The Senate's version of the reconciliation bill went further than the House on provider taxes, Medicare's trustees moved up the hospital trust fund's depletion date, and federal officials took aim at prior authorization.
June brought pressure on both of hospitals’ largest public payers. The Senate wrote tighter Medicaid financing limits than the House, and the Medicare trustees shortened the runway for the program that pays for inpatient care. Prior authorization, a long-running source of friction, also drew federal action from two directions.
The Senate Finance Committee released its text on June 16. According to KFF’s analysis, the draft would lower the provider tax safe harbor for Medicaid expansion states from 6% of net patient revenue to 3.5%, stepping down half a point per year, and would bar all states from adding or raising provider taxes. KFF counted 22 states with at least one tax above the new threshold, including California, New York, Pennsylvania, Michigan and Illinois. The draft also placed tighter limits on state-directed payments.
The AHA said the Senate package was substantially worse than the House version and urged senators to reject it without major changes, warning that rural hospitals would be hit hardest.
The 2025 Medicare trustees report, released June 18, projects the Hospital Insurance trust fund that pays for Part A will be depleted in 2033, three years earlier than last year’s estimate. At that point, incoming revenue would cover about 89% of projected Part A costs. The trustees cited higher-than-expected 2024 spending, including inpatient and hospice services.
A closer insolvency date makes Medicare payment reform more likely to surface in future budget talks. Site-neutral payment and other hospital-specific savings ideas will keep coming back.
On June 23 HHS and CMS announced voluntary commitments from major insurers, including UnitedHealthcare, Aetna, Cigna, Elevance, Humana and Centene, covering commercial, Medicare Advantage, Medicaid managed care and marketplace plans. Plans pledged to reduce the number of services that need prior authorization by January 1, 2026, honor existing approvals when patients switch plans, and deliver real-time decisions for most requests by 2027.
Four days later, CMS announced the WISeR model, which brings technology-assisted prior authorization to traditional Medicare for a defined set of services considered prone to overuse, such as skin substitutes and knee arthroscopy for osteoarthritis. The model runs from 2026 through 2031 in Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington. CMS said licensed clinicians, not software, will make final decisions.
Executive takeaway: Track the Senate's provider tax and state-directed payment language against your state's financing structure, and if you operate in a WISeR state, prepare outpatient and physician teams for prior authorization in traditional Medicare.
The proposed CY2027 outpatient rule extends site-neutral payment to imaging, deepens 340B cuts and removes 638 services from the inpatient-only list. Here's how to prepare before the final rule.
Read analysis
The FY2027 IPPS rule took effect Oct. 1 with a 2.3% update, new quality measures and a mandatory joint-replacement model coming in 2028. Here's what hospital leaders should do now.
Read analysis
September 2026: hospital margins slip in July, Essentia and HealthPartners plan a 22-hospital merger, and Elevance targets off-campus outpatient billing.
Read analysisA practical executive agenda for hospital and health system leaders, four times a year.
