Welcome to another round of PYA Washington Updates. Forty-four years ago today, MTV began broadcasting and aired its first video The Buggles’ “Video Killed the Radio Star.”
Happy Birthday, Medicare and Medicaid!
Sixty years ago Wednesday, President Lyndon Johnson traveled to the Truman Library in Independence, Missouri, to sign Medicare and Medicaid into law. The first Medicare beneficiary was Harry S. Truman, who had sent Congress the first comprehensive federal health insurance proposal 20 years earlier. This week’s Keckley Report included the following chart, showing how much things have changed in 60 years:
| 1965 | 2025 | Change | |
| US Population Total (Mil) | 200 | 347 | +74% |
| Total U.S. GDP (Bil) | $742.3 | $ 3,051.0 | +311% |
| National Health Expenditures | $41.6 | $ 5,263.0 | +1243% |
| Health System Spending as % of GDP | 5.7 | 18.0 | +216% |
| % Medicare $$ % Medicaid $$ |
13 12 |
32 16 |
+146% +33% |
| Life expectancy | 70.2 | 78.4 | +12% |
| Medicare enrollment (Million) | 19 | 68 | +258% |
Unadjusted for inflation
Senate Democrats celebrated the birthday by introducing legislation to repeal what they’re calling “Trumpcare,” OBBBA’s $964 billion reduction in Medicaid spending over 10 years and the $124 billion cut from ACA Marketplace premium tax credits.
2026 Medicare Hospital Inpatient Prospective Payment System Final Rule
Late yesterday, CMS released the 2026 IPPS Final Rule. Medicare payments for hospital inpatient services will increase by 2.6% for 2026, 0.2% more than CMS had proposed in April. The final rule includes changes to the inpatient quality payment program, hospital value-based purchasing programs, and the promoting interoperability program. CMS also finalized several tweaks to its new mandatory alternative payment model, Transforming Episode Accountability Model (TEAM), set to go live January 1, 2027. CMS’ fact sheet on the final rule is available here. On August 27, PYA will present Episode #100 in our Healthcare Regulatory Roundup webinar series, focusing on the final rule. Registration is now open — click here to sign up.
CMS Digital Health Ecosystem
On Wednesday, CMS hosted a Make Health Tech Great Again event at the White House to announce commitments secured from major healthcare and information technology companies to lay the foundation for the next-generation digital health ecosystem. That foundation includes (1) promoting a CMS Interoperability Framework to enable information sharing between patients and providers, and (2) increasing the availability of personalized tools to support patient decision-making. The latter includes apps to assist patients with diabetes and obesity management; the use of conversational AI assistants to help patients check symptoms, navigate care options, and schedule appointments; and tools to “kill the clipboard” by replacing paper intake forms with digital check-in methods.
Artificial Intelligence
On July 23, the Trump administration released Winning the Race: America’s AI Action Plan, a federal strategy to position the U.S. as a global leader in AI. The plan includes three healthcare policy initiatives:
- CMS AI-Enabled Prior Authorization Pilot. CMS will launch a six-year pilot to improve, streamline, and, where possible, automate prior authorizations using AI.
- Enhanced Fraud Detection and Program Integrity. CMS will leverage predictive analytics and real-time data to prevent improper payments and will encourage state Medicaid agencies to pursue similar AI investments with enhanced federal funding.
- Regulatory Streamlining and Innovation Incentives. The AI Action Plan calls for modernizing regulations to support AI adoption in healthcare and for offering financial incentives to states that foster innovation-friendly environments.
Most-Favored-Nation Drug Pricing
Back on May 12, President Trump signed Executive Order 14297, Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients, setting a 30-day deadline for drug companies to electively lower the cost of prescription drugs or face regulations tying the price federal healthcare programs pay for medications to lower prices paid by other countries. Yesterday, President Trump sent letters to 17 of the world’s largest drug companies, expressing dissatisfaction with their response to his Executive Order and directing them to take more steps to reduce drug prices by September 29. If the companies “refuse to step up,” the federal government “will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.”
PYA Webinars – 2026 Medicare Physician Fee Schedule (MPFS) Proposed Rule
On Wednesday, we presented the first of two webinars addressing the 2026 MPFS proposed rule. We covered the 2026 payment rate/conversion factor, the new efficiency adjustment, the revised practice expense methodology, the Ambulatory Specialty Model (new mandatory alternative payment model), and changes to the Merit-Based Incentive Payment System and the Medicare Shared Savings Program. You can access the slides and a recording of the webinar here. Our second webinar on the 2026 MPFS proposed rule will be August 13, and we’ll address telehealth changes, global payments reforms, new reimbursement methodology for skin substitutes, and updates to care management services and prevention and wellness programs. You can register for the webinar here.
Please do not hesitate to contact us if you have any questions regarding these latest developments, and please continue to check PYA’s website for updates.
