From sweeping drug price reforms to proposed staffing mandates and changes to Medicaid financing, here are five federal policy moves from the last week that ASCs need to know:
CMS proposes updates for third round of Medicare drug price negotiations
CMS released draft guidance on May 12 outlining changes for the third round of Medicare drug price negotiations, including the possible inclusion of certain Part B drugs that lack generic or biosimilar alternatives. This marks a shift from the initial focus solely on Part D medications.
The guidance aims to improve transparency, focus on high-cost drugs, and balance fair pricing with continued pharmaceutical innovation.
Here are key highlights:
- Part B drugs may be included if they lack generic or biosimilar competition.
- Previously negotiated drugs could be repriced if major changes occur.
- Price rules apply starting in 2026 and extend through 2028.
- The next drug list will be announced by Feb. 1, 2026; new prices take effect in 2028.
- Public comments are open through June 26.
Trump issues executive order to slash drug costs
On May 12, former President Trump signed an executive order directing drugmakers to match U.S. drug prices with those in other wealthy nations under a “most favored nation” model. HHS has 30 days to set pricing targets, with enforcement options including trade actions and potential drug importation from countries like Canada.
If drugmakers fail to significantly lower prices after initial negotiations, the order authorizes the commerce secretary and U.S. trade representative to pursue trade actions against countries that keep drug prices artificially low, according to the executive order. It also directs federal agencies to consider restricting exports of certain drugs or materials as part of broader efforts to address pricing disparities between the U.S. and other countries.
House Republicans introduce a bill to implement Medicaid work requirements
On May 11, House Republicans unveiled a 160-page bill aimed at reducing federal healthcare spending by imposing nationwide work requirements for Medicaid recipients and tightening eligibility criteria. The legislation is part of a broader effort to curtail government expenditures, particularly within Medicaid and Affordable Care Act (ACA) programs.
A recent analysis from the Congressional Budget Office projects that the bill could slash up to $715 billion in Medicaid and ACA-related spending over the next decade. However, the proposed changes come with significant implications for coverage access — an estimated 8.6 million people could lose their health insurance by 2034.
CMS closes alleged Medicaid tax ‘loophole’
CMS has proposed a new rule targeting what it calls a loophole that enables states to levy targeted taxes on Medicaid managed care organizations (MCOs) to boost federal matching funds. These funds are often redirected back to the taxed entities, a practice CMS says undermines fair funding practices.
While certain provider taxes are allowed under federal law, CMS contends that some states are exploiting these allowances by implementing non-redistributive, Medicaid-specific taxes. The agency cites California, Michigan, Massachusetts, and New York as accounting for 95% of projected federal losses tied to these mechanisms.
If not addressed, CMS estimates such practices could cost federal taxpayers more than $74 billion over five years. The proposed rule includes the following reforms:
- Prohibiting higher tax rates on Medicaid business than on non-Medicaid business
- Clarifying language to eliminate ambiguity around Medicaid-specific taxation
- Strengthening statistical tests to prevent manipulation of tax structures
- Phasing in changes based on the length of current state waivers
Lawmakers reintroduce bill to set minimum nurse-to-patient ratios
On May 12 — International Nurses Day — Sens. Alex Padilla (D-Calif.) and Jeff Merkley (D-Ore.), along with Rep. Jan Schakowsky (D-Ill.), reintroduced the Nurse Staffing Standards for Hospital Patient Safety and Quality Care Act, which aims to establish mandatory minimum nurse-to-patient ratios in hospitals nationwide.
Under the proposed legislation, hospitals would be required to:
- Develop annual staffing plans that comply with the bill’s specified minimum ratios
- Publicly post nurse-to-patient ratio requirements and maintain detailed records of registered nurse staffing levels
- Provide whistleblower protections for nurses who report unsafe staffing conditions
The Department of Health and Human Services would be responsible for enforcing compliance with the staffing standards through civil penalties and an administrative complaint process.
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