient-dense food. The memo offers standard diet examples, encourages hospitals to use hospitalization as a patient education opportunity, and emphasizes that hospitals must continue to comply with regulations ensuring menus and diets meet individual patient nutritional needs.
 
The CMS memo is available here.
 
CMS Issues 2026 Open Enrollment Report
On March 27th, CMS released the Health Insurance Exchanges 2026 Open Enrollment Report, providing information about plan selection in all 50 states and the District of Columbia. Notably, CMS did not release information on effectuated enrollment, which it intends to provide later this spring. Overall, 23.1 million people selected or were automatically enrolled in a plan, a drop of 5%, or 1.2 million, compared to last year. Nationwide, the average out-of-pocket premium rose from $113 per month last year to $178 per month this year. More enrollees (40%) selected bronze plans this year compared to last year (30%), which helped drive down the average out-of-pocket premium but also means fewer consumers have access to cost-sharing reductions. CMS reports 43% of HealthCare.gov enrollees selected HSA-eligible plans this year, compared to 2% during the 2025 open enrollment period. Fewer than 1% of enrollees chose catastrophic plans, despite expanded access to these plans. 
 
The report is available here and a press release is available here.
 
Treasury Department Issues Advisory on Health Care Fraud 
On March 30th, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an advisory warning financial institutions about ongoing health care fraud schemes and outlining associated money laundering risks. The advisory specifically references the Treasury Department’s efforts to combat fraud “in Minnesota and across the country.” The advisory highlights common fraud typologies and red flag indicators of fraud schemes specifically targeting health care benefit programs. FinCEN notes that fraud proceeds are often laundered through complex financial transactions, shell companies, and third-party accounts to obscure their origin. The agency urges banks and other financial institutions to strengthen monitoring and reporting, including filing Suspicious Activity Reports (SARs) that reference key fraud indicators, to support law enforcement efforts. The advisory signals continued federal focus on identifying and disrupting health care fraud and associated financial networks.
 
The FinCEN Advisory is available here.
 
Treasury Proposes Rule to Pay Whistleblowers
On March 30th, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a proposed rule to fully implement a whistleblower award program designed to incentivize reporting of violations related to sanctions, money laundering, and other financial crimes. The proposal would establish a process for individuals to submit original information that leads to successful enforcement actions, with eligible whistleblowers receiving a percentage of collected monetary penalties. FinCEN outlines eligibility criteria, procedures for submitting tips, and factors that would determine award amounts, including the significance of the information and the level of assistance provided.
 
The proposed rule is available here and a press release is available here. Comments are due on or before June 1st.
 
GAO Report Shows Increased Spending at CMMI 
On March 27th, GAO delivered a report to House Budget Committee Chairman Jodey Arrington (R-TX) describing the CMS Innovation Center (CMMI)’s obligations from 2011 through 2024, how CMMI distributed resources to develop and test models, the outcomes of model testing, and CMMI’s adherence to practices of performance management to measure performance. Overall, GAO found that CMMI spent $11.4 billion on its initiatives from 2011 through 2024 while testing 70 models. Only four of these models have been expanded to nationwide implementation, though elements of other models have been incorporated into Medicare. CMMI regularly assesses model performance, and uses this data to evaluate progress against both long-term and near-term goals. GAO previously found that CMMI’s work increased federal spending by $5.4 billion from FY 2011 through FY 2020, and projected that it would increase federal spending by $1.3 billion from FY 2021 through FY 2030.
 
The report is available here.
 
CMS Announces Relief for MSSP and REACH ACOs on Suspicious Billing 
On March 31st, CMS sent a memo to ACOs participating in both the Medicare Shared Savings Program (MSSP) and REACH models, announcing that it will provide relief from the financial effects of suspicious billing practices. Specifically, for Performance Year 2025, CMS will exclude certain codes for durable medical equipment, orthotics, and urinary catheters. It will also exclude most skin substitute billing for REACH ACOs, though it will not adjust skin substitute billing for MSSP. These billing codes were pulled based on “significant, anomalous, and highly suspect” activity, occurring with unexpected and unjustified volume changes, signaling fraudulent spending. Spending on skin substitutes alone increased from $256 million in 2019 to more than $10 billion in 2024, and affected roughly 10% of ACOs. The move largely holds ACOs harmless for the fraudulent behavior of a small number of actors within their ACOs. Updates will be reflected in 2027 shared savings figures.
 
