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From the President’s Desk: Signals from CMS as Rulemaking Gets Underway
By Jim Scott, President and CEO
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It may be an inside-the-Beltway affliction, but few things focus the analytical mind quite like imminent rulemaking.
With CMS releasing several key proposed rules this month, my team and I are grounding our expectations in themes the agency returned to throughout a busy March conference season. At both the Better Medicare Alliance Executive Policy Summit and the CMS Quality Conference, the message from CMS leadership was notable for its consistency.
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Whether the discussion turned to Medicare Advantage payment accuracy, quality measurement, or care delivery, officials returned to the same constellation of priorities: strengthening program integrity, focusing on outcomes, and building payment infrastructure that rewards value over volume. For those who have watched CMS revisit these themes across previous administrations, what stood out in March was not the substance of the priorities, but the discipline with which they were delivered.
We offer an overview of this messaging in our recaps of BMA and QualCon26 below. Elsewhere in this issue, Emma Hammer revisits President Trump’s Executive Order 14273 on drug pricing, examining how its directives are progressing through implementation and ongoing rulemaking.
As CMS advances efforts to address fraud, waste, and abuse, Sabrina Luther examines stakeholder reaction to recent program integrity actions focused on DMEPOS. Following the cyberattack on Stryker, Linda O’Neill considers what the incident suggests about a category of risk that sits outside the traditional ransomware playbook and how federal agencies are working to help healthcare organizations prepare for continuity of operations in the event of an attack.
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Assessing Implementation of EO 14273 Drug Pricing Policies
By Emma Hammer, Health Policy Manager
| | One year on, President Trump’s EO on lowering drug prices continues to shape federal drug pricing policy, with agencies advancing key directives while several actions remain in development or pending rulemaking. | | |
A year after President Trump issued Executive Order (EO) 14273, Lowering Drug Prices by Once Again Putting Americans First, federal agencies continue to take steps to advance its objectives.
Although the EO’s deadlines and goals are not immediately enforceable, they provide insight into the Administration’s drug pricing priorities and the timing of implementation. The Administration has taken steps to complete many of the EO’s directives, though several remain in the rulemaking phase and have yet to be fully implemented.
Some directives ask agency officials to provide recommendations to the President but do not require them to be publicly released. For these actions, work may be ongoing without public visibility.
Building on our August 2025 analysis, Applied Policy has prepared a chart outlining the EO’s directives, implementation timing, and agency actions to date.
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DMEPOS Moratorium and CRUSH RFI: Early Implementation and Stakeholder Response
By Sabrina Luther, Health Policy Associate
| | Stakeholders raise concerns about access, competition, and implementation as CMS advances program integrity actions in DMEPOS. | | |
As discussed in our March newsletter, on February 25, 2026, the Trump Administration announced several initiatives as part of a broader effort to address healthcare fraud. These included a nationwide Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) enrollment moratorium and the launch by the Centers for Medicare & Medicaid Services (CMS) of a Request for Information (RFI) related to Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH), for which the comment period ended on March 30, 2026. This comes alongside other Medicare program integrity initiatives, including the agency’s plan to publish information on providers/suppliers whose participation in the Medicare program has been revoked, including the reason for revocation and corresponding National Provider Identifier (NPI).
Since the announcement of the DMEPOS Medicare enrollment moratorium, stakeholders have raised concerns about its potential implications.
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Stryker Attack Emphasizes Importance of Federal Agencies
By Linda Rouse O'Neill, Vice President for Health Policy
| A recent cyber incident highlights a shift beyond ransomware and underscores the importance of planning for continuity of operations. | |
When Applied Policy first examined cybersecurity in healthcare in 2024, the dominant concern was ransomware. The $22 million ransom demand in the cyberattack on Change Healthcare—which followed shortly after our series—appeared to confirm the prevailing model: financially motivated actors, payment demands, and an eventual path to recovery.
The attack on Stryker Corporation last month has upended the playbook.
On March 11, 2026, employees at the Michigan-based company discovered that their phones and computers had been wiped. There was no ransom note. No demand for payment. No malware spreading in any pattern an incident response framework had anticipated. Attackers who had obtained administrator-level credentials used the company’s own device management tools to erase thousands of devices at once.
A pro-Iranian hacktivist group claimed responsibility for the attack.
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White House Budget Proposes Reduction in HHS Funding
By Emma Hammer, Health Policy Manager
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The White House’s FY 2027 budget requests $111.1 billion in discretionary funding for the Department of Health and Human Services (HHS), a 12.5 percent decrease from FY 2026. While final funding levels will be determined by Congress, the proposal provides insight into the Administration’s policy and operational priorities for the coming year.
