Weekly Spotlight
Medicare and Medicaid at a Crossroads: AI-Driven Gatekeeping Meets State Payment Overhaul
This week marked a pivotal moment for federal healthcare programs as two transformative initiatives collided with mounting stakeholder resistance. CMS’s comprehensive Medicaid state-directed payment reforms, capping rates at 100% of Medicare in expansion states and 110% in non-expansion states, triggered alarm among hospital systems already bracing for $911 billion in Medicaid cuts under the One Big Beautiful Bill. The July 4, 2025 implementation deadline looms as providers warn of potential facility closures and destabilized access in underserved communities.
Simultaneously, the WISeR (Wasteful and Inappropriate Service Reduction) model intensified the prior authorization debate, with Cohere Health’s selection for the AI-driven pilot in Texas drawing sharp criticism from House Democrats concerned about algorithmic care denials. As CMMI Director Abe Sutton defended the demonstration amid MedPAC’s divided response, the fundamental tension between cost containment and care access reached a boiling point. Together, these initiatives signal a dramatic shift toward automated utilization management and standardized payment structures that could reshape how 90+ million Americans access healthcare through Medicare and Medicaid—raising urgent questions about whether AI and rate caps will deliver promised efficiencies or create new barriers to essential care.
Other Regulatory News
CMS
CMS Implements Sweeping Reforms to Medicaid State-Directed Payments with New Rate Limits and Oversight Requirements
The Centers for Medicare & Medicaid Services (CMS) has rolled out comprehensive reforms to Medicaid state-directed payments this week, establishing new rate limits of 100% of Medicare rates in expansion states and 110% in non-expansion states, effective July 4, 2025. Following the One Big Beautiful Bill Act, the changes include payment reductions, restructured reimbursement methodologies, and strengthened state oversight requirements to improve program integrity. Existing programs receive a grandfather period until January 1, 2028, but hospital systems express concerns about potential destabilization of Medicaid-dependent facilities and impacts on patient access to care across state health programs.
Source: Becker’s Hospital Review | Additional Source | Additional Source | Additional Source
CMS WISeR Model Faces Growing Scrutiny as Cohere Health Selected for AI-Driven Prior Authorization Pilot
The CMS Innovation Center’s Wasteful and Inappropriate Service Reduction (WISeR) model has sparked intensifying debate over Medicare prior authorization reforms. Director Abe Sutton defended the demonstration program amid House Democrats’ concerns about potential AI-driven care denials affecting patient access. MedPAC commissioners remain divided over the model’s expansion of prior authorization requirements, with supporters citing cost containment benefits while critics warn of unequal access among Medicare beneficiaries. CMS has selected Cohere Health to lead the AI-assisted prior authorization pilot in Texas and one additional state, though the selection awaits finalization.
Source: InsideHealthPolicy Daily News | Additional Source | Additional Source
CMS Proposes Coverage for Cardiac Ablations in ASCs
The Centers for Medicare & Medicaid Services (CMS) has proposed expanding Medicare coverage to allow cardiac ablation procedures in ambulatory surgical centers (ASCs), moving these treatments from hospital-only settings. The policy change aims to improve patient access to cardiac care while potentially reducing Medicare payment costs. Healthcare providers, including Dr. Arash Aryana, view the proposal positively for its potential to enhance care quality and reduce healthcare system expenses through lower-cost outpatient settings.
Source: Cardiovascular Business
Former MedPAC Leaders Support CMS Payment Reform
Seven former Medicare Payment Advisory Commission (MedPAC) leaders have endorsed CMS physician payment reform that would shift away from the AMA’s Relative Value Scale Update Committee (RUC) toward empirical data-driven “efficiency adjustments.” The Medicare reimbursement changes aim to improve payment accuracy and fairness for healthcare providers under current physician fee schedules.
Source: InsideHealthPolicy Daily News
Industry Groups Warn CMS Fee Schedule May Undermine Value-Based Care
Healthcare industry groups have raised concerns that CMS’s proposed 2026 physician fee schedule could undermine value-based care programs and Medicare payment models, potentially affecting healthcare provider participation in quality-based reimbursement initiatives and patient care outcomes.
