6 Health Policy Changes in the House Reconciliation Package You Should Know

There is a lot of noise on Capitol Hill about Medicaid cuts and some of the most significant changes to health care policy since the passage of the Affordable Care Act (ACA) in 2010. While nothing is set in stone yet, the House just passed the full budget reconciliation package, moving debate on Medicaid, tax cuts and many other important policy changes over to the Senate.

In the House, conservative hardliners and moderate Republicans have had a hard time agreeing on several provisions, particularly on the proposed Medicaid reforms and implementation dates. Now that the bill is moving on to the Senate, many of the same disputes over Medicaid and SALT provisions are set to replay as the Senate has the opportunity to make additional changes.

While this package makes sweeping changes to Medicaid—which could cause 10 million people to lose their health insurance coverage—there are six lesser known provisions you should be aware of:

1. The ORPHAN Cures Act. H.R. 946, the Optimizing Research Progress Hope and New (ORPHAN) Cures Act, would allow orphan drugs that have been approved for one or more rare diseases to be exempt from Medicare’s drug pricing negotiation program. NORD, EveryLife, the Tigerlily Foundation, Save Rare Treatments Taskforce and other rare disease advocates have been vocal supporters of this bill.

An “orphan drug” is a drug or treatment that has received approval from the U.S. Food and Drug Administration (FDA) to treat one rare disease. Currently, orphan drugs are exempt from Medicare’s drug negotiation program, which provides an incentive for manufacturers to research and develop therapies for the 30 million Americans who live with one of over 10,000 rare diseases.

Under current statutes, as soon as one of these orphan drugs is approved for two or more rare diseases, it is no longer exempt from the Medicare Drug Price Negotiation program, which subverts the original intent of the Orphan Drug Act of 1983–to encourage innovation of these therapies. This is one of the first Inflation Reduction Act fixes since the change in administrations.

2. Accelerating Kids Access to Care Act. Potentially lost in the 160-page bill text of the Energy and Commerce markup is S.752/H.R.1509, Accelerating Kids Access to Care Act. This bill would help children with complex medical needs by simplifying the out-of-state application process for Medicaid.

Currently, many children and young adults with complex medical needs—such as congenital heart disease patients—must seek treatment from specialists that are out-of-state and out-of-network with their Medicaid plans. For example, someone with congenital heart disease living in New Jersey or Delaware may seek treatment in Philadelphia, where there are specialists who understand how to treat their condition.

This legislation clarifies the Medicaid provider screening and enrollment process so that children with complex medical needs can get the care they need faster.

This issue hits close to home for CURA—we recently teamed up with the Adult Congenital Heart Association to advocate on Capitol Hill for some of the unique challenges that adult congenital heart patients face, such as finding providers who know how to treat adult congenital heart patients.

3. A reimbursement boon for Medicare physicians. At the end of 2024, The Centers for Medicare and Medicaid Services (CMS) decreased the Physician Fee Schedule conversion rate by 2.83% effectively cutting the salaries of physicians who serve Medicare patients by 2.93% on average. This is the fifth year in a row that physicians have seen cuts to their Medicare reimbursement rates. Combine these cuts with increasing medical inflation, and taking on Medicare patients seems not only less profitable–but less sustainable–especially for smaller medical practices serving elderly populations.

The budget reconciliation text includes a reimbursement rate bump for Medicare physicians, which essentially amounts to a pay raise. Beginning in 2026, the Physician Fee Schedule will reimburse Medicare physicians up to 75% of the Medicare Economic Index (MEI). Modern Healthcare reports that the MEI generally rises faster than inflation.

Many physicians have found it more difficult to run their own private practices due to medical inflation costs and physician fee rates that have not kept up with medical inflation. This bump in the Medicare Physician fee and the attachment of future fee schedule changes to the MEI could help address the cuts Medicare physicians have seen over the past few years.

4. PBM Reform. Targeting Pharmacy Benefit Managers (PBMs) has become the focusof this Congress’ efforts tolower the cost of prescription drug prices. PBMs act as middlemen between pharmacies, drug manufacturers and insurance providers. In some cases, PBMs are directly integrated into the business models of large insurance providers and pharmacies.

The PBM reform provisions in the budget reconciliation text would 1) require transparency with Medicare Part D Prescription Drug Plan Sponsor from PBMs in Medicare Part D, 2) limit PBM compensation to fair market service fees and prohibit compensation based on a drug’s list price.

In 2024, Congress attempted to pass much broader PBM reforms that were eventually dropped from the end-of-year package. These reforms—in addition to prohibiting PBMs from linking their fees to list price of drugs in Medicare Part D and banning profiting off of spread pricing in Medicaid—also included regulations on the rebates PBMs can provide and transparency requirements for PBMs in the broader commercial market. Because these two big reforms are not directly related to the federal budget, they would likely not pass the “Byrd Bath,” or the test the Senate uses to determine whether or not legislation is related to the budget.

The CBO estimates that the spread pricing and Medicare Part D delinking reforms would provide $306 million and $719 million in savings, respectively.

5. Expanded definition of rural emergency hospitals. Rural residents often face more transportation difficulties than urban or suburban residents when it comes to accessing health care.Some residents have to drive very long distances to get the health care they need.

A new provision in the budget reconciliation act would change the definition of a rural emergency hospital (REH) in order for all REHs that closed between Jan. 1, 2014 and December 26, 2020, to be eligible to reopen. Rural hospitals make up about one third of all hospitals in most states. Expanding the definition of REHs could help rural Americans gain better access to outpatient emergency services.

Martin County, in rural eastern North Carolina, is one of the first places trying to reopen a rural emergency hospital that has closed.

6. Provides $25 million to Contractors to Use AI to Detect Waste, Fraud and Abuse. As part of the House Republicans’ goal to limit waste, fraud and abuse in the Medicare program, $25 million from the Medicare trust fund will be spent on federal contracts with AI companies to find and recoup overpayments, wrongful payments and other savings.

Looking Ahead
Of course, the fate of these provisions remains uncertain, and are subject to change day-to-day over the coming weeks. As negotiations continue, stakeholders from all sides are racing to shape the final package. Curious how these provisions or other legislation could impact your organization’s mission? Reach out to us today!