The request advances a proposed reorganization of HHS, including the creation of the Administration for a Healthy America, and outlines continued emphasis on program integrity, oversight, and modernization at CMS. It also includes targeted funding reductions across several agencies and proposes structural changes that could affect several programs, including the 340B Drug Pricing Program.
| | Updates on Federal Rulemaking | | |
CMS Finalizes CY 2027 Medicare Advantage and Part D Policy Changes
By Caitlyn Bernard Shreve, Senior Health Policy Associate
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On April 2, 2026, CMS released its Contract Year 2027 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program Final Rule, which contains finalized policies for Medicare Advantage (MA) and Medicare Part D plans in contract year (CY) 2027.
In this rule, CMS finalizes proposals:
- Codifying Part D redesign under the Inflation Reduction Act (IRA)
- Updating the Manufacturer Discount Program, with minor modifications
- Updating third-party marketing organization (TPMO) practices, with modification
- Updating Star Ratings measures, including removing the Health Equity Index reward
- Clarifying that cannabis products illegal under applicable federal or state law cannot be offered as Special Supplemental Benefits for the Chronically Ill (SSBCI)
- Making regulatory changes aimed at reducing administrative burden in MA and Part D programs
The agency also addresses proposals from the Contract Year 2026 Proposed Rule related to SSBCI that were not finalized in the Contract Year 2026 Final Rule.
CMS is not finalizing its proposal to revise the Special Enrollment Period (SEP) for Significant Change in Provider Network intended to simplify plan changes for enrollees affected by provider terminations.
Finalized policies are effective June 1, 2026, and are applicable to coverage beginning January 1, 2027.
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CMS Proposes FY 2027 Hospice Payment and Quality Reporting Updates
By Emma Hammer, Health Policy Manager
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On April 2, 2026, CMS issued the fiscal year (FY) 2027 proposed Medicare Program: FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements rule.
In this rule, CMS proposes to:
- Increase hospice payments by 2.4 percent
- Update the hospice wage index using the current methodology
- Make the provision of the hospice election statement addendum mandatory
- Implement a Service and Spending Variation Index (SSVI) to identify potential utilization, quality of care, or compliance concerns
- Maintain the Hospice Outcomes & Patient Evaluation (HOPE) instrument quality measure set
- Identify hospices that have not submitted required quality data with an icon on the Compare Tool on Medicare.gov
The proposed rule also includes three requests for information: 1) ways to enhance the provision of palliative care outside of hospice care, 2) the potential construction of a hospice-specific wage index, and 3) feedback on issues that may occur when a Medicare hospice patient requests Medical Aid in Dying (MAID), as well as potential federal oversight mechanisms.
Comments on the proposed rule are due by June 1, 2026.
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FY 2027 IRF PPS Proposed Rule Signals Modest Growth and Broader Payment Reform Direction
By Meghan Basler, Senior Health Policy Associate
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On April 2, 2026, CMS released the FY 2027 Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) proposed rule.
In this rule, CMS proposes to:
- Increase IRF payment rates by 2.4 percent
- Update case mix group (CMG) weights and average length of stay values based on FY 2025 IRF claims and FY 2024 cost report data
- Maintain the current wage adjustment methodology, including a 5 percent cap on decreases, finalize the phase-out of the rural adjustment, and apply a budget-neutral wage adjustment factor of 1.0033
- Update outlier and cost-to-charge ratio (CCR) policies, including lowering the outlier threshold to $8,689 and updating CCRs (0.461 rural / 0.386 urban) with a 1.54 ceiling
- Revise IRF coverage and care coordination requirements
- Update the IRF Quality Reporting Program (QRP) by shortening data submission timelines (beginning FY 2029)
- Maintain and refine broader payment and delivery policies, including signaling future wage index reform and alignment across post-acute care settings
The proposed rule also includes two requests for information (RFIs): one on potential IRF PPS payment reform, including diagnosis-based classification and revised comorbidity scoring, and another on advanced care planning measures in the IRF QRP.
Additionally, CMS proposes updates to the DMEPOS Competitive Bidding Program, including increasing bid surety bond requirements to $100,000 for Remote Item Delivery (RID) models while maintaining $50,000 for traditional competitions.
Comments on the proposed rule are due by June 1, 2026.
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CMS Proposes FY 2027 Payment Updates for Skilled Nursing Facilities
By Sabrina Luther, Health Policy Associate
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On April 2, 2026, CMS issued the FY 2027 Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) proposed rule.
In this rule, CMS proposes to:
- Increase SNF PPS payment rates by 2.4 percent
- Remove two COVID-19 vaccination-related measures under the SNF Quality Reporting Program (QRP)
- Update the data submission timeframe for the SNF QRP
- Require expanded submission of Minimum Data Set (MDS) data as related to the SNF QRP
- Amend the “snapshot updates” for two MDS-based measures under the SNF Value-Based Purchasing (VBP) Program.
The proposed rule also includes three requests for information (RFIs): 1) an advanced care planning (ACP) measure in the SNF QRP, 2) observations and analysis in the Patient Driven Payment Model (PDPM), and 3) the potential construction of a SNF-specific wage index.
Comments on the proposed rule are due by June 1, 2026.
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CMS Proposes FY 2027 Payment Update and Quality Changes for Inpatient Psychiatric Facilities
By Caitlyn Bernard Shreve, Senior Health Policy Associate
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On April 2, 2026, CMS issued the FY 2027 proposed Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) Rate Update rule.
In this rule, CMS proposes to:
- Increase IPF PPS payment rates by 2.3 percent
- Increase electroconvulsive therapy (ECT) payment per treatment
- Cap facility-level outlier payments at 20 percent and set the FY 2027 outlier threshold at $37,820
- Remove two measures from the IPFQR Program beginning with the FY 2028 payment determination
- Implement a standardized IPF patient assessment tool, as required by statute
Comments on the proposed rule are due by June 1, 2026.
| | Applied Policy Welcomes Crystal Uba as Full-Time Associate | | |
Applied Policy’s COO John Voorhees announced that Crystal Uba has joined the firm as a full-time associate following her internship.
Uba, who worked as a management and program analyst at CMS before interning at Applied Policy, holds a master’s degree in bioinformatics and molecular biochemistry from The George Washington University. She previously interned at AstraZeneca and held research assistant roles at both the Walter Reed Army Institute of Research and The George Washington University.
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Reflecting on her internship, Uba noted, “Right away I could tell that the people here really care about the work they do. That made for a vibrant and exhilarating work experience, and I’m excited to continue contributing to the team as a full-time associate."
“Our internship program is designed to support early-career professionals interested in health policy,” said Voorhees. “In some cases, a candidate distinguishes themselves to the extent that we are pleased to bring them on full-time.”
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NVHPF Examines 340B at a Crossroads
By Annie Tuttle, Health Policy Associate
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On March 19, the Northern Virginia Health Policy Forum convened a discussion on the 340B Drug Pricing Program, bringing together legal, provider, and policy perspectives on the program’s origins, current pressures, and potential future direction. In a conversation moderated by Applied Policy's Brittany La Couture, the panel explored how 340B continues to function as a financial lifeline for safety-net providers while facing increased scrutiny, legal challenges, and policy debate.
The discussion focused on the proposed shift to a rebate-based model, ongoing federal and state policy activity, and the operational and data challenges associated with potential program changes. Panelists also examined intersections with Medicare drug price negotiation and Medicaid rebate rules, as well as emerging questions around contract pharmacy access, reporting requirements, and the growing role of litigation in shaping the program’s future.
A recording of the event is available below. Download the summary here.
| | CMS Messaging from BMA Executive Summit and QualCon26 | | Applied Policy participated in a series of national health policy conferences in March. While the emphasis of each varied, we observed several common themes. We are seeing CMS placing greater emphasis on moving care upstream, tightening payment, and increasing oversight across Medicare and Medicaid. Risk adjustment and payment accuracy are under closer review, particularly in Medicare Advantage, as stakeholders prepare for changes in the years ahead. While there is ongoing interest in the potential of artificial intelligence, many stakeholders have questions about how it can be integrated into existing payment systems. | |
BMA Executive Policy Summit
“We actually read the comments,” Chris Klomp, CMS Deputy Administrator and Director of the Center for Medicare, said during a fireside chat at the 2026 Better Medicare Alliance Executive Policy Summit.
The line, along with Klomp’s suggestion that comment closing periods are followed by “comment-paloozas,” drew a laugh from the audience. It also spoke to where Medicare Advantage policy may be heading. CMS is signaling that stakeholder input will be considered as the agency revisits payment, risk adjustment, and prior authorization. At the same time, officials throughout the BMA sessions made clear that engagement will not slow a broader push to tighten oversight and refine how the program operates.
Continue reading
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CMS QualCon26
“If you’re focused on what’s wrong, you can always find it. Focus on what’s right,” Tony Robbins told an audience of CMS leaders and healthcare professionals at the 2026 CMS Quality Conference.
The remark came during a featured one-on-one session with CMS Administrator Mehmet Oz. Robbins’ appointment to the newly formed HHS Healthcare Advisory Committee in the days following the conference suggests that the exchange was less a motivational interlude than a signal of the direction Oz is taking the agency.
Continue reading
| | Applied Policy Welcomes Holly Ojalehto to Spring Intern Class | | |
Applied Policy is pleased to welcome Holly Ojalehto as a member of the spring intern class.
Ojalehto holds dual bachelor’s degrees in social sciences and communications from the University of Washington and brings a background in healthcare technology, marketing, and communications, with experience spanning established and startup healthcare technology companies.
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Her experience includes work with healthcare data analytics and clinical decision support solutions designed for organizations whose strategies and operations are shaped by federal policy and reimbursement.
“Like all applicants to the intern program, Holly brought an interest in health policy,” said COO John Voorhees. “What set her apart was her experience seeing the impact of policy within the healthcare technology sector. We are glad to support her in broadening her understanding of how that policy is developed and are excited to have her on the team.”
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MedPAC Examines Access, Enrollment Complexity, and Medicare Advantage Oversight at March Meeting
By Emma Hammer, Health Policy Manager
| | MedPAC Delivers Statutorily Required Report to Congress | |
MedPAC's March 2026 Report to Congress provides a comprehensive assessment of Medicare payment policy, covering fee-for-service payment adequacy, Medicare Advantage, Part D, and trends in post-acute care.
At more than 600 pages, the report examines payment adequacy across major delivery systems and presents recommendations to Congress on payment updates and program structure. It also reflects ongoing policy concerns related to Medicare Advantage payment accuracy, program spending growth, and the evolving effects of the Inflation Reduction Act on Part D.
We have prepared a summary highlighting issues central to current Medicare payment policy discussions, including provider payment update recommendations, Medicare Advantage benchmarks and quality measurement, post-acute care utilization and incentives, and changes to Part D financing and benefit design.
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Healthcare has never lacked for acronyms. OKRs are among the latest to enter the lexicon.
Chris Klomp used the term at the BMA Executive Policy Summit, describing how Mehmet Oz is running CMS. “Dr. Oz runs the Center for Medicare by a system called objectives and key results,” Klomp said in conversation with John Brooks and BMA’s Mary Beth Donahue.
OKRs — short for objectives and key results — were developed by Andy Grove at Intel and later popularized by John Doerr, who brought the framework to Google. The model has since become a fixture in the tech industry. The idea is straightforward: set clear priorities at the top, define measurable outcomes, and leave execution to individual teams. The emphasis is less on tracking activity and more on whether results are actually achieved.
Forbes has previously noted Dr. Oz’s use of the framework at CMS. Whether OKRs translate smoothly into a federal agency, with its scale, regulatory constraints, and political environment, remains to be seen. But the choice of framework may offer a window into how CMS under Oz defines success, and how it plans to measure it.
| | On the Docket/Under Review | | |
Applied Policy is following these rules under review at the Office of Management and Budget:
- Interoperability Standards and Prior Authorization for Drugs (CMS-0062)
- Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals; the Long-Term Care Hospital Prospective Payment System; and FY 2027 Rates (CMS-1849)
- Independent Dispute Resolution Operations (CMS-9897)
- Strengthening Oversight of Accrediting Organizations (AO), Burden Reduction, and Related Provisions (CMS-3367)
- Medicare Drug Price Negotiation Program (CMS-4215)
- Medicaid Managed Care State Directed Payments and Medicaid Fee-For-Service Targeted Medicaid Practitioner Payments (CMS-2449)
- Establishing State Community Engagement Requirements for Certain Individuals Under Section 1902(xx) of the Social Security Act (CMS-2454)
- Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2027; and Basic Health Program (CMS-9883)
- Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes (CMS-2452)
See all rules under OMB review here.
| | Applied Policy continues to track executive orders that could impact healthcare and health policy. Access our regularly updated page below. | | By Katie Lawler, Health Policy Associate | |
On April 2, 2026, President Donald Trump signed a proclamation stating that U.S. reliance on imported pharmaceuticals and active pharmaceutical ingredients poses a threat to national security due to supply chain vulnerabilities.
The proclamation imposes tariffs of up to 100 percent on imported patented drugs and active pharmaceutical ingredients, while offering reduced or zero tariffs for companies that commit to onshoring production or enter into most-favored-nation pricing agreements. It also directs federal agencies to negotiate trade and pricing agreements with key allies to support domestic manufacturing. Certain products, including orphan drugs and advanced therapies, are exempt from the tariffs, and generic drugs and their ingredients are not currently affected. The policy establishes monitoring and enforcement mechanisms to ensure compliance with onshoring commitments. Overall, the proclamation is intended to reduce reliance on foreign supply chains and strengthen domestic pharmaceutical production in support of national and public health security.
| | Insight Joke of the Month for April | | Why did the rocket ship go to the doctor? | | | | Follow Applied Policy on LinkedIn for updates on our research, events, and policy analysis. | | Questions, comments, or concerns? Please contact us at news@appliedpolicy.com | | | |
Applied Policy, L.L.C., is a health policy and reimbursement consulting firm strategically located minutes from Washington, D.C.
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