Source: MedCity News
CMS to Implement OBBB Redetermination Policy in December
The Centers for Medicare & Medicaid Services (CMS) will implement new redetermination procedures under the One Big Beautiful Bill policy in December, affecting Medicare payment processes and healthcare provider reimbursement protocols for covered services and claims appeals.
Source: InsideHealthPolicy Daily News
CMS releases details on the Rural Health Transformation Program
The Centers for Medicare & Medicaid Services (CMS) has released comprehensive details on the Rural Health Transformation Program, a federal initiative aimed at improving healthcare access, care quality, and health outcomes in underserved rural communities. The program addresses critical gaps in rural healthcare delivery through targeted Medicare and Medicaid support for rural hospitals, healthcare providers, and health systems to enhance patient access to essential medical services.
Source: National Association of Counties
Rural Hospitals’ Future Under the One Big Beautiful Bill
The One Big Beautiful Bill (OBBB) threatens rural hospital financial viability through $911 billion in Medicaid cuts over ten years, reducing Medicaid eligibility and hospital reimbursement rates. Rural health system leaders warn of potential facility closures that could compromise patient access and care quality in underserved communities, highlighting critical healthcare policy implications for Medicare and Medicaid-dependent facilities.
Source: Becker’s Hospital Review
Hospitals Prepare for Financial Impact of Medicaid Cuts
Hospitals are establishing financial ‘war rooms’ to strategize operational adjustments and hospital reimbursement changes in response to significant Republican-enacted Medicaid cuts, with health systems preparing for reduced Medicare and Medicaid funding that could impact patient access and care delivery across hospital networks.
Source: Stat
FDA
Patients Call for More Medical Device User Fee Funding, FDA Staffing
Patient advocacy groups are pushing for increased medical device user fee funding and expanded FDA staffing to accelerate device approval timelines. The initiative aims to address regulatory bottlenecks that delay patient access to critical medical devices amid growing healthcare demands. FDA clearance delays impact device manufacturers and ultimately limit care quality for patients requiring innovative medical technologies.
Source: MedTech Dive
FDA Approves Microbot Medical’s LIBERTY Robot System for Endovascular Procedures
The FDA granted medical device clearance to Microbot Medical’s LIBERTY Robot System, a fully disposable endovascular robotic platform for peripheral vascular procedures. This innovative medical device technology enables remote manipulation of guidewires and catheters during minimally invasive surgical interventions, enhancing precision and procedural safety. The FDA approval represents a significant advancement in robotic-assisted vascular surgery, allowing healthcare providers and health systems to access enhanced surgical capabilities that could improve patient care quality and health outcomes while potentially impacting hospital reimbursement models for endovascular procedures.
Source: Cardiovascular Business | Additional Source
FDA Proposes Major Overhaul to Drug Approval Process, Reducing Expert Advisory Panel Reviews
The FDA is proposing significant changes to its pharmaceutical approval process by reducing reliance on expert advisory panels and potentially ending decades-old advisory committee reviews for specific drug applications. According to FDA official George Tidmarsh, this policy shift aims to streamline drug approvals but could fundamentally alter the traditional regulatory oversight framework. The changes may limit external medical expert input on medication safety and efficacy evaluations, potentially impacting patient access, prescription drug oversight, and how medications reach patients through modified pharmaceutical industry interactions with federal regulators.
Source: Stat | Additional Source
FDA to Tighten Regulations on Pharmaceutical Advertising
The FDA is initiating rulemaking to close loopholes in direct-to-consumer pharmaceutical advertising, requiring drug manufacturers to disclose complete safety profiles in prescription medication ads. This regulatory change, directed by President Trump, aims to enhance transparency and protect patients from misleading pharmaceutical marketing, potentially impacting how companies promote medications to consumers and affecting patient access to accurate drug information.
Source: Stat
Apple Receives FDA Clearance for Hypertension Device
Apple has received FDA clearance for a medical device targeting hypertension management, representing a notable development in remote patient monitoring technology. This FDA clearance could expand patient access to digital health tools for cardiovascular care and potentially influence how healthcare providers monitor blood pressure remotely.
Source: Medical Device Network
HHS
HHS to Establish Committee for Medicare and Medicaid Restructuring
The Department of Health and Human Services (HHS) plans to establish an external advisory committee to restructure Medicare and Medicaid programs, potentially impacting insurance coverage, Medicare payment systems, and health plan administration. The initiative could affect patient access and healthcare provider reimbursement across both federal programs.
