Federal Healthcare Update for Week of May 1, 2026

THIS WEEK’S DOSE

• House Ways and Means Committee hears from hospital and health system executives. The hearing focused on how to improve healthcare affordability and followed the committee’s January 2026 hearing with insurance executives on the same topic.
• House Oversight Committee advances program integrity legislation. The nine bills aim to crack down on fraud in federal programs such as Medicaid.
• House Energy and Commerce Health Subcommittee discusses food legislation. Members discussed more than 25 bills during the legislative hearing.
• CMS extends GENEROUS model application deadlines. The model aims to allow drug manufacturers to provide supplemental rebates to participating states for certain drugs to align Medicaid net prices with negotiated most-favored nation pricing.
• CMS defers $91 million in federal Medicaid funding for Minnesota. This follows action from earlier this year, when the Centers for Medicare & Medicaid Services (CMS) deferred $250 million of federal funding for Minnesota’s Medicaid program.
• Education Department finalizes student loan policies. The final rule excludes certain degrees from the definition of “professional degree,” making them ineligible for higher federal borrowing caps.

CONGRESS

House Ways and Means Committee hears from hospital and health system executives. Four chief executive officers from various types of hospital systems testified, in addition to Brad Woodhouse, president of Protect our Care, who was the witness invited by committee Democrats. Republicans emphasized the need to increase market competition, ensure 340B program integrity, establish site-neutral payments, and prevent urban hospitals from benefitting from rural classifications. Chairman Smith (R-MO) took a firm stance in his opening statement, expressing that hospitals charge “an insane amount” for healthcare.

Witnesses detailed their challenges and urged Congress to address the healthcare workforce shortage, reduce regulatory and administrative burdens, and ensure stable healthcare coverage as ways to lower costs. Democrats focused largely on the negative impact of Medicaid cuts in the One Big Beautiful Bill Act (OBBBA) on patients, citing an increase in the uninsurance rate, higher levels of uncompensated care, and increased costs to the healthcare system.

House Oversight Committee advances program integrity legislation. The committee markup included discussion of nine bills, most of which passed unanimously. The following seven bills are broad antifraud bills, focused on the US Department of the Treasury:

• H.R. 8463, Pre-Payment Fraud Prevention and Treasury Data Access Act. Reported favorably by a 35 – 1 vote, with Rep. Tlaib (D-MI) as the sole no vote.
• H.R. 8464, Stopping Fraudulent Payments Act. Reported favorably by a 23 – 17 vote, with Republicans voting in favor.
• H.R. 8312, Fraud Prevention and Accountability Act. Reported favorably by a 23 – 17 vote, with Republicans voting in favor.
• H.R. 8428, Federal Fraud Prevention Workforce Training Act. Reported favorably by a 40 – 0 vote.
• H.R. 8467, Zeroing Out Monetary Benefits Improperly Expended Act. Reported favorably by a 40 – 0 vote.
• H.R. 8466, Taxpayer Resources Used in Emergencies Accountability Act. Reported favorably by a 40 – 0 vote.
• H.R. 8340, Taxpayer Funds Oversight and Accountability Act. Reported favorably by a 40 – 0 vote.

Two additional bills focus specifically on federal programs administered by states, such as Medicaid. Notably, both passed with bipartisan support:

House Energy and Commerce Health Subcommittee discusses food legislation. During the hearing, there was bipartisan agreement about the need to modernize the US Food and Drug Administration (FDA) food chemical review process and improve information sharing between states and the federal government during food safety incidents. Democrats supported requiring mandatory FDA review of food chemicals and strengthening infant formula safety protections. Democrats also raised concerns about Trump administration FDA staffing cuts, warning that a 20% workforce reduction undermines the agency’s ability to conduct oversight and manage food recalls. Republicans emphasized the Make America Healthy Again movement and the need for a single national food labeling and safety standard, warning that a patchwork of state laws creates unworkable compliance burdens, drives up food costs, and threatens supply chain efficiency.

ADMINISTRATION

CMS extends GENEROUS model application deadlines. CMS announced the GENErating cost Reductions fOr US Medicaid (GENEROUS) model in November 2025. CMS previously extended the application deadline for drug manufacturers in March 2026. The agency explained that this second extension is intended to provide more time for small and mid-sized manufacturers to apply:

• Drug manufacturers: application deadline extended from April 30, 2026, to June 11, 2026.
• States: application deadline extended from August 31, 2026, to September 10, 2026.

Read more in the request for applications for manufacturers, released February 2026, and for states, released December 2025.

CMS defers $91 million in federal Medicaid funding for Minnesota. Of the $91 million, $76 million is deferred because of fraud concerns in 14 personal care service categories, and $14 million is deferred because of concerns that the funding was used to improperly cover undocumented immigrants. In February 2026, after a review of fiscal year (FY) 2025 fourth quarter spending, CMS announced that it would defer $259.5 million of federal matching funds for the same two reasons. In a video posted to X, CMS Administrator Oz noted that Minnesota must submit documentation to verify this spending was proper.

