On February 3, 2026, President Trump signed H.R. 7148, the Consolidated Appropriations Act, 2026 (the “Bill”) into law. In addition to funding portions of the government through September 30, 2026, the Bill also includes several important provisions affecting the Medicare and Medicaid programs. In particular, the Bill delays the Medicaid DSH cuts that were slated to begin this year and also reduces the total amount of the payment cut. The Bill contains a new administrative mandate for off-campus hospital outpatient departments, and it also extends various Medicare programs, including the low-volume adjustment, Medicare-dependent hospitals, and telehealth flexibilities.
Below is a summary of the key Medicaid and Medicare provisions in the Bill:
- Medicaid DSH Allotment Reductions: The Bill reduces and delays the Medicaid DSH payment cuts mandated by the Affordable Care Act (ACA). The ACA cuts would have gradually reduced Medicaid DSH payments by $24 billion over the next two years. But the Bill reduced the total payment cut to $8 billion, and delayed implementation of the cut until federