HMA Weekly Roundup

House Committees Consider Policies to Meet Budget Reconciliation Instructions

This week, key committees in the House of Representatives released recommendations for legislative language that meets their federal savings and spending targets required in the fiscal year (FY) 2025 budget resolution. On May 11, 2025, the House Energy and Commerce Committee released legislation—and subsequently a substitute amendment—that contains several substantive Medicaid proposals designed to address eligibility and enrollment; financing; fraud waste, and abuse; and to institute mandatory work and community engagement requirements and cost sharing. The Committee completed its markup on May 14, 2025, voting to approve the provisions in the substitute amendment.

The release of text and committee markups are key steps in Congress’s budget reconciliation process; however, proposals may change during Senate proceedings.

Health Management Associates (HMA), and Leavitt Partners, an HMA company, are tracking these developments and analyzing the extensive health and health-related legislative text, including the Medicaid, Medicare, and Affordable Care Act (ACA) Marketplace proposals. Below, we review the status of congressional efforts and key policies.

Background

The budget reconciliation process is a powerful tool for enacting significant fiscal policy changes, as it allows for expedited consideration and passage of budget-related legislation. It has been used in the past to enact major tax reforms, healthcare legislation, and other important budgetary measures.

In 2025, Congress has been actively working to develop its budget bills through a series of steps. The House adopted a budget resolution on February 25, 2025, which sets the framework for federal spending, revenue, and the debt limit for fiscal year 2025 and outlines budgetary levels for the following years through 2034. The Senate passed an amended version of the budget resolution on April 5, 2025. The Senate’s amendments included reconciliation instructions that require $4 billion in gross deficit reductions and allow a $5.8 trillion net deficit increase. On April 10, 2025, the House agreed to the Senate’s amendments with a vote of 216−214. This agreement set the stage for the development of a reconciliation bill.

House Energy and Commerce Markup

On May 14, 2025, the House Committee on Energy and Commerce completed its second day of marking up legislative language to comply with the Concurrent Resolution on the Budget for Fiscal Year 2025, voting to advance the proposals out of committee. The committee’s proposal excluded certain significant structural reforms that had generated concern among some members and stakeholders, such as broad reductions in the federal matching rate (enhanced federal matching assistance percentage (FMAP)) for Medicaid expansion populations, per-capita caps on federal Medicaid cost growth, or reductions in the safe harbor threshold for state Medicaid provider taxes. The proposal does, however, contain more than a dozen provisions that would reduce federal health care spending by $715 billion with the funding reductions mostly focused on Medicaid, which the Congressional Budget Office projects will reduce the federal share of Medicaid spending, including:

• Adding mandatory work and community engagement requirements for individuals ages 19−64 without dependents, subject to exceptions for pregnant women, people who are medically frail, people with disabilities, people in compliance with other government program work requirements, people living in areas experiencing a temporary hardship, and other individuals
• Adding cost sharing for beneficiaries in the expansion population who earn more than 100 percent of the Federal Poverty Level, not to exceed $35 per item or service
• Pausing implementation of several final rules published during the Biden Administration, including: the final rule published September 21, 2023, “Streamlining Medicaid; Medicare Savings Program Eligibility Determination and Enrollment”; the April 2, 2024 rule, “Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes”; and the May 10, 2024, final rule, “Minimum Staffing Standards for Long Term Care Facilities and Medicaid Institutional Payment Transparency Reporting”
• Adding provider screening requirements
• Increasing frequency of eligibility redeterminations for certain individuals and adding enrollee address verification policies
• Reducing expansion FMAP for certain states that provide Medicaid coverage to undocumented individuals and families, regardless of the source of funding
• Preventing certain spread pricing arrangements in Medicaid between states and pharmacy benefit managers
• Restricting funding for certain essential community providers that furnish family planning services, reproductive health, and related healthcare services
• Ending a temporary increased FMAP to new states adopting Medicaid expansion, revising policies governing the use of Medicaid provider taxes, and payment limits for state directed payments

Committee Markups

Various other House committees have begun holding markups for the reconciliation package. The Committee on Ways and Means conducted its markup on May 13, 2025, to discuss its portion of the reconciliation bill, which involves $4.5 trillion in deficit increases. The initial Ways and Means proposal did not include many significant healthcare proposals, but on May 12, 2025, the committee released a substitute amendment that includes several changes that would affect private insurance coverage and Medicare. Key provisions include:

• Changes to Medicare and ACA premium tax credit (PTC) eligibility requirements related to immigration status
• Improvements to ACA PTC eligibility verification checks
• Changes to Health Savings Account flexibilities
• Codification and renaming of individual coverage health reimbursement accounts, which serve as a defined contribution that employees can use to purchase insurance in the individual market

Other committees, such as the Education and Workforce, Judiciary, Armed Services, and Homeland Security Committees, also have conducted markups and approved their respective portions of the reconciliation bill.

Connect With Us

These steps are part of the ongoing process to finalize the budget and reconciliation legislation for FY 2025. Our federal policy experts with Leavitt Partners and across HMA are monitoring the legislative policies and ongoing negotiations in Congress and with the administration. They work with healthcare organizations and industry to plan for the range of scenarios and policies Congress is debating.

For more information about the impact of these policies, contact our featured federal policy experts Shannon Deere, Greg Gierer, and Liz Wroe.

President Issues Executive Order Calling for Most Favored Nation Drug Pricing

On May 12, 2025, the President signed an Executive Order (EO), Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” The EO calls for or, in some cases, presumes a range of manufacturer, administrative and regulatory actions to reduce drug prices, but ultimate outcome remains unclear.

HMA experts, including Leavitt Partners, an HMA company, are closely following executive agency and stakeholder responses to the EO. In this article, our experts summarize the EO and identify key considerations for healthcare stakeholders.

Policy Overview

Since his first administration, President Trump has consistently criticized disparities in brand-name prescription drug prices between the United States and other developed countries. In 2018, the previous Trump Administration issued a preliminary proposal to institute an International Pricing Index (IPI) model targeting Medicare payments for a subset of clinician-administered drugs. The IPI model would have set a Medicare payment amount for select Part B drugs at a lower amount to align with international prices and allow for negotiation of prices, while still providing a drug add-on payment to providers consistent with historical drug costs.  In November 2020, the administration issued an interim final rule (IFR) instituting an escalated version of this concept, entitled the Most Favored Nation (MFN) Model. Both the IPI proposal and the MFN final rule, the latter of which was enjoined by the courts on largely procedural grounds and later rescinded by the Biden administration, would have been implemented under the Center for Medicare and Medicaid Innovation’s (CMMI) demonstration authority.

On May 12, 2025, the President signed an EO, Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients, which reaffirms the Administration’s concerns regarding what it perceives to be American funding of pharmaceutical research and development “while foreign health systems get a free ride.” In an effort to address the Administration’s concerns, the EO notes that the Administration “will take immediate steps to end global freeloading” and that “should drug manufacturers fail to offer American consumers the most-favored-nation lowest price, my Administration will take additional aggressive action.”

The EO outlines efforts to implement this policy, including:

• Trade Efforts. The US Department of Commerce and United States Trade Representative (USTR) are directed to ensure that foreign countries are not engaged in actions with the effect of forcing Americans to “pay for a disproportionate amount” of R&D costs.
• Direct-to-Consumer (DTC) Sales at MFN Price. The US Department of Health and Human Services (HHS) is directed to facilitate DTC sales programs for manufacturers to offer MFN prices.
• MFN Targets. The HHS Secretary is directed to provide MFN targets to manufacturers within 30 days with the expectation that manufacturers will “bring prices for American patients in line with comparably developed nations.”
• If “significant progress” toward MFN pricing is not made, HHS will be directed to propose a rulemaking plan to impose it.
• The order suggests that the HHS Secretary certify, on a case-by-case basis, that reimportation will pose no additional risk to public health and will result in savings, as well as to create standard mechanisms for importation. It is unclear how this direction aligns with the current statutory framework, which is focused on Canada.
• Federal Trade Commission/Department of Justice Action. The EO calls for efforts “consistent with law” to undertake enforcement action against anticompetitive practices identified in the prior drug pricing EO, including use of the Sherman Antitrust Act.

Key Considerations

At this stage, the scope and practical effects of the EO remain uncertain, as the administration has not yet provided details regarding the regulatory and subregulatory actions envisioned under the document. With respect to trade policy, for instance, the EO does not outline explicitly what particular tools it expects USTR or the Commerce Department to leverage in combating “foreign freeloading.”

Similarly, the EO does not elaborate on the steps that the administration plans to take in “facilitat[ing]” voluntary MFN target pricing under DTC purchasing arrangements. Such efforts could theoretically bring waivers or other regulatory flexibilities to bear, or else they could take a more hands-off approach, simply encouraging drugmakers to take action on their own.

Without further clarifications around how the administration might define or assess “significant progress” towards MFN pricing targets on the part of manufacturers, nor the form, manner, or timeline that “aggressive action” in the absence of such progress might take, the EO serves principally as an illustration of the President’s posture, perspective, and priorities with respect to prescription drug affordability and access.

Even in the absence of immediate pricing or payment interventions, the EO could provide a preview of future executive actions aligned with the document’s focus. Such actions could include CMMI models building on the IPI or MFN initiatives from the first term, explicit trade negotiation priorities, regulatory measures related to DTC purchasing arrangements, FDA reimportation program flexibilities, or any number of other drug-related policies.

Our experts will continue to monitor these activities as they progress.

Connect With Us

For details regarding the EO and potential impact on the healthcare sector, contact our featured experts, Kevin Kirby, Mark Desmarais, Conor Sheehey, and Shannon Deere at [email protected]