Source: Fierce Healthcare
Trump Administration’s ‘Make America Healthy Again’ Initiative Faces Implementation Challenges Amid Policy Debates
The Trump administration’s ‘Make America Healthy Again’ (MAHA) initiative, led by HHS Secretary Robert F. Kennedy Jr., has released multiple reports outlining ambitious public health reforms targeting chronic disease, childhood health outcomes, and processed foods. The presidential MAHA Commission’s second report examines concerns around environmental chemicals and overmedicalization, while Kennedy’s formal policy framework commits to eliminating artificial food dyes and investigating autism causes through FDA and CDC reforms. However, the administration’s roadmap deliberately avoids new regulatory frameworks on pesticides and takes a cautious approach to ultraprocessed food definitions, raising questions about implementation feasibility within existing HHS regulatory structures and effectiveness in addressing environmental health concerns affecting children.
Source: Stat | Additional Source | Additional Source | Additional Source | Additional Source | Additional Source
RFK Jr.’s Vaccine Policies Trigger Multi-Front Political and Medical Opposition
HHS Secretary Robert F. Kennedy Jr.’s vaccine restrictions and “Make America Healthy Again” initiatives have sparked unprecedented opposition across multiple fronts. Democratic governors are implementing executive orders and regional coalitions to maintain vaccine access and insurance coverage mandates, positioning themselves for 2026 elections. The American College of Physicians has called for Kennedy’s removal, while internal Trump administration tensions emerge over vaccine policy direction. Kennedy faces scrutiny over controversial initiatives including increased vaccine injury investigations, autism link studies, and a new vaccine panel reviewing COVID-19 and childhood immunization programs. Senator Cassidy urges Kennedy to endorse DTaP vaccines amid Louisiana’s pertussis outbreak, highlighting conflicts between public health emergencies and vaccine advocacy. These developments affect patient access, CDC guidance, FDA approvals, and healthcare provider protocols nationwide.
Source: POLITICO | Additional Source | Additional Source | Additional Source | Additional Source | Additional Source | Additional Source | Additional Source
NIH Director Faces Criticism from Activist Loomer
NIH Director Dr. Jay Bhattacharya faced public criticism from activist Laura Loomer over his pandemic management policies and public health leadership approach. The confrontation highlights ongoing scrutiny of federal health agency leadership and accountability in post-COVID healthcare policy decisions, with implications for future NIH research priorities and public health emergency preparedness protocols.
Source: MedPageToday.com
NIH on Track to Spend Entire $47 Billion Budget by September 30
The National Institutes of Health (NIH) is on track to fully spend its $47 billion federal budget by the September 30 fiscal year deadline following increased grantmaking activity in August. This represents a significant turnaround after earlier delays and political scrutiny that had slowed funding allocations for medical research programs. The budget execution affects healthcare research funding, pharmaceutical development, and medical innovation across the health system.
Source: Stat
CDC Infectious Disease Data Project Shelved
HHS suspended a CDC real-time infectious disease data tracking initiative that was in development since early summer. The shelved project aimed to improve public health emergency responses and enhance data accessibility for healthcare providers and health systems, raising concerns about transparency and preparedness for future health crises among public health officials.
Source: MedPageToday.com
Federal Cuts Leave a Hole in the Food Safety System
Federal budget cuts threaten CDC’s FoodNet surveillance system that tracks foodborne illness outbreaks, raising public health concerns about reduced monitoring capacity for food safety incidents that could impact patient access to safe food and healthcare provider outbreak response capabilities.
Source: The New York Times
Kennedy Report Won’t Solve America’s Food Issues, Experts Say
Food policy experts critique a White House health report on America’s nutrition challenges, arguing it fails to provide comprehensive policy solutions to address food-related health outcomes and regulatory frameworks. The analysis suggests gaps in addressing patient access to healthy food options and potential impacts on healthcare costs and public health programs.
Source: The New York Times
AMA Supports HHS Crackdown on Information Blocking
The American Medical Association (AMA) endorses the U.S. Department of Health and Human Services’ (HHS) new enforcement measures targeting healthcare information blocking, with civil penalties reaching up to $1 million per violation. This crackdown on healthcare providers and technology vendors aims to improve patient access to medical data, enhance care quality, and reduce physician burnout by ensuring seamless health information exchange. AMA President Bobby Mukkamala supports enforceable consequences against violators who impede patient data sharing.
