Welcome to another round of PYA Washington Updates. We’re sure everyone has a smile on their face today, as the college football season starts tomorrow!
Medicare Sequestration
On August 15, in response to a request from the ranking members of four Senate committees, the Congressional Budget Office (CBO) provided estimates of OBBBA’s Statutory Pay-As-You-Go effects: “By CBO’s estimate, average increases in the deficits stemming from the act will total $415 billion over the 5-year period and $339 billion over the 10‑year period. Without enactment of subsequent legislation that would offset the deficit increase, waive the recordation of the bill’s effects on the scorecard, or otherwise mitigate or eliminate the statutory requirements, OMB will be required to issue a sequestration order not more than 14 days after the end of the current session of Congress (excluding weekends and holidays) to reduce spending by $415 billion in fiscal year 2026….”
If OMB issues that order, Medicare sequestration will go from the current 2% to 4%, or an estimated $45 billion for FY 2026. For the period 2027 to 2034, the amount would total $491 billion. That’s roughly half the amount by which federal Medicaid spending will be reduced for the same period. Keep in mind the “subsequent legislation” to which CBO refers would require 60 votes in the Senate.
Revocation of Executive Order on Competition
On August 13, President Trump revoked President Biden’s July 2021 Executive Order on Promoting Competition in the American Economy. The 2021 Executive Order applied a “whole-of-government” approach to increasing competition and included a lengthy list of directives to multiple federal agencies to address “some of the most pressing competition problems” in the economy, including hospital consolidations in rural communities and insurance industry monopolistic practices. FTC Chair Andrew Ferguson praised President Trump’s decision to reverse the Biden administration’s “undue hostility towards mergers and acquisitions.” This latest action may mean more hospital and healthcare deals, with this risk of antitrust challenges further diminished.
2026 Employer Health Care Strategy Survey
On Tuesday, the Business Group on Health (BGH) released its annual survey of large employers’ expectations and plans for providing health insurance. Employers predict the healthcare cost trend for 2026 will come in at a median of 9%, which falls to 7.6% with plan design changes. If those predictions hold true, healthcare costs would be 62% higher than they were in 2017. BGH expects these increases will drive employers to pursue value-driven strategies (e.g., centers of excellence, advanced primary care models, adoption of high-performance network model) more aggressively. With the move to these innovative models for health benefit management, providers must be prepared to demonstrate their value through quality and efficiency measures.
Chili Cook-Off?
This week, CMS announced its Crushing Fraud Chili Cook-Off Competition, “a market-based research challenge aimed at harnessing explainable artificial intelligence (AI), specifically machine learning (ML) models, to detect anomalies and trends in Medicare Fee-For-Service (FFS) claims data that can be translated into novel indicators of fraud.” Those interested in sharing their fraud-fighting recipes must submit a research proposal by September 19. CMS will allow 10 teams into the test kitchen, providing them with access to Medicare claims data to taste-test their ML model. CMS will then select and publicly announce the challenge winner. No word on what the winner may receive.
EU Tariff Agreement – Pharmaceuticals
After having threatened 250% tariffs on pharmaceuticals, the Trump Administration announced on August 21 that it has agreed to a 15% tariff on name-brand drugs imported from the European Union (EU), a primary importer of pharmaceuticals. Generic drugs are exempt from the latest agreement and will continue to be subject to the existing 2.5% tariff. The new tariffs will take effect September 1.
PYA Webinars – 2026 Medicare Hospital Inpatient Prospective Payment System Final Rule
On August 27, PYA will present a webinar on the 2026 IPPS final rule, addressing updated payment rates, changes to the inpatient quality reporting program and hospital value-based purchasing programs, and details relating to the Transforming Episode Accountability Model, the mandatory alternative payment model set to launch on January 1, 2026. As an added bonus, we will also address the new 340B Drug Rebate program. You can register for this 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.
