D.C. at a Glance: Vizient’s policy & advocacy updates

Legislative update

• Congress has returned to D.C. after a brief recess with the same goal they (meaning the majority) had before they left – passing “Reconciliation 2.0” (1.0 being the OBBBA), a Republican-led effort to fund the remaining offices within the Department of Homeland Security (e.g. ICE, CBP). On May 4, the Senate Judiciary Committee and the Senate Homeland Security and Governmental Affairs Committee released their respective reconciliation bill texts, which, as expected, do not include any healthcare provisions. Even with the current 2.0 process still incomplete, however, initial discussions have already emerged among some Republican lawmakers about a future “Reconciliation 3.0” package that could include health policy provisions, particularly related to program oversight and fraud prevention. However, the immediate priority for Congress remains advancing the current targeted reconciliation bill and the outlook for any additional legislative package will be significantly complicated by the upcoming midterm elections and lack of legislative days remaining in the 2026 calendar.
• On April 28, the House Committee on Ways and Means held another hearing on healthcare affordability, this time featuring leaders from several major hospital systems including HCA Healthcare, CommonSpirit Health, New York-Presbyterian and ECU Health. During the hearing, witnesses described the ongoing challenges faced by providers and urged the committee to strengthen the health care workforce, reduce administrative and regulatory burden and preserve stable coverage. Republican representatives primarily emphasized the need to increase market competition and establish site-neutral payments to increase health care affordability, while Democrats focused on the negative financial impact of recently-expired enhanced advance premium tax credits and Medicaid cuts in the OBBBA on patients. Additionally, some Members of Congress criticized providers’ use of the 340B Drug Discount Program and expressed frustration with the not-for-profit tax exemption, blaming some of the witnesses for how they utilize the savings gleaned by both.
• Earlier this month, following the release of the Department of Health and Human Services (HHS) FY 2027 budget request, HHS Secretary Kennedy testified seven times to various congressional committees to highlight the administration’s policy priorities set forth in the budget request. During the hearings, Republicans mostly focused on ongoing HHS efforts to address chronic diseases, the drug pricing deals reached through the administration’s Most Favored Nation (MFN) policies and the agency’s new nutrition initiatives. Democrats’ questioning primarily centered on the agency’s response to the ongoing measles outbreak, the secretary’s stances on vaccine safety and efficacy, recent OBBBA-related cuts to Medicaid and the proposed elimination of certain programs at HHS. Notably, the 340B Program was also a recurring topic throughout many of the hearings. While several lawmakers praised the original intent and aims of the program, there was desire among policymakers, including Sec. Kennedy, for increased program integrity and additional transparency from 340B covered entities moving forward. However, no official policy proposals have been released by the administration at this time.
• On May 11, Vizient endorsed (Press Release) the Drug Origin Transparency Act of 2026, bipartisan legislation that would add additional transparency to the drug supply chain. The bill would require manufacturers to regularly submit information to the Food & Drug Administration (FDA) regarding production facilities and the sourcing of active pharmaceutical ingredients (APIs) and other materials used in drug manufacturing. It would also require certain origin information to be reflected in product labeling. These measures would provide greater insight into potential vulnerabilities for stakeholders, giving those in the supply chain an opportunity to find alternative production locations or supplier options before a supply disruption occurs.

Regulatory policy & executive action

• On April 10, the Centers for Medicare & Medicaid Services (CMS) issued the annual proposed rule (Fact Sheet) (Vizient Summary) to update the Fiscal Year (FY) 2027 Medicare payment and policies for the hospital inpatient prospective payment system (IPPS) and the long-term care hospital (LTCH) prospective payment system. The proposed rule increases the inpatient payment rate for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful Electronic Health Record (EHR) users by 2.4 percent. CMS anticipates hospital payments will increase overall by $1.9 billion in FY 2027. However, CMS proposes to decrease disproportionate share hospital and uncompensated care payments by 3.3 percent from FY 2026, totaling $7.56 billion for FY 2027. CMS also proposes changing the eligibility requirements for off-campus provider-based departments, which may make it more challenging for off-campus inpatient facilities to qualify as a provider-based department. In addition, CMS proposes updates to several quality programs. CMS also provides several requests for information (RFIs) on issues such as the adoption of measures into hospital quality programs and the Medicare Promoting Interoperability Program, and potential modifications to the types of providers participating in TEAM, among other topics. Vizient will be submitting comments on the proposed rule, which are due June 9. Please direct feedback to Randi Gold.
  • Along with payment updates and RFIs, the Proposed Rule also includes a proposal to create the Comprehensive Care for Joint Replacement (CJR) Expanded (CJR-X) Model (Fact Sheet). CJR-X builds on the CJR Model, which was tested from April 1, 2016 – Dec. 31, 2024, and aims to improve quality and efficiency for beneficiaries undergoing lower extremity joint (hip and knee) replacements (LEJR). If finalized, nearly all acute care hospitals, with some exceptions, would be required to participate in the CJR-X model beginning Oct. 1, 2027. CMS proposes that CJR-X will be a two-sided risk model, where participants could receive a reconciliation payment amount from CMS or pay CMS a repayment amount based on their spending and quality performance. Under the proposal, the first CJR-X performance year would run from Oct. 1, 2027 through Sept. 30, 2028.
• On April 10, CMS and the Office of the National Coordinator for Health Information Technology (ONC) also issued a proposed rule (Fact Sheet) (Vizient Summary) to improve and streamline the prior authorization (PA) process by providing additional requirements for different types of payers. This Proposed Rule, which builds on the 2020 CMS Interoperability and Patient Access final rule and the 2024 CMS Interoperability and Prior Authorization final rule that focused on non-drug items and services, extends many of those requirements to now cover PA for drugs. CMS proposes to require impacted payers to support electronic PA and to make decisions on those requests no later than 72 hours after receiving a standard PA request and no later than 24 hours after receiving an expedited PA request. CMS also proposes adding additional metrics for impacted payers to report, including PA metrics and an application programming interface (API) metric. CMS also requests information regarding opportunities to increase resiliency in the context of cybersecurity and ways to streamline the step therapy process through technology and data sharing. While CMS outlines various compliance dates in the Proposed Rule, most of the provisions would go into effect on Oct. 1, 2027. Vizient will be submitting comments on this Proposed Rule, which are due June 15. Please direct feedback to Jenna Stern.
• On April 23, CMS and FDA announced the Regulatory Alignment for Predictable and Immediate Device (RAPID) coverage pathway, which aims to shorten the national coverage determination (NCD) process. Under RAPID, CMS would issue a proposed NCD on the same day a device gains FDA market authorization, potentially enabling national Medicare coverage within two months, compared to approximately a year or more under the current pathway. The RAPID coverage pathway will be available to certain devices that are also the subject of an Investigational Device Exemption (IDE) study that enrolls Medicare beneficiaries and studies clinical health outcomes agreed upon by FDA and CMS.