CBO says Trump's tax law will cost health sector $1.1T

The Congressional Budget Office (CBO) on Monday released a final score of the One Big Beautiful Bill Act, the tax law President Donald Trump enacted on July 4, estimating the law will cause the health sector to lose $1.1 trillion, cost Medicaid $964 billion, and lead to 10 million people becoming uninsured. CBO also estimated the law will add $3.394 trillion to the nation's deficits from 2025 to 2034.

Much of the cost comes from the law's tax provisions, which are estimated to decrease revenues by more than $4 trillion by 2034 while also cutting funding for federal programs like Medicaid and food stamps. The largest tax cuts in the law are extensions of tax cuts passed in 2017 and include a reduction of the corporate tax rate from 35% to 21% as well as reductions of most individual tax rates.

Meanwhile, the largest category of cuts to Medicaid includes limitations on provider taxes used by states to help finance their share of Medicaid expenses, and on state-directed payments when states order Medicaid managed care carriers to increase their reimbursements to providers. These cuts are estimated to total $392 billion.

The implementation of work requirements for most working-age adults without disabilities or dependents is estimated to account for another $326 billion in spending reductions as CBO anticipates that millions of people will lose their benefits.

CBO's estimates don't address the expiration of enhanced subsidies for beneficiaries on the Affordable Care Act exchanges, which expire at the end of the year. In a previous projection, CBO estimated that allowing the subsidies to expire combined with a recent regulation restricting exchange enrollment would lead to an additional 5.1 million people becoming uninsured.

(Folley/Burns, The Hill, 7/21; McAuliff, Modern Healthcare, 7/21)

CMS to claw back $7.8B in Medicare payments to hospitals

CMS last week announced it plans to claw back $7.8 billion in Medicare payments to hospitals 10 years sooner than it originally proposed. CMS also intends to survey hospitals about their drug costs.

Both of CMS' proposals relate to the 340B drug program, which allows hospitals to purchase drugs at significant discounts with the intent of making those medications more affordable for low-income patients.

President Donald Trump's first administration attempted to reform 340B by cutting Medicare's payments to hospitals for pharmaceuticals by almost 30% between 2018 and 2022, but the Supreme Court ruled that those cuts were illegal and ordered Medicare to make hospitals whole.

To comply with the court's ruling, CMS determined it would pay all eligible hospitals $9 billion in lump-sum payments to account for drug cuts from previous years, but it would also recoup $7.8 billion resulting from the corresponding higher payments for all non-drug services.

Initially, CMS had said it would take that money back by 2041, but last week CMS said it now plans to take the money back by 2031 instead.

"The longer it takes for us to fully recover the $7.8 billion, the less likely that the relative burden on hospitals from the adjustments will match the relevant benefits those hospitals previously received," officials wrote in the proposed regulation.

In a statement, Ashley Thompson, SVP at the American Hospital Association, said the expedited recoupment of drug funds is "illegal and unwise" and "should not be finalized."

"It is important to remember that this clawback punishes 340B hospitals for the agency's own mistake in implementing a policy that a unanimous Supreme Court held to be unlawful," Thompson said.

(Herman, STAT+ [subscription required], 7/17)

HHS says it will reform US organ donation system following federal investigation

Usually, the patient is taken to an operating room where hospital workers will withdraw life support and wait. Organs are only considered viable for donation if the patient dies within an hour or two. In those cases, the procurement organization's team will wait five more minutes and then start removing organs. There are strict rules in place that are supposed to make sure no retrieval begins before death or causes death.

HRSA found 73 cases in Kentucky over the past four years in which officials should have considered canceling organ removal sooner as the patients had high or improving levels of consciousness. While the surgeries ultimately didn't happen, the investigation said multiple patients showed signs of pain or distress while being prepared for the procedure. Many of the patients did eventually die either hours or days later, however some recovered enough to leave the hospital.

The investigation also found that employees for Kentucky Organ Donor Affiliates — now called Network for Hope following a merger — frequently pressured families to authorize donation, improperly took over cases from doctors, and tried to pressure hospital staff to remove life support and allow for surgery despite indications patients had growing awareness. Some employees also failed to recognize that hospital sedatives or illegal drugs could hide a patient's neurological condition, meaning they could be in better shape than they seemed.

HHS Secretary Robert F. Kennedy said the investigation's findings "show that hospitals allowed the organ procurement process to begin when patients showed signs of life, and this is horrifying. Organ procurement organizations that coordinate access to transplants will be held accountable. The entire system must be fixed to ensure that every potential donor’s life is treated with the sanctity it deserves."

Kennedy added that OPOs will need to adopt a formal process allowing any staff member to halt a donation process if patient safety concerns arise, and that they will need to review any failures to follow protocol and develop clear policies around who is and isn't eligible for organ donation.

(Cunningham, Washington Post, 7/22; Christensen, CNN, 7/21)

RFK Jr. fires 2 top aides

HHS Secretary Robert F. Kennedy Jr. fired two of his top aides — chief of staff Heather Flick Melanson and deputy chief of staff for policy Hannah Anderson — following internal clashes, according to people familiar with the matter who spoke to CNN.

Three people familiar with the matter told CNN that Flick Melanson had initially tried to oust Anderson over dissatisfaction with her performance. However, the firing wasn't carried out through the proper process and took the White House by surprise. Those complications angered Kennedy and led to his decision to fire Flick Melanson over his loss of confidence in her.

In a statement, an HHS spokesperson confirmed the firings and said the department's White House liaison, Matt Buckham, would be serving as acting chief of staff.

"He brings valuable experience in personnel strategy and organizational management to this new role," the spokesperson said. "Secretary Kennedy thanks the outgoing leadership for their service and looks forward to working closely with Mr. Buckham as the Department continues advancing its mission to Make America Healthy Again."

In response to CNN publishing the story, Flick Melanson said in an email, "It's simple. I was not fired. I resigned." Anderson did not immediately respond to a request for comment from CNN.

Flick Melanson previously served at HHS during President Donald Trump's first term, acting as general counsel and then acting secretary for administration and a senior adviser to then-HHS Secretary Alex Azar.

Anderson joined HHS after working on Capitol Hill as a Republican staffer, including as health policy adviser to Republicans on the Senate's main health committee.

(Cancryn, CNN, 7/17)