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From the President’s Desk: Moving from Policy to Practice

By Jim Scott, President and CEO

Simay Okyay McNutt reviews CMS’s request for information on prior authorization for certain services, including DMEPOS. The RFI seeks input on how these processes affect access, workflow, and program integrity.

With hurricane season just weeks away, Linda Rouse O’Neill discusses the federal resources available to hospitals and other healthcare providers as they prepare for the overlapping seasonal risks of wildfire and hurricanes.

Finally, we examine how the Trump administration is advancing its Health Technology Ecosystem initiative, from the rollout of the Medicare App Library to CMS’s expanding use of artificial intelligence in program operations.

CMS Adjusts Timelines for Key Drug Pricing Models

By Emma Hammer, Health Policy Manager

Stakeholders continue to monitor the proposed GUARD and GLOBE models after CMS pauses the Part D component of BALANCE and shifts GENEROUS timelines.

As Applied Policy has previously reported, in 2025, the Centers for Medicare & Medicaid Services (CMS) announced an ambitious suite of drug pricing models designed to align what Americans pay for prescription drugs with prices in other countries. In April, the agency announced delays and deadline extensions in two of the models as implementation challenges emerged.

The models — the Better Approaches to Lifestyle and Nutrition for Comprehensive Health (BALANCE) model, the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) model, the proposed Guarding U.S. Medicare Against Rising Drug Costs (GUARD) model, and the Global Benchmark for Efficient Drug Pricing (GLOBE)— share a common premise: that the United States pays too much for prescription drugs relative to other developed nations.

Each uses different mechanisms within federal health programs to align U.S. drug prices with those paid in economically comparable countries through most favored nation pricing. Participation in BALANCE and GENEROUS is voluntary for manufacturers, states, and health plans. If finalized, GUARD and GLOBE would be mandatory for manufacturers.

Healthcare Preparedness as Summer Risks Emerge

By Linda Rouse O'Neill, Vice President for Health Policy

Natural disasters reveal the strengths and limits of healthcare preparedness. Federal coordination, technical resources, and regulatory flexibility all play a role in preparation and response.

With summer approaching, parts of the United States are already experiencing heightened wildfire activity. Fires forced evacuations in parts of Florida and Georgia in April, and the National Interagency Fire Center predicts continued above-normal fire potential along the Southeast Atlantic coast and across Florida through June. June 1 also marks the beginning of the Atlantic hurricane season. While early forecasts suggest a relatively moderate season—with 12 to 13 named storms, six of which are expected to become hurricanes—recent history shows that seasonal weather risks can shift rapidly.

Preparing for the risks inherent in such weather extremes requires ongoing planning on the part of hospitals and healthcare providers. This entails identifying contingencies, stress-testing protocols, and regularly reassessing plans as new threats emerge. It means anticipating that natural disasters may disrupt supply chains, compromise power and communications systems, force evacuations, and drive surges in patient volume, even as individual staff members may be facing personal losses.

Yet even the most thorough planning has its limits, and each natural disaster produces new lessons.

CMS Seeks Input on Prior Authorization for Laboratory Services and DMEPOS

By Simay Okyay McNutt, Senior Health Policy Manager

CMS has issued a request for information on prior authorization processes for laboratory services and DMEPOS. While prior authorization is a standard practice in managed care, its use in fee-for-service Medicare is currently very limited. 

As noted in our summary of CMS’s proposed Interoperability Standards and Prior Authorization for Drugs rule below, the agency has issued a request for information on prior authorization for laboratory services and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

CMS is also seeking input on whether greater consistency in documentation standards could reduce burden, a question with direct relevance to DMEPOS suppliers navigating varying requirements across Medicare Administrative Contractors, Medicare Advantage plans, and other payers. The agency requests feedback on how automation and technology could improve these processes and how prior authorization requirements affect the healthcare workforce. These questions intersect with broader discussions about the use of automation and artificial intelligence in prior authorization, including concerns about the extent to which automated processes can substitute for clinical review.

The RFI does not propose expanding prior authorization across fee-for-service Medicare. It draws in part on experience in managed care settings but seeks input on how these processes function across payer types. In that context, the questions it raises may be relevant beyond the settings in which prior authorization is currently used. Viewed alongside CMS’s use of pre-service review in targeted FFS models, including the Wasteful and Inappropriate Service Reduction (WISeR) Model, this focus may also reflect ongoing consideration of how such approaches could be applied in specific settings, particularly for higher cost services or those subject to additional review.

AI in Federal Health Programs: From Strategy to Operational Use

As federal policy and governance frameworks solidify, CMS is deploying AI in areas ranging from fraud detection to utilization management and digital health infrastructure.

The Trump administration has moved from framing artificial intelligence as a policy priority to deploying AI in federal health programs.

In its National Policy Framework for Artificial Intelligence, the White House emphasizes priorities tied to U.S. competitiveness, regulatory consistency, and broader adoption across sectors. These include workforce development, national security safeguards, and intellectual property protections.

Within HHS, the focus has been on establishing the governance structures needed to support that expansion. The department’s December 2025 AI strategy emphasizes risk management, internal capacity building, and systems to track and evaluate AI use cases, including maintaining an inventory of applications and aligning implementation with broader federal requirements.

At CMS, these policies are beginning to take shape in practice as the agency positions AI as a foundational capability across administration, oversight, and aspects of care delivery.

CMS Launches Medicare App Library

Although limited in scope, the library offers a glimpse of how CMS is approaching patient-facing digital applications under its Health Technology Ecosystem initiative.

On April 9, CMS announced the initial rollout of the Medicare App Library, an early operational component of its effort to support a more connected, digital-first healthcare system.

The Medicare App Library is a directory of patient-facing digital applications intended to support data access, care coordination, and ongoing health management. CMS describes the library as a mechanism to identify and evaluate applications that meet agency expectations for privacy, security, and usability. Four applications are currently publicly available, and the website notes that nine additional apps are “almost ready for Medicare.”

CMS has organized the App Library around three initial use cases: tools intended to reduce administrative burden through digital data exchange (part of CMS’s “Kill the Clipboard” initiative), conversational artificial intelligence applications that provide personalized health guidance, and applications focused on diabetes and obesity prevention and management. These categories reflect a focus on conditions and workflows that are highly prevalent in the Medicare population and point toward a prioritization of longitudinal management of chronic disease rather than episodic care, consistent with the administration’s emphasis on chronic conditions.

Although the App Library remains in an early phase, it represents a step toward operationalizing the administration’s digital health strategy. Its initial focus provides an indication of how federal efforts to align data access, care coordination, and patient engagement may begin to take shape in practice.

Applied Policy in the News

Applied Policy is proud to serve as a trusted resource on health policy and to provide background and insight for leading industry publications.

In April, Applied Policy Senior Health Policy Associate Meghan Basler was quoted in Modern Healthcare on the expanding Medicare wage index dispute. In Alex Kacik’s article, “Medicare Wage Index Dispute Expands—What Hospitals Should Know,” Basler observed that “Rural classification alone can materially increase or decrease reimbursement, even before considering other policies, such as Medicare-Dependent Hospital and low-volume hospital adjustments.”

Updates on Federal Rulemaking

CMS Proposes Interoperability Standards and New Prior Authorization Requirements for Drugs

By Emma Hammer, Health Policy Manager

On April 10, CMS issued the Interoperability Standards and Prior Authorization for Drugs proposed rule.

In recent years, CMS has issued a series of rules advancing interoperability and prior authorization processes; however, many policies have excluded drugs. CMS has received extensive stakeholder feedback recommending that policies apply to drugs and, accordingly, proposes policies to that effect in this rule. Impacted payers include Medicare Advantage (MA) organizations, state Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service (FFS) programs, Medicaid managed care plans, CHIP managed care entities, and Qualified Health Plan (QHP) issuers on the Federally-facilitated Exchanges (FFEs).

In the rule, CMS proposes to:

• Expand and standardize electronic prior authorization (ePA) requirements for drugs
• Improve denial communications by requiring state Medicaid, CHIP, and QHP issuers on the FFEs to provide specific reasons for all prescription drug prior authorization denials to providers
• Update decision timeframes for prior authorization determinations across Medicaid, CHIP, and QHPs on the FFEs to require faster decisions
• Enhance prior authorization public reporting requirements for non-drug items and services, and newly require prior authorization public reporting for certain drugs
• Define “failure to report,” which would allow CMS to impose a civil monetary penalty (CMP) on an entity that fails to provide the records needed for a CMS Open Payments program audit

CMS also seeks public input on Requests for Information (RFIs) on five topics:

• Improving and expanding electronic event notifications for value-based care and care coordination
• Increasing health care resiliency, given the increase in cybersecurity threats
• Improving implementation and oversight of payer application programming interface (API) technology
• Ways to streamline the step therapy process through technology and data sharing, including by allowing payers to access historical patient information
• Prior authorization for laboratory tests and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items

CMS is accepting comments on the proposed rule through June 15, 2026.

CMS Proposes 2.4% IPPS Update for FY 2027 with Targeted Payment Adjustments, DSH Reductions, and Expanded Oversight Across Hospital Policies

By Meghan Basler, Senior Health Policy Associate

On April 10, CMS issued the fiscal year (FY) 2027 Hospital Inpatient Prospective Payment System (IPPS) for Acute Care Hospitals and the Long-Term Care Hospital (LTCH) Prospective Payment System proposed rule.

