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From the President's Desk: CMS Navigates Demands of the Moment

By Jim Scott, President and CEO

In an unusual workaround, CMS drew on user-fee funds from its research data-sharing program to temporarily reinstate furloughed staff. Beyond ensuring that time-sensitive operations like the Medicare and ACA open enrollment periods could proceed uninterrupted, this allowed for the on-schedule publication of the Physician Fee Schedule (PFS) final rule despite the broader funding lapse. Although we continue to wait for the Outpatient Prospective Payment, Home Health, Competitive Bidding, and End-Stage Renal Disease final rules, CMS's agility in this moment speaks to both the operational challenges and its commitment to maintaining continuity in the nation's healthcare system.

Below, Meghan Basler reports on CMS guidance regarding claims processing during the shutdown, and Caitlyn Bernard Shreve provides our summary of the PFS.

We also include timely insights into other areas of interest. As artificial intelligence becomes increasingly integrated into clinical and administrative operations, Annie Tuttle examines how the federal government, coalitions, and private enterprise are competing to define the rules governing its use in healthcare. Sabrina Luther discusses how medical food might be considered under the Food and Drug Administration’s and Department of Agriculture’s pursuit of a uniform definition of ultra-processed foods.

Finally, as Veterans Day approaches, we look at how telehealth, which has been essential to expanding veterans’ access to care, has also heightened demands on the Department of Veterans Affairs’ workforce.

CMS Issues Guidance on Claims Processing During Shutdown

By Meghan Basler, Senior Health Policy Associate

Applied Policy continues to monitor CMS and other federal agencies for operational updates during the ongoing shutdown.

When the federal government shut down on October 1, 2025, a number of temporary Medicare payment provisions authorized under the Full-Year Continuing Appropriations and Extensions Act, 2025 (P.L. 119-4) expired. In response, CMS instructed Medicare Administrative Contractors (MACs) to pause processing certain claims for 10 business days, allowing time to determine how the expired provisions should be handled operationally.

On October 21, CMS issued updated guidance lifting the claims hold. MACs are directed to process claims with dates of service on or after October 1, 2025, for services affected by the expiration of those temporary payment rules.

Claims that will now be processed include:

• Medicare Physician Fee Schedule (PFS) services
• Ground ambulance services
• Federally Qualified Health Center (FQHC) claims

Telehealth and Hospital Care at Home

• Telehealth claims related to behavioral/mental health services will now be processed
• All other telehealth services and Hospital Care at Home services will remain on hold until CMS issues further direction

This partial resumption reflects CMS’s need to differentiate between telehealth benefits that Congress made permanent (behavioral health) and those tied to temporary authorities that lapsed with the shutdown.

What Providers Need to Know

Advance Beneficiary Notices (ABNs)

CMS recommends that providers offering services no longer eligible for Medicare reimbursement, such as telehealth visits provided to beneficiaries at their homes, should consider issuing an Advance Beneficiary Notice of Noncoverage (ABN). An ABN is a notice given to Medicare beneficiaries before receiving a service that Medicare may not cover. This helps protect patients from unexpected bills, gives them the choice to proceed and pay out-of-pocket for non-covered services, and shields providers by enabling them to bill the patient if Medicare denies the claim. Without an ABN, providers might have to cover the cost themselves if Medicare refuses to pay for the service.

Special Rules for ACO Providers

Providers participating in eligible Medicare Shared Savings Program (MSSP) ACOs may continue to offer covered telehealth services without geographic restrictions under section 1899(l) of the Social Security Act.

This authority remains in effect even though other temporary telehealth flexibilities have expired.

Operational Takeaways

The lifting of CMS’s claims hold provides long-awaited clarity for providers navigating the operational fallout of the government shutdown and the lapse of temporary Medicare payment authorities. While payment for most services can now resume, the continued suspension of non-behavioral telehealth and Hospital Care at Home claims highlights the patchwork nature of current Medicare flexibilities. Providers should take this moment to review their billing practices, confirm which services remain billable, and issue ABNs when coverage is uncertain. As CMS works to finalize additional guidance, clear communication with patients and close monitoring of future policy updates will be essential to ensuring continuity of care and financial stability across all care settings.

Where Will Medical and Specialized Nutrition Products Fit in Definition of UPFs?

By Sabrina Luther, Health Policy Associate

Establishing a definition of ultra-processed foods was identified as a key deliverable following the Trump Administration’s Make Our Children Healthy Again Assessment. Manufacturers, clinicians, and patients who depend on medical foods are awaiting clarity on how such products may be classified under this new definition.

This summer, the U.S. Food and Drug Administration and U.S. Department of Agriculture announced a joint Request for Information (RFI) seeking data and comments to help develop a uniform definition of ultra-processed foods (UPFs). This RFI was issued as part of a series of efforts by the Trump Administration to address concerns regarding UPFs and diet-related chronic diseases, as identified in the Make Our Children Healthy Again Assessment.

Health and Human Services Secretary Robert F. Kennedy, Jr. has stated that “defining ultra-processed foods with a clear, uniform standard will empower us even more to Make America Healthy Again.”

Over 19,000 comments had been submitted by the time the comment period closed on October 23. This level of engagement indicates a broad interest in developing a uniform definition of UPFs and the need for careful policy consideration.

Citing the term’s ambiguity and connotations, some commenters suggested the department pursue an alternative to “UPF.” The American Society for Nutrition specifically noted that “there may be unintended consequences of labeling a food as ‘ultra-processed’ when it has nutrient-dense characteristics and adds nutritional adequacy to the diet.”

While the Administration has emphasized nutrition reform, its current discussions appear to overlook a key population—those who rely on medical foods.

Setting Standards for AI Governance in U.S. Healthcare

By Annie Tuttle, Health Policy Associate

The White House has described a “complex regulatory landscape and a lack of clear governance” as barriers to adopting artificial intelligence in healthcare. As the Trump Administration eases regulation, multiple organizations are proposing governance frameworks.

When the American Medical Association launched its Center for Digital Health and AI last month, it joined a growing list of organizations seeking to shape the governance of artificial intelligence in the American healthcare system. The AMA’s announcement came as the Trump Administration rejected the Biden-era embrace of government-affiliated coalitions and signaled a preference for industry-led innovation in AI. The field is now crowded with contenders—coalitions, technology alliances, medical societies, and accreditation bodies—all vying to define standards for AI in both clinical practice and healthcare administration.

The AMA has thus far been specific in its definition of AI as “augmentative intelligence,” emphasizing that it should assist, not supplant, human providers. Industry leaders and policymakers have largely agreed. At a hearing in September, Rep. Morgan Griffith (R-VA), chair of the House Health Subcommittee, observed that “AI applications can be hugely beneficial to patients and providers, but they are to assist—and not replace—the clinical workforce.” His remarks reflected a growing consensus among policymakers that the value of AI in medicine depends on maintaining human oversight and control.

With so many stakeholders at the table, the challenge ahead lies in determining whose framework for AI will guide the nation’s health system.

Telehealth Expands Veterans' Access to Care, But Strains Providers

With Veterans Day approaching, we consider a paradox: While telehealth has expanded access to care for veterans, it has also increased demands on the VA’s limited clinical workforce.

The Veterans Health Administration (VHA), part of the U.S. Department of Veterans Affairs (VA), is the nation's largest integrated health system. The agency, which serves approximately 9.1 million veterans annually, has long been at the forefront of telehealth adoption, providing remote services across numerous clinical specialties. This investment paid off during the COVID-19 pandemic, when telehealth usage spiked. By mid-2020, the number of weekly video visits to veterans’ homes had increased by more than 1,100 percent—from approximately 11,000 to nearly 139,000 per week. Although the initial surge subsided as clinics reopened, virtual care has remained a central component of the VA’s model.

Telehealth is now an essential part of veterans’ care: in 2023, more than one-third of all outpatient visits were conducted by phone or video. Yet as telehealth has become embedded in everyday practice, new evidence suggests that some aspects of virtual care are increasing clinician workload and contributing to burnout—posing a new concern for a system already facing widespread staffing shortages.

The issue stems from the fact that telehealth extends beyond one-to-one substitution of in-person visits with video appointments. Increasingly, VA telehealth encompasses asynchronous communication. Secure messaging through the My HealtheVet patient portal allows veterans to request refills, report symptoms, or ask clinical questions. Use of the platform has expanded rapidly. In the first half of 2020 alone, veterans and providers exchanged more than 11.6 million messages, nearly three million more than during the same period the previous year. This steady stream of correspondence can lengthen clinicians’ workdays, adding administrative responsibilities not reflected in traditional scheduling models.

Secure messaging can shift time away from in-person encounters toward less visible forms of care, including emails and portal communications. A national study of VA clinicians found that while video visits did not contribute to higher burnout, inbox volume did. Between 2020 and 2023, the rate of self-reported burnout among VA primary care providers increased from 42 percent to 53 percent, mirroring national trends. Each additional 44 patient messages per 1,000 patients corresponded to roughly a one-percentage-point increase in the likelihood of burnout.

Put simply, increased online messaging workload correlated with greater clinician exhaustion, even after accounting for factors such as provider age and clinic characteristics.

Updates on Federal Rulemaking

CMS Releases CY 2026 PFS Final Rule

By Caitlyn Bernard Shreve, Senior Health Policy Associate

On October 31, CMS issued its final calendar year (CY) 2026 Physician Fee Schedule (PFS), which finalizes policies for physician payment and other outpatient services covered under Medicare Part B.

