August 2025
Senate Appropriations Committee Advances NIH Spending Bill
On July 31, the Senate Appropriations Committee advanced its fiscal year (FY) 2026 Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS) appropriations bill, which provides funding for the National Institutes of Health (NIH), by a bipartisan vote of 26-3. The bill recommends funding for the NIH at $48.7 billion, representing a $400 million increase over the FY2025 funding level.
Senate appropriators also addressed several actions related to NIH that have been taken by the Administration in recent months:
- Restructuring: The bill rejects the Administration’s proposed restructuring of the agency. Instead, language in the bill reasserts Congress’ oversight responsibility and reminds NIH that Congress is the body that has established the structure of NIH and that the Secretary of Health and Human Services (HHS) must provide Congress with 180 days written notice of any determination to restructure or reorganize the functions of NIH’s institutes and centers.
- Facilities and administrative (F&A) costs: The bill text includes language prohibiting the administration from making changes to F&A costs, sometimes referred to as “indirect costs.” The bill acknowledges that F&A costs are “essential for supporting federally funded research.” It also noted that the Joint Association Group (JAG; the group representing the various organizations that represent academic and research institutions) has been discussing alternative models to fund F&A costs and indicates that the committee looks forward to reviewing those proposals. In the meantime, the bill prohibits NIH from making any changes at this time.
- Timely access to funds: The committee calls out its concerns that ongoing delays in awarding appropriated FY 2025 funds threaten to disrupt critical biomedical research across the country. The committee directs NIH to award grants as expeditiously as possible and to allow recipients timely access to their award dollars when they submit a drawdown request.
- Funding concerns related to women’s health: The bill commends NIH for its cross-institute work on women’s health and directs NIH within 30 days of enactment of FY 2026 funding legislation to produce a report on all research grants concerning women’s health that have been terminated or renewals that have been withheld since January 20, 2025, (including the grant number, grant recipient, and justification for grant termination or funds withheld.) Within 60 days of enactment, the bill directs NIH to reinstate those grants that have been terminated and provide weekly updates to Congress on these efforts until they are complete.
The House Appropriations Committee is expected to consider its version of the bill in early September.
CY 2026 Medicare Physician Schedule Proposed Rule Includes Policies to Cut Physician Payment Despite Conversion Factor Increase
On July 14, the Centers for Medicare & Medicaid Services (CMS) released the Medicare Physician Fee Schedule (MPFS) proposed rule and fact sheet for Calendar Year 2026 (CMS-1832-P). This rule updates payment policies and payment rates for Part B services furnished under the MPFS, as well as makes changes to the Quality Payment Program (QPP).
Highlights of the proposed rule include updates to the conversion factor as well as several significant policy changes that align with the administration’s efforts to curb fraud, waste, and abuse, and advance the agency’s Make American Health Again initiative. 2026 marks the first year that there are two separate conversion factors: one for practitioners working in a qualifying advanced Alternative Payment Models (APM) with an increase of 3.83% and the other for those not participating in a qualifying APM (an increase of 3.62%). Other proposals include payment policy to adjust physician work Relative Value Units downward to account for efficiency gains over time, creation of policy to cut practice expenses amounts for services performed in the facility setting, expansion of behavioral health initiatives, and making permanent changes to some telehealth provisions. The Agency also seeks feedback on strategies to enhance support for the prevention and management of chronic disease.
ASH staff reviewed the proposed rule with the Committee on Practice and Reimbursement Subcommittee and collected feedback that will be incorporated in the Society’s comments. A complete summary of the rule and policies affecting ASH members is available here.
Trump Administration Releases NIH Funding Following Letter from Republican Senators
Senator Katie Britt (R-AL), along with 13 other Republican Senators, sent a letter on July 24 to the Office of Management and Budget (OMB) Director Russell Vought calling for the full implementation of the FY 2025 Full-Year Continuing Appropriations and Extensions Act, following a temporary pause that occurred after the transmittal of a budget document to the National Institutes of Health (NIH) from the White House that included language limiting what the NIH could fund. The letter notes that the “continuing resolution supports NIH initiatives across a range of critical research areas – cancer, cardiovascular disease, rare pediatric disorders, and more.” The letter continues, stating that the Senators share the goal to restore public trust in the NIH, but “withholding or suspending these funds would jeopardize that trust and hinder progress on critical health challenges facing our nation.” An accompanying press release issued by Senator Britt is available here. The Trump Administration subsequently released NIH funding on July 29.
