Congressional votes to end the federal government shutdown have brought several pieces of good news for health care. Other developments out of Washington, D.C., have more mixed results.
The Good
The deal reached in the Senate to end the shutdown includes several critical provisions — with each health care waiver structured retroactive to Oct. 1, 2025, and in place through Jan. 30, 2026 — that help protect health care and hospitals:
- Medicaid disproportionate share hospital (DSH) relief: Eliminates Medicaid DSH cuts
- Medicare rural support: Extends the enhanced low-volume adjustment and the Medicare-dependent hospital program
- Medicare telehealth and hospital-at-home: Extends key telehealth waivers and the hospital-at-home program
- Medicare work geographic index floor: Extends a 1.0 floor on the work geographic practice cost index for physicians
- Medicare rural ambulance: Extends add-on payments for ambulance services to support rural, “super-rural,” and urban ambulance services
- Workforce: Extends community health centers, the National Health Service Corps, and the Teaching Health Centers Graduate Medical Education Program
In addition, positive outcomes of the deal include:
- PAYGO sequester: Under PAYGO requirements, Congress must pay for any legislative package, either by reducing entitlement spending or increasing revenue. The legislation would waive PAYGO reductions by “wiping the scorecard clean,” preventing a 4% Medicare sequester cut from taking effect in January.
- Medicare clinical laboratory tests: The deal delays payment reductions to the Clinical Laboratory Fee Schedule under the Protecting Access to Medicare Act through Jan. 30, 2026, and delays the data reporting periods through Jan. 31, 2026.
- Cybersecurity Information Sharing Act of 2015: The deal extends this program’s authorization until Jan. 30, 2026. The law provides liability protections for private sector companies, including hospitals and health systems, that voluntarily share cyber threat information with the government.
The other piece of strong positive news coming out of Washington, D.C., this week is that CHA has successfully secured an initial $30.4 million settlement via ongoing Medicare rural floor wage index litigation and is in the process of securing an additional $74 million for California hospitals.
A couple of offsets included in the bill were necessary, and advocacy by CHA and the American Hospital Association prevented the worst outcomes, such as site-neutral cuts, from materializing, leaving the following in place:
- Medicare Improvement Fund: Reduces funding in the Medicare Improvement Fund from $1.8 billion to $1.4 billion
- Medicare sequestration: Adds a month to the already scheduled 2% sequestration in the second half of 2032 (this sequester is separate from the PAYGO sequester averted by this deal and has been in place since 2013)
The Bad
- Affordable Care Act (ACA) premium tax credits: While Senate Republicans and Democrats agreed to vote in mid-December to extend the subsidies for insurance purchased on ACA exchanges, there is no guarantee a proposal will pass. Further, Speaker Johnson has not committed to such a vote in the House. Expiration of the subsidies could lead to a significant increase in insurance coverage losses and uncompensated care for hospitals.
- Short-term stability: The funding bill and its health policy extensions will only last through the end of January, leaving fewer than three months for federal legislators to work through negotiations on a longer-term spending plan.
The Unknown
Along with the positive and negative developments, this week’s conversation and legislation offer a couple of key uncertainties:
- Next steps on fee program: The shutdown undoubtedly slowed the work of the Centers for Medicare & Medicaid Services in reviewing California’s submission for Hospital Fee Program 9. The state has already responded to several of CMS’ questions, but it’s unclear just how much time has been lost and whether the program will be approved by the end of the year. Regardless of this timing, payments from the current fee program will continue into calendar year 2026. CHA continues to work with the California delegation and the administration to support a quick approval.
- Insurance companies in the hot seat: As senators were coming together on a bipartisan deal, President Trump publicly floated an idea that funds could be directed to consumers rather than insurance companies. Developing actual policy proposals and securing votes to implement them would be a lengthy process, but it’s notable that the president is now calling attention to profit-minded insurance companies that too often leave providers and patients in the lurch.
