Washington Update | Funding Battles, MA Rate Freeze, and PE Investment

This week’s policy signals for health systems:

Senate funding bill stalls as EPTC extension takes shape. Eight Republican Senators joined Democrats in a 55-45 vote rejecting a funding bill, with negotiations over Department of Homeland Security funding remaining a sticking point. Meanwhile, Senator Bernie Moreno (R-OH) and a group of GOP senators have sent bill text to Democratic colleagues offering a 3-year, phased-out enhanced premium tax credit (EPTC) deal. The proposal would extend EPTCs with a staged phaseout, giving beneficiaries options to enroll in a health savings account or receive subsidies in a more traditional format. The bill also extends open enrollment through March 31 and imposes other caps and guardrails. Coverage stability remains a near-term policy risk for health systems—particularly in markets sensitive to payer mix shifts. Read more: The New York Times, Politico, Inside Health Policy.

CMS announces near-flat CY27 MA rates. CMS released proposed calendar year 2027 Medicare Advantage and Part D capitation rates that would slow payment growth significantly. If finalized as proposed, MA rates would only grow 0.09%—or $700 million—next year, bucking a years-long trend of payment increases that outpaced Original Medicare. The proposed rule would also change risk score calculations beginning in 2027. CMS Administrator Mehmet Oz, M.D. says the proposed policies are 'about making sure Medicare Advantage works better for the people it serves' through payment accuracy and modernized risk adjustment. Read more: Becker's Hospital Review, Fierce Healthcare, Politico.

Thought leaders release legislative framework for PE health investment. In a new Health Affairs Forefront article, thought leaders from UCLA and Vermont's Green Mountain Care Board detail a legislative framework to guardrail private equity investments in health. The authors propose three major legislative efforts: establish a debt use cap, create reporting mandates for enhanced transparency and oversight, and ban rapid resales. They also include four additional legislative safeguards aimed at closing loopholes around financial solvency, dividend recapitalization, corporate practice of medicine laws, and carried interest tax. The framework preserves space for 'responsible investment.' Read more: Health Affairs.