Source: Becker’s Hospital Review
Hill
House Lawmakers To Introduce Bill Expanding Medicare Coverage Of AI Devices
A bipartisan group of House representatives plans to introduce legislation establishing a Medicare reimbursement pathway for FDA-approved AI and machine learning medical devices. The bill would expand Medicare coverage and patient access to innovative healthcare technologies, requiring CMS to develop new payment mechanisms for these FDA-cleared devices. This healthcare policy initiative aims to enhance care quality and health outcomes for Medicare beneficiaries while addressing insurance coverage gaps for emerging medical device technologies.
Source: InsideHealthPolicy Daily News
Government Shutdown Threats Escalate as Healthcare Funding and Federal Health Insurance Subsidies Hang in Balance
Congressional leaders are locked in high-stakes negotiations over government funding that could severely impact federal healthcare operations and insurance coverage for millions of Americans. Rep. Jodey Arrington and Sen. James Lankford have reintroduced the Prevent Government Shutdowns Act to protect agencies like HHS, CDC, and FDA from disruptions, citing the 2019 shutdown’s $9 billion cost in back pay alone. Meanwhile, lawmakers are negotiating bipartisan deals to extend federal health insurance subsidies affecting nearly 20 million Americans, set to expire January 1, 2026, while facing GOP opposition to healthcare spending. The standoff intensified when Senate Democratic Leader Chuck Schumer threatened a shutdown unless Republicans meet Democratic healthcare demands, potentially disrupting Medicare and Medicaid payments, patient access to federal health services, and ongoing public health initiatives. The negotiations continue through September 2026, with significant implications for healthcare provider payments and health plan operations nationwide.
Source: Politico | Additional Source | Additional Source
340B Drug Pricing Program Under Intense Congressional Scrutiny as Spending Surges 565% and Lawmakers Challenge HHS Pilot Initiative
The 340B Drug Pricing Program faces mounting congressional pressure as new CBO data reveals pharmaceutical spending under the program exploded from $6.6 billion in 2010 to $43.9 billion in 2021—a 565% increase driven largely by high-cost cancer drugs comprising 40% of purchases. Total program spending reached $66.3 billion in 2023. Amid these dramatic growth figures, 162 bipartisan House lawmakers are urging HHS to abandon a controversial pilot initiative that would shift the program from upfront prescription drug discounts to a pharmaceutical rebate model. Critics argue the proposed change could undermine safety-net providers serving vulnerable populations by increasing administrative costs and operational complexity, while raising broader concerns about program sustainability, federal budgetary pressures, and patient access to affordable medications.
Source: Congressional Budget Office | Additional Source | Additional Source | Additional Source
Senate Hearing Scheduled on CDC Leadership and Vaccine Policy
The Senate health committee will hold a September 17 hearing examining CDC leadership changes and vaccine policy divisions, with former CDC director Susan Monarez testifying about the public health impacts of recent policy shifts. The hearing will address vaccination strategies and CDC governance amid ongoing debates over federal health policy direction and public health outcomes.
Source: InsideHealthPolicy Daily News
How Trump Tax Bills Help Health Care Giants Avoid Taxes
Congress must decide on extending the Affordable Care Act’s enhanced premium tax credits before year-end expiration. Without extension, HHS under the Trump administration may implement alternative measures that could disrupt ACA marketplace stability, affecting insurance coverage and patient access for millions who depend on these premium subsidies for affordable health plans.
Source: Stat
House Appropriators Allow BARDA mRNA Research, Move To Defund WisER In HHS Spending Bill
The House Appropriations Committee approved the fiscal 2026 HHS spending bill, maintaining BARDA funding for mRNA vaccine research while moving to defund the WisER program. The legislation adjusts federal health research priorities and could impact biomedical preparedness initiatives and healthcare emergency response capabilities.
Source: InsideHealthPolicy Daily News
Big Beautiful Bill Reduces Drugs Eligible for Price Negotiations
The One Big Beautiful Bill creates pharmaceutical policy exemptions for orphan drugs from Medicare price negotiations under prescription drug pricing controls, potentially allowing these high-cost medications for rare diseases to avoid pricing regulations. This could impact patient access and insurance coverage for specialized treatments while affecting drug pricing policy implementation.
Source: Managed Healthcare Executive
Democrats Press GOP on Cuts to CDC, HHS in House Budget Bill
During a House Appropriations hearing, Democrats criticized Republican-proposed cuts to CDC and HHS funding in the fiscal year 2026 federal budget, arguing that reduced healthcare agency funding would compromise public health programs, disease surveillance, and health emergency preparedness capabilities.
Source: MedPageToday.com
Other
AMA Releases 2026 CPT Code Set with 288 New Codes for AI and Remote Patient Monitoring
The American Medical Association released the 2026 Current Procedural Terminology (CPT) code set featuring 418 total updates, including 288 new codes specifically designed for remote patient monitoring and artificial intelligence services in medical practice. These physician billing code changes establish new Medicare reimbursement pathways for emerging healthcare technologies, addressing the accelerating integration of digital health tools across health systems. The updates will affect medical practice revenue and payment structures starting January 1, 2026, as providers gain formal billing mechanisms for AI-enabled and remote monitoring services.
Source: Becker’s Hospital Review | Additional Source
Mental Health Disorders Linked to Reduced Life Expectancy in HIV Patients
A recent international study found that HIV patients with mental health disorders experience up to five years reduced life expectancy, highlighting critical gaps in integrated care delivery. The findings emphasize the need for coordinated treatment approaches and improved patient access to comprehensive mental health services within HIV care programs, with potential implications for Medicare and Medicaid reimbursement policies supporting dual-diagnosis treatment models.
Source: Managed Healthcare Executive
MAHA Influencers Spread Health Care Conspiracies
A New York Times investigation finds Make America Healthy Again (MAHA) movement influencers are spreading healthcare conspiracy theories that undermine public trust in health authorities and medical institutions. The misinformation campaign poses significant challenges to public health messaging, patient access to care, and healthcare provider credibility during critical health policy discussions.
Source: The New York Times
Obesity Drugs Found Cost-Effective Despite High Prices
Preliminary analysis shows obesity medications Wegovy and Zepbound demonstrate cost-effectiveness despite high pharmaceutical pricing, significantly reducing weight and health risks including hypertension and diabetes. The findings could influence healthcare policies on prescription drug coverage, insurance reimbursement, and patient access to obesity treatments, potentially affecting Medicare and Medicaid coverage decisions for these medications.
Source: Stat
ICER Finds GLP-1 Drugs Cost-Effective but Warns of Major Budget Strain
The Institute for Clinical and Economic Review (ICER) found GLP-1 medications including Wegovy and Zepbound are cost-effective pharmaceutical treatments delivering significant health outcomes for obesity management. However, ICER warns widespread prescription adoption could create substantial financial burden on healthcare budgets and insurance coverage systems, raising concerns about long-term drug pricing affordability and requiring strategic management approaches for health plans and Medicare programs.
Source: Managed Healthcare Executive
Novo Nordisk Plans Major Workforce Reductions Amid Market Changes
Novo Nordisk announced an 11% workforce reduction affecting approximately 9,000 jobs to achieve $1.26 billion in annual savings by 2026. The pharmaceutical company’s restructuring targets enhanced competitiveness in the obesity medication market amid shifting drug pricing pressures and evolving prescription access dynamics in the pharmaceutical landscape.
Source: Stat
3.3% Annual Reduction of PrEP Coverage Would Result in Thousands of HIV Infections, Cost Billions
A recent JAMA Network Open study reveals that a 3.3% annual reduction in PrEP prescription coverage could result in tens of thousands of preventable HIV infections and billions in additional healthcare costs. The findings underscore the critical policy importance of maintaining robust insurance coverage and patient access to this pharmaceutical HIV prevention medication to sustain public health outcomes and control long-term healthcare spending.
Source: Managed Healthcare Executive
Cardiac Surgeons Embrace AI for Administrative Tasks
Cardiac surgeons demonstrate strong confidence in artificial intelligence capabilities for streamlining administrative workflows and improving patient selection processes, signaling potential shifts in medical practice operations and healthcare provider efficiency that could influence future care delivery models and physician productivity standards.
Source: Cardiovascular Business