CMMI Introduces Substance Access Beneficiary Engagement Incentive
On April 1st, the CMS Innovation Center announced that organizations participating in CMMI models may begin offering a new Substance Access Beneficiary Engagement Incentive (BEI) beginning immediately. The incentive allows providers to incorporate “eligible hemp-derived products” into patient care plans under clinician guidance. Substance Access BEI is available to participants in ACO REACH, the Enhancing Oncology Model (EOM), and the Long-Term Enhanced ACO Design (LEAD) Model, and allows organizations to offer up to $500 per year per eligible beneficiary in eligible hemp-derived products containing no more than 0.3% delta-9 THC. Organizations are prohibited from offering inhalable products, any products containing more than 3mg per serving of tetrohydrocannabinols in an orally administered form, or any products containing not naturally-produced cannabinoids. Notably, this is not a Medicare coverage change; CMS “will not pay for or reimburse providers for these products under the Substance Access BEI” and “does not make claims regarding the therapeutic value of these products.”
 
More information is available here.
 
CMMI Publishes LEAD Model RFA
On March 31st, the CMS Innovation Center published a Request for Applications (RFA) for the Long-term Enhanced ACO Design (LEAD) Model. LEAD is a ten-year voluntary ACO model launching January 1, 2027, upon the conclusion of ACO REACH. The model builds upon – and shares many features of – earlier ACO programs including MSSP and REACH, while also introducing several new features and structures.
 
The RFA outlines a handful of key program areas: 

  • Participants: ACOs will be composed of Participant Tax Identification Numbers (Participant TINs), typically primary care practices.
  • Preferred Providers: Participant Providers may form contractual relationships with Preferred Providers, typically specialty care providers, to coordinate services and align incentives across the full range of care.
  • Beneficiary Alignment: Beneficiaries will be aligned to an ACO based on an established primary care relationship with the Participant TINs in the ACO through claims-based and/or voluntary alignment. In cases where less than 10% of allowed claims were billed by primary care clinicians in Participant TINs, claims-based alignment will consider specialist billing.
  • Baseline Benchmark: Historical baseline Medicare expenditures will reference the three most recent calendar years and will remain static for the duration of the ACO’s participation in the model. For Newly Entering ACOs, CMS will give additional weight to more recent base years; ACOs with prior experience will have base years weighted equally. LEAD ACOs will have separate per-beneficiary per-month benchmarks for Aged & Disabled, End-Stage Renal Disease, and High Needs categories. Benchmarks will also be calculated separately for beneficiaries who are voluntarily aligned versus claims-based aligned.
  • Benchmark Rebasing: LEAD will not rebase benchmarks over the 10-year duration of the model, allowing successful ACOs to accumulate savings rather than compete against themselves. Starting in year 5, LEAD will phase-in benchmarks based on a rate book methodology that does not reference ACO-specific historical claims.
  • Integrated Support for Complex Populations: Aligned beneficiaries will be split into three categories: Aged & Disabled, ESRD, and High Needs. LEAD allows mingling of all three categories in a single ACO rather than separating into distinct ACOs. Benchmarks will be calculated separately for each patient category to produce a more accurate total benchmark.
  • Minimum Aligned Beneficiaries: The standard 5,000 beneficiary minimum is retained, with exceptions for certain new ACOs (1,000) and ACOs with at least 40% of beneficiaries qualifying as High Needs (800), which must increase their beneficiaries to 5,000 and 1,600, respectively, by year 5.
  • Payment: LEAD includes Primary Care Capitation (PCC) and Total Care Capitation (TCC) payments, as well as prospective payment options for ACOs that want to establish downstream payment arrangements with specialty care providers participating in LEAD as Preferred Providers.
  • Quality: LEAD will use the same claims-based and CAHPS measures included in REACH, while also phasing in two new eCQMs.
  • CMS-Administered Risk Arrangements (CARA): CMS will administer voluntary, episode-based risk arrangements between ACOs and specialists, focused on specific quality and cost outcomes. Episodes will include acute medical, procedural, and chronic condition bundles.
  • Benefit Enhancements: In addition to benefit enhancements available to other ACOs, LEAD ACOs will be able to offer Medical Nutrition Therapy to an expanded population, Part B cost-sharing support, and other enhancements.