Additionally, on August 5, the Government Accountability Office (GAO) issued a report on recent funding actions taken by NIH, including the cancellation of existing grants and reduction in awarding of new grants. The report, which was requested by Congress, finds that these actions were taken without regard to the Impoundment Control Act of 1974 (ICA), which ensures that congressional appropriations are faithfully executed. The report, which acknowledged both the rescheduling of study sections and advisory councils as well as ongoing litigation over the terminations, concludes that “NIH violated the ICA by withholding funds from obligation and expenditure.”
CMS Releases CY 2026 Hospital Outpatient Prospective Payment System Proposed Rule
The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule and fact sheet. The rule proposes payment and policy changes to the services provided under the OPPS and ASC payment system, including updating payment rates, updating quality measures, proposing changes to the inpatient only procedure list, and other policies.
CMS is taking steps to address the payment disparity between hospital outpatient departments and physician offices by proposing to reduce payment for certain drug administration services furnished in excepted off-campus outpatient departments. Additionally, the proposed rule includes a provision to specify additional criteria for approved Graduate Medical Education (GME) programs, which are currently approved by a national accrediting organization. CMS is proposing to prohibit accreditors from requiring or encouraging institutions to put in place diversity, equity, and inclusion programs that encourage “unlawful discrimination on the basis of race."
Notably, CMS did not include the electronic clinical quality measure (eCQM) addressing timely pain treatment for Sickle Cell Disease (SCD). ASH invested in the development, testing, and validation of the treatment of SCD pain measure to address critical gaps in care and improve care delivery and efficiencies within the healthcare system. Additionally, the eCQM was recommended for inclusion in CMS’ Hospital Outpatient Quality Reporting Program and the agency’s Rural Emergency Hospital Quality Reporting Program. While the Agency has been limiting measures for inclusion across payment rules this year, ASH will be preparing comments to respond to the non-inclusion of this eCQM.
ASH will continue to review the rule and prepare comments for submission by the September 15 deadline. A summary of the rule is available here.
FY 2026 Inpatient Prospective Payment System Final Rule Released
On July 31, CMS released the FY 2026 Inpatient Prospective Payment System (IPPS) final rule and fact sheet. Policies included in the final rule are expected to increase hospital payments by $5 billion. Payment rates for general acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting program and are meaningful electronic health record users is 2.6%. ASH submitted comments on the proposed rule in June, and Society staff is in the process of comparing the final rule with our comments.
White House Issues Executive Order on Oversight of Federal Grants
On August 7, the White House issued “Improving Oversight of Federal Grantmaking,” an Executive Order (EO) intended “to improve the process of Federal grantmaking while ending offensive waste of tax dollars.” The EO is the latest attempt to increase executive influence in determining whether projects are funded or terminated.
The EO directs agency heads to “designate a senior appointee to oversee all aspects of the grantmaking process, including reviewing new funding opportunity announcements and reviewing discretionary grants to ensure that they are consistent with “agency priorities and the national interest.” In considering discretionary awards, the EO directs senior appointees to ensure the awards advance the President’s policy priorities, provide preference for discretionary awards to be given to institutions with lower indirect cost rates, direct grants to be given to a “broad range of recipients rather than to a select group of repeat players,” and prioritize an institution’s committing to reproducibility over reputation or perceived prestige, among other directives. The EO notes it does not discourage or prevent the use of peer review, “provided that peer review recommendations remain advisory and are not ministerially ratified, routinely deferred to, or otherwise treated as de facto binding by senior appointees or their designees.”
A fact sheet was issued in conjunction with the EO.
Nonpartisan CBO Issues Report Analyzing Reductions in NIH Funding
The Congressional Budget Office (CBO) issued a report on July 18, finding that a permanent 10 percent reduction in federal funding for the NIH would lead to fewer drugs reaching the market. The report, which was requested by lawmakers to assess the impact of budget cuts, estimated that a 10 percent reduction in NIH funding of “external preclinical research would ultimately decrease the number of new drugs coming to market by roughly 4.5 percent, or about two drugs per year.” The report noted that the reduction of new drugs coming to market would not happen immediately; rather, “the impact of the reduction in funding would grow over a 30-year period and would take full effect in the third decade after the reduction began.”