Key policy updates include:

• Separate conversion factors (CF) for qualifying vs. non-qualifying alternative payment model (APM) participants, with increased payment rates for both groups,
• A 2.5 percent efficiency adjustment to work relative value units (RVU) for most non-time-based services and reallocate indirect practice expense (PE) RVUs by site of service,
• Streamlining of the Medicare Telehealth List review by removing steps and adding services,
• New remote therapeutic monitoring (RTM) and remote physiological monitoring (RPM) codes,
• Expanded billing for the Complex Patient E/M add-on code G2211,
• New HCPCS codes for Advanced Primary Care Management (APCM) services,
• Policies to improve care for chronic illnesses and behavioral health,
• Changes to the payment system for skin substitutes,
• Clarifications on price concessions, bona fide service fees (BFSF), and units sold at maximum fair price (MFP) for Average Sales Price (ASP) reporting,
• A mandatory Ambulatory Specialty Model (ASM) for chronic care quality and cost accountability,
• Updates to the Medicare Part B and Part D Inflation Rebate Programs,
• Updates to the Shared Savings Program (SSP) and the Quality Payment Program (QPP), and
• Alignment of the Medicare Diabetes Prevention Program (MDPP) with Centers for Disease Control and Prevention (CDC) standards.

CMS continues to play a central role in the Trump Administration’s efforts to reduce prescription drug costs through greater transparency, inflation-based rebates, and Medicare drug price negotiations. As these initiatives advance, understanding their policy implications for coverage, reimbursement, and market dynamics has become increasingly important.

On November 19, the Northern Virginia Health Policy Forum welcomes Dr. Inmaculada (Inma) Hernandez, Senior Advisor to the Administrator for Drug Prices at CMS. A leading researcher on drug pricing and reimbursement, Dr. Hernandez will share insights on current federal initiatives to control prescription drug spending and improve pricing transparency for American consumers.

This is a virtual event.

In Case You Missed It: Recent Events and Releases

Oz Outlines CMS Priorities at Aspen Institute Event

CMS Administrator Dr. Mehmet Oz joined the Aspen Institute’s Public Health Grand Rounds on October 6 to discuss the agency’s policy direction under the Trump Administration. In conversation with CNBC’s Bertha Coombs, Oz highlighted CMS’s focus on proactive policymaking, transparency, and collaboration across the public and private sectors.

He also addressed chronic disease prevention, GLP-1 policy considerations, Medicare Advantage oversight, Medicaid work requirements, PBM reform, and AI integration. Oz underscored the administration’s commitment to advancing affordability and innovation while maintaining stability across Medicare, Medicaid, and the insurance marketplace.

Senate HELP Holds 340B Hearing

On October 23, the Senate Health, Education, Labor, and Pensions Committee held a hearing to examine the growth and operation of the 340B Drug Pricing Program. The hearing focused on oversight, financial impacts, patient benefit, and provider practices.

Witnesses included William B. Feldman, MD, DPhil, MPH, a physician and health policy researcher at the University of California; Michelle Rosenberg, Director of Health Care at the U.S. Government Accountability Office; and Aditi Sen, PhD, Chief of the Health Policy Studies Unit at the Congressional Budget Office.

Chair Bill Cassidy (R-LA) opened the hearing by describing the 340B program as “well-intentioned” but noting that “people are judged by actions, not by intentions.”

Recognizing that releases may be delayed by the ongoing shutdown, Applied Policy is following these rules under review at the Office of Management and Budget:

• Medicaid Managed Care-State Directed Payments (CMS-2449)
• Medicaid Program; Prohibition on Federal Medicaid Funding for Sex Trait Modification Procedures Furnished to Children and Youth (CMS-2451)
• Medicare and Medicaid Programs; Hospital Condition of Participation: Limiting Participation Based on the Performance of Sex Trait Modification Procedures on Children
• Center for Medicare & Medicaid Innovation Payment Models (CMS-5544)
• Transparency in Coverage (CMS-9882)
• Amendments to Rules Governing Organ Procurement Organizations (CMS-3409)
• Medicare and Medicaid Programs; Repeal of Minimum Staffing Standards for Long-Term Care Facilities
• Contract Year 2027 Policy and Technical Changes to Medicare Advantage, Medicare Prescription Drug Benefit, Medicare Cost Plan, and Programs of All-Inclusive Care for the Elderly Programs (CMS-4212)
• Ensuring Safety through Domestic Security with Made in America Personal Protective Equipment (PPE) and Essential Medicine Procurement by Medicare Providers and Suppliers (CMS-1516)
• Health Data, Technology, and Interoperability: ASTP/ONC Deregulatory Actions to Unleash Prosperity
• Global Benchmark for Efficient Drug Pricing (GLOBE) Model (CMS-5545)
• Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model (CMS-5546)
• CY 2026 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System and Quality Incentive Program (CMS-1830)
• CY 2026 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1834)
• CY 2026 Part A Premiums for the Uninsured Aged and for Certain Disabled Individuals Who Have Exhausted Other Entitlement (CMS-8090)
• CY 2026 Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts (CMS-8089)
• Medicare Part B Monthly Actuarial Rates, Premium Rates, and Annual Deductible Beginning January 1, 2026 (CMS-8091)
• CY 2026 Home Health Prospective Payment System Rate and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program Updates (CMS-1828)

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.

November 13-14: PQA Leadership Summit

November 19: NVHPF Presents Drug Pricing Reform: A Conversation with a CMS Advisor

November 27-28: Applied Policy Office Closed for Thanksgiving Holiday

When is turkey soup bad for your health?