The full RFA is available here.
 
CMS Releases Proposed Hospice Payment and Quality Reporting Rule
On April 2nd, CMS released the FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Proposed Rule. Overall, the rule proposes to increase hospice payment rates by 2.4%, based on a 3.2% market basket percentage increase reduced by a 0.8 percentage point productivity adjustment. The payment update would represent an aggregate increase of $785 million from FY 2026. The proposed hospice cap amount is $36,210.11, an increase of 2.4% from FY 2025.
 
CMS also proposes several key policies. First, CMS seeks comment on a “service and spending variation index” (SSVI), an effort to monitor inappropriate utilization, quality of care, and compliance concerns. CMS also is proposing to make the hospice election statement addendum mandatory for all Medicare beneficiaries at the time of hospice election. Lastly, the rule proposes to allow a physician designee and the physician member of an interdisciplinary group to discharge a patient from hospice.
 
The proposed rule also includes several RFIs, seeking input on enhancing community palliative care services under current Medicare benefits, on the development of a hospice-specific wage index using BLS data, and on the overlap between hospice and assisted suicide.
 
The proposed rule is available here. A fact sheet is available here.
 
CMS Releases 2027 Medicare Advantage and Part D Final Rule 
On April 2nd, CMS released the FY 2027 Medicare Advantage and Part D Final Rule. The rule aims to improve quality and access across both programs, and includes the following key changes: 

  • Star Ratings: CMS is finalizing a policy to eliminate the Excellent Health Outcomes for All reward (previously called the Health Equity Index reward). CMS is also removing 11 measures focused on administrative processes, and adding a new Part C Depression Screening and Follow-Up measure to address behavioral health gaps starting with the 2027 measurement year and 2029 Star Ratings.
  • Part D benefit: CMS is eliminating the coverage gap phase, establishing a reduced annual out-of-pocket threshold, removing cost sharing for enrollees in the catastrophic phase, and incorporating the Manufacturer Discount Program that replaced the Coverage Gap Discount Program on January 1, 2025.
  • Supplemental Benefits: CMS is requiring plans to publicly post their plan-developed special supplemental benefits for the chronically ill (SSBCI) eligibility criteria, and clarifying requirements for administering supplemental benefits through debit cards.
  • Regulatory Burden: CMS is exempting account based plans from creditable coverage disclosure requirements, rescinding the requirement for MA plans to send mid-year notices about unused supplemental benefits, waiving the requirement for the Limited Income Newly Eligible Transition program to maintain toll-free call centers from 8am to 8pm, and removing restrictions on the time and manner by which beneficiaries can have conversations with licensed agents and brokers.
  • Health Equity: CMS is eliminating the requirement for MA quality improvement programs to include activities that reduce health disparities, and eliminating health equity requirements for MA Utilization Management Committees. 

The final rule is available here. A fact sheet is available here.
 
CMS Releases 2027 Skilled Nursing Facility Proposed Rule 
On April 2nd, CMS released the Fiscal Year (FY) 2027 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Proposed Rule. Overall, the rule proposes to increase SNF PPS rates by 2.4%, based on a market basket update of 3.2%, minus a 0.8% productivity adjustment. This payment update represents an aggregate increase of $208.4 million over FY 2026.
 
In addition, the rule proposes the following key changes: 

  • Quality Reporting Program: CMS is proposing to remove two measures related to Covid-19 vaccination coverage of health care personnel and patients/residents. CMS is also proposing to require the submission of Minimum Data Set (MDS) data on all SNF residents regardless of payer.
  • SNF VBP: CMS is providing estimated performance standards for the FY 2029 and FY 2030 program years, and proposing to update the “snapshot date” for two measures calculated using MDS assessment data.
  • SNF QRP RFI: CMS seeks feedback on advanced care planning as a potential measure.
  • Patient Driven Payment Model RFI: CMS seeks feedback on potential updates to the Patient Driven Payment Model (PDPM) payment system, including how CMS could address observed Case Mix Upcoding.