In January 2026, CMS also announced it would withhold $2 billion annually from the state because of concerns that Minnesota was not addressing fraud within the 14 service categories and was not in compliance with federal program integrity requirements. In March 2026, Minnesota filed a lawsuit against the February deferral and January withhold, but a federal judge blocked their request for a temporary restraining order.

Education Department finalizes student loan policies. The US Department of Education finalized provisions to implement the student loan policies passed in OBBBA, and the policies largely mirror the January 2026 proposed rule. The final rule is effective July 1, 2026.

Key policies include:

• Setting a lifetime federal borrowing cap of $100,000 for graduate students and $200,000 for professional students.
• Establishing annual borrowing limits of $20,500 for graduate students and $50,000 for professional students. Previously graduate students could borrow up to the cost of attendance.
• Phasing out the Graduate PLUS Program, which graduate and professional students have used to pay for education expenses not covered by other financial aid.
• Narrowing the range of degree programs that qualify as “professional,” which reduces the number of programs eligible for the higher loan limits established by the law, to the following:
  • Pharmacy (PharmD).
  • Dentistry (DDS, DMD).
  • Veterinary medicine (DVM).
  • Chiropractic (DC, DCM).
  • Law (LLB, JD).
  • Medicine (MD).
  • Optometry (OD).
  • Osteopathic medicine (DO).
  • Podiatry (DPM, DP, PodD).
  • Theology (MDiv, MHL).
  • Clinical psychology (PsyD, PhD).

The definition of “professional” omits nursing, physical therapy, dental hygiene, occupational therapy, audiology, and social work degrees, among others. Despite receiving many comments opposing this proposal, the agency ultimately finalized this list as proposed. Rep. Lawler (R-NY) has introduced the Professional Student Degree Act (H.R. 6718) to amend the Higher Education Act to define and expand what qualifies as a “professional degree,” including restoring programs such as nursing, physical therapy, and social work to that status.

BIPARTISAN LEGISLATION SPOTLIGHT

Sens. Grassley (R-IA) and Bennet (D-CO) introduced S. 4460, the Rural Community Hospital Demonstration Reauthorization Act, which would extend the Medicare demonstration beyond its current June 2028 expiration date. The program tests cost-based reimbursement paid to rural hospitals that have fewer than 51 beds (and therefore do not qualify as critical access hospitals) for covered Medicare inpatient hospital services. Fourteen additional bipartisan Senators are original co-sponsors, including Senate Finance Committee Chair Crapo (R-ID) and Ranking Member Wyden (D-OR).

QUICK HITS

• President Trump withdraws Means surgeon general nomination, picks new nominee. Following concerns about the likelihood of Casey Means’ nomination successfully moving through the Senate confirmation process, President Trump selected Nicole Saphier, MD, as the new nominee. Saphier is a radiologist and commentator.
• FDA seeks information on real-time clinical trials. The FDA requested information on a proposed pilot program to assess how artificial-intelligence-enabled technologies can improve early-phase clinical trials. Comments are due May 29, 2026.
• Nebraska becomes first state to implement OBBBA Medicaid work requirements. As of May 1, 2026, Nebraska is the first state to implement the new Medicaid work requirements, ahead of the January 1, 2027, deadline. The state also released a list of conditions that will fall under the “medically frail” exemption. States and stakeholders are awaiting guidance from CMS on this exemption.
• House Appropriations Committee advances FY 2027 FDA funding bill. The bill would provide $7.1 billion to the FDA for FY 2027, less than the $7.2 billion request in the president’s budget. The bill advanced by a 35 – 25 party-line vote.
• Senate Democrats release policy framework to lower healthcare costs. The framework outlines Democrats’ vision for healthcare, which holds that healthcare costs should be low, access to care should be reliable, and the healthcare system should be simpler. This follows Senate Democrats’ release of a report last week showing the impact of Republicans’ policies on the healthcare system.
• GAO reappoints five MACPAC commissioners. The GAO, responsible for Medicaid and CHIP Payment and Access Commission (MACPAC) appointments, reappointed the five commissioners whose appointments were set to expire in April 2026. The five commissioners will serve an additional three-year term through April 2029.
• IACC recommends adoption of standard autism definition. The Interagency Autism Coordinating Committee (IACC), housed within the US Department of Health and Human Services (HHS), recommended that federal agencies adopt a standard definition of “profound autism” for individuals with the most support needs. IACC stated that this definition would improve identification of autistic individuals and improve consistency in research, reporting, and strategic planning. HHS Secretary Kennedy will make a final decision about the recommendation.

NEXT WEEK’S DIAGNOSIS

The House and Senate are both scheduled to be in recess next week, returning to session the week of May 11, 2026, when lawmakers will resume work on the “skinny” reconciliation package to fund US Customs and Border Protection and US Immigration and Customs Enforcement. While on recess, the Senate Health, Education, Labor, and Pensions Committee will hold two field hearings in Louisiana:

MACPAC will hold its final meeting of the 2025 – 2026 cycle on May 7, 2026. The meeting will include votes on recommendations related to work requirements implementation, automation in prior authorization, and transitions of care for children and youth with special healthcare needs. On the regulatory front, we continue to await the federal independent dispute resolution operations rule and the final Notice of Benefit and Payment Parameters for 2027 .