This rule proposes to:

• Increase IPPS operating payment rates by 2.4 percent, with approximately $1.9 billion in total payment growth
• Recalibrate MS-DRG weights using updated claims and cost data
• Decrease uncompensated care (DSH) payments by approximately 3.3 percent (~$7.46 billion)
• Discontinue the low-wage index policy and implement a budget-neutral transition for affected hospitals, while maintaining other wage index adjustments
• Tighten provider-based status criteria
• Establish non-discrimination requirements and new criteria for residency programs
• Continue NTAPs while proposing to eliminate alternative pathways beginning FY 2028
• Expand mandatory episode-based payment through the proposed nationwide CJR-X Model
• Refine Transforming Episode Accountability Model (TEAM) and solicit information on its potential expansion
• Reconcile non-renal organ acquisition costs and codify appeals processes
• Increase LTCH payment rates by 2.4 percent, with continued reliance on quality reporting penalties and budget neutrality adjustments

CMS is accepting comments on the proposed rule until 5 p.m. EDT on June 9, 2026.

Quality Program Proposals in FY 2027 IPPS Proposed Rule

By Meghan Basler, Senior Health Policy Associate

CMS’s FY 2027 IPPS Proposed Rule contains several proposed updates to quality programs.

These include:

• Cross-Cutting Proposals: Advance a system-wide shift toward digital, outcome–based measurement by adopting an Advance Care Planning (ACP) electronic clinical quality measure (eCQM) across programs and reintroducing five modified 30-day mortality measures
• Hospital Inpatient Quality Reporting (IQR) Program: Expand outcome-focused measurement by adding new measures, incorporating Medicare Advantage into existing measures, removing measures, and increasing reliance on EHR-based reporting
• Hospital-Acquired Condition Reduction Program (HACRP): CMS proposes no changes to the HAC Reduction Program for FY 2027
• Hospital Readmissions Reduction Program (HRRP): Adopt a new sepsis readmissions measure beginning FY 2029 and continue expanding the program to include Medicare Advantage beneficiaries
• Hospital Value-Based Purchasing (VBP) Program: Transition modified mortality measures into VBP and seek input on future measures
• PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program: Add ACP and Malnutrition Care Score eCQMs, remove the COVID-19 vaccination measure, and align reporting requirements with the IQR Program
• Medicare Promoting Interoperability (PI) Program: Advance interoperability and digital quality reporting by adopting new eCQMs, operationalizing electronic prior authorization requirements, introducing a UDI measure, updating certified electronic health record technology (CEHRT) definitions, and removing select administrative requirements
• LTCH Quality Reporting Program: Streamline the measure set by removing COVID-19 measures and accelerate data submission timelines to improve reporting timeliness

CMS is accepting comments on the proposed rule until 5 p.m. EDT on June 9, 2026.

Commission Updates

MedPAC Reviews Payment Incentives, Part D Trends, and Beneficiary Decision-Making

By Crystal Uba, Health Policy Associate

Applied Policy is following these rules under review at the Office of Management and Budget:

• 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)
• Alternative Payment Model Updates and the Increasing Organ Transplant Access (IOTA) Model (CMS-5544)
• CY 2027 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1850)
• CY 2027 Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Medicare Part B (CMS-1848)
• CY 2027 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System and Quality Incentive Program (CMS-1846)
• Exchange Pre-Enrollment Eligibility Verification (CMS-9873)
• 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.

Executive Order Provides for Accelerated Study of Ibogaine

By Katie Lawler, Health Policy Associate

In a move he publicly linked to a conversation with podcast host Joe Rogan on April 18, President Trump issued an executive order directing federal agencies to accelerate the development and availability of treatments for serious mental illness, with a focus on psychedelic therapies, including ibogaine.

The order instructs the Food and Drug Administration (FDA) to prioritize review of qualifying therapies through Commissioner’s National Priority Vouchers under the National Priority Voucher Program and to facilitate patient access under the Right to Try Act, including coordination with the Drug Enforcement Administration on Schedule I handling authorizations. It also directs the Department of Health and Human Services (HHS) to allocate at least $50 million in existing funds through the Advanced Research Projects Agency for Health to support state-led initiatives and related research efforts. Additional provisions call for coordination among HHS, FDA, the Department of Veterans Affairs, and the private sector to expand clinical trial participation, improve data sharing, and support real-world evidence generation.

The order further instructs the Attorney General, in consultation with HHS, to initiate and complete review of therapies containing Schedule I substances following successful Phase 3 clinical trials, so that rescheduling may proceed as appropriate for approved products.

What do you call it when COVID and the flu walk into a bar?

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