The proposed rule is available here. A fact sheet is available here.

Other

KFF Publishes Report on ACA Plans In-Network Denials 
On March 24th, KFF released an analysis of CMS data on claims denials and appeals for qualified health plans (QHPs) offered on the federal marketplace, HealthCare.gov. In 2024, QHP issuers denied 19% of in-network claims and 37% of out-of-network claims. The combined denial rate, 20%, was similar to the 2023 rate. The in-network claims denial rate varied significantly by insurer and state, but overall, the percentage of insurers with in-network denial rates of 30% or more dropped to 3% (from 17% in 2023). Limited data exists on the reason for these denials, with “other” (36%) and administrative reasons (25%) leading. Only 9% of denials were for lack of prior authorization and 5% were for lack of medical necessity. Fewer than 1% of enrollees appealed the denial and insurers upheld their original decision in 66% of appeals.
 
The report is available here.
 
KFF Publishes Report on Hospital Consolidation 
On March 27th, KFF released a report finding that hospital market consolidation remains widespread, with one or two health systems controlling inpatient care in 47% of U.S. metropolitan statistical areas (MSAs), including 19% where a single system dominates the market. The analysis also finds that more than 80% of metro areas are highly concentrated under federal antitrust guidelines, limiting competition and strengthening system negotiating leverage with commercial insurers. Most hospital markets (80%) became less competitive between 2015 and 2024 or were controlled by one health system during that period.
 
In general, the number of health systems in an MSA is positively correlated with population. In nearly 80% of MSAs with a population of less than 200,000, one or two health systems controlled the inpatient care market. Nearly all MSAs with a population of at least one million had four or more health systems. However, in 14 of these 55 large MSAs, the two largest health systems controlled 75% of the market or more, and in 44 of the MSAs, they controlled 50% of the market or more. The authors note that this level of consolidation is associated with higher hospital prices, often without corresponding improvements in quality.
 
The KFF report is available here.
 
Electronic Frontier Foundation Sues CMS Over WiSER
On March 29th, the Electronic Frontier Foundation (EFF) filed a lawsuit against CMS under the Freedom of Information Act (FOIA), seeking records related to the agency’s Wasteful and Inappropriate Service Reduction (WISeR) model, which uses AI to support prior authorization decisions in traditional Medicare. The WISeR model launched January 1st in six states and will run through 2031. EFF’s complaint alleges that CMS has not responded to a FOIA request filed on January 29th and has failed to provide sufficient transparency into how the model operates, including how algorithms influence coverage determinations and what safeguards are in place to ensure compliance with Medicare standards. The group raises concern that the use of AI in this context could lead to inappropriate denials of medically necessary care. The lawsuit aims to compel CMS to release detailed information on the model’s design, oversight, and impact on beneficiary access.
 
The court filing is available here.
 
Leading Medical School Accreditor Drops Health Equity Requirement; DOJ Investigating Medical School Admissions 
On March 13th, the Liaison Committee on Medical Education (LCME) published updated accreditation standards for MD-granting medical education programs. The standards, which will be applicable for surveys conducted during the 2027-28 academic year, no longer include a curricular content standard on “structural competence, cultural competence, and health inequities.” Such a standard was included as recently as May 2025, requiring medical curricula to include content on the “diverse manner” in which people perceive health and illness, health inequities, the impact of disparities in health care on all populations, and the knowledge and attributes needed to provide effective care in a “multidimensional and diverse society.” The new standards replace this language with a statement on self-directed learning, including the “ability to self-identify critical gaps in knowledge” and critically review “the credibility of relevant information to fill those gaps.” LCME has come under political pressure from the Trump administration regarding the use of DEI-based standards and was specifically mentioned in Trump’s April 2025 Executive Order on that topic.
 
In addition, on March 25th, the DOJ launched investigations into medical school admissions policies at Stanford University, the University of California – San Diego, and the Ohio State University. The DOJ is conducting a “compliance review” investigation under Title VI of the Civil Rights Act of 1964, which prohibits recipients of federal financial assistance from discriminating on the basis of race, color, or national origin. A letter to the schools requests “any and all documents guiding medical school admissions policies and procedures, including any documents related to the use or lack of use of race in evaluating applicants.”
 
LCME’s accreditation standards may be found here and the April 2025 Executive Order is available here.
 
Hospitals Sue HHS Over Medicare DSH Changes
On March 30th, 131 hospitals located in 16 states filed a lawsuit against HHS challenging reductions to Medicare disproportionate share hospital (DSH) payments, arguing that CMS exceeded its legal authority in finalizing a 2023 rule that retroactively changed the calculation of Medicare DSH payments to hospitals that serve a high volume of low-income patients. The hospitals allege that CMS attempted to reinstate a prior policy regarding how patients with Medicare Advantage are included in the DSH formula. That policy was subjected to numerous lawsuits and eventually vacated by the court, but not before hospitals lost an estimated $3 to 4 billion over nine years. The plaintiffs seek to overturn the 2023 rule and recover unpaid DSH funds. CMS’ calculation of Medicare DSH payment has been the subject of numerous legal challenges over the past decade.

New York State

Senator Rivera Introduces Legislation to Preserve Health Plan Coverage Following H.R.1 Changes 
On March 26th, New York State Senator Gustavo Rivera, Chair of the Senate Health Committee, introduced a bill (S9589) intended to preserve health coverage for certain individuals who are expected to lose access to subsidized insurance as a result of federal policy changes associated with the passage of H.R.1. The bill would maintain coverage for two groups of individuals, as follows: 

  1. For lawfully present immigrants losing access to federal subsidies effective January 1, 2027, the bill would establish a state-only funded premium assistance program that would provide financial assistance equivalent to federal premium tax credits and cost-sharing reductions.
  2. For certain Essential Plan enrollees losing coverage due to immigration status or because their income is between 200-250% FPL, the bill would authorize state-only funded Essential Plan coverage.

 The bill does not identify a specific source of state-only funding. Senator Rivera reportedly pointed to available State budget resources, but the legislation itself does not prescribe a funding mechanism. A recent report from the Community Service Society outlined several possible ways the State could reduce the costs of such proposals, including lowering Essential Plan reimbursement rates and requiring some enrollees to pay a $50 monthly premium.
 
The bill would be effective July 1st and would require the state premium assistance program to be established no later than January 1, 2027.
 
OMH Issues Proposed Updates to MHOTRS Regulations 
On April 1st, the New York State (NYS) Office of Mental Health (OMH) issued a proposed amendment to the Part 599 regulations governing Mental Health Outpatient Treatment and Rehabilitative Services (MHOTRS). These proposed changes seek to provide a more “urgent care-like” and integrated model by expanding service flexibility prior to admission, allowing clinics to address health-related social needs, and advancing opportunities to identify and respond to co-occurring mental health and substance use needs.
 
In addition to technical clarifications, the proposed amendment includes the following: 

  • Requiring nonprescription medications in the case record, if known;
  • Clarifying the definition of Complex Care Management (CCM) to specify that it should be used for immediate health-related social needs, removing the 14-day limit and requirement for CCM to follow a clinical service, allowing for three pre-admission procedures, and permitting increased units;
  • Allowing for the provision of crisis complex and crisis per diem services pre-admission and after admission without a two-year lookback period;
  • Limiting Medicaid reimbursement to no more than one pre-admission procedure for individuals with complex needs discharged from hospitals;
  • Requiring signatures on progress notes, with eSignatures permitted;
  • Clarifying record retention requirements for minors;
  • Including language to support the integration of mental health and co-occurring addiction care, including a “Co-occurring Capable” designation;
  • Adding children’s eligibility criteria to permit admission of individuals with certain health-related social needs; and
  • Allowing testing services pre-admission when clinically appropriate and excluding them from the three-visit pre-admission limit.

 The notice of proposed rulemaking, which includes a list of all the changes with associated justifications for the change, is available in the State Register here. The proposed regulations are expected to be posted on the OMH website here once available. Comments may be submitted to regs@omh.ny.gov through May 31st.