Welcome to another round of PYA Washington Updates! It’s been a relatively quiet four-day work week in the world of health policy and regulation. Things will likely heat up again next week when Congress returns from its Memorial Day recess.
One Big Beautiful Bill Act
On Wednesday, the Joint Committee on Taxation updated its analysis of the revenue impacts of OBBBA’s tax provisions. According to the JCT, the bill would reduce federal tax revenue by $3.94 trillion between 2025 and 2034. The Congressional Budget Office, which is responsible for reporting on the OBBBA’s impact on federal spending, has not released final numbers, but the CBO most recently estimated a $1.6 trillion reduction over the same period. That means OBBBA would increase the deficit by roughly $2.3 trillion, but that doesn’t include interest payments.
The White House is pushing back, saying that OBBBA actually reduces the deficit. According to a White House statement released Wednesday, the CBO should not count the extension of expiring tax cuts as lost revenue and should have included the next revenue from reciprocal tariffs.
Appearing on CBS’ Face the Nation on Sunday, House Speaker Mike Johnson claimed the only people who stand to be impacted by OBBBA’s Medicaid cuts are “able-bodied workers, many of whom are refusing to work because they’re gaming the system,” apparently to the tune of about $700 billion (the reduction in Medicaid spending from 2025 to 2034 under OBBBA, per CBO.)
While we’ve focused on OBBBA’s spending cuts, the legislation includes other provisions impacting not-for-profit hospitals. Presently, there is a 21% excise tax on compensation paid by charitable organizations exceeding $1 million and on certain excess parachute payments for the organization’s top five highest compensated employees. (The tax does not apply to compensation provided in exchange for medical services.) OBBBA would extend the tax to all employees of a charitable organization who receive $1 million+ in compensation or an excess parachute payment. Also, OBBBA would resurrect the so-called “parking tax,” requiring charitable organizations to treat the amount of qualified parking and transportation fringe benefits as unrelated business income for federal tax purposes.
The Senate gets its turn at the legislation starting next week. Needless to say, it’s going to be a long, hot summer in Washington, D.C. For those who want a quick refresher on the legislative process, we recommend this throwback to 1975.
New Limits on Medicare Advantage Plans’ Use of Prior Insignia?
Late last week, bills were introduced in the House and the Senate to streamline the prior authorization process in Medicare Advantage. The Senate bill has 47 co-sponsors, while the House bill has 90. Purportedly, the bills have broad bi-partisan support but expect the insurance industry to come out swinging.
Price Transparency
Consistent with the directives in Executive Order 14221, CMS released late last week new guidance on how hospitals should calculate the estimated allowed amount values for their online machine-readable files as part of hospital price transparency requirements. Hospitals no longer will be permitted to use 999999999 to signify that there was insufficient historic data for that item or service over the last year. Also, CMS also seeks public input by July 21, 2025, to identify price transparency challenges and improve compliance and enforcement processes.
CMS Oversight of Treatment for Gender Dysphoria
On Wednesday, CMS sent a letter to select hospitals requesting them to produce within 30 days information regarding quality standards for medical interventions for gender dysphoria in children, including informed consent processes. CMS also wants hospitals to provide complete financial data for all pediatric sex trait modifications paid, in whole or in part, by the federal government. This action follows an executive order, an HHS report on best practices for gender dysphoria treatment, and a quality and safety special alert memo for hospitals.
Strata Performance Trends Report
Each quarter, Strata publishes a report on healthcare trends with analyses of financial, operational, and claims data from organizations nationwide. The report released this week shows significant increases in drug and supply costs even before any new tariffs take effect. Hospitals’ charity deductions for Q1 2025 rose 7.6% from Q1 2024 and jumped 24.5% compared to Q1 2023. Hospital operating margins dipped below 1 percent for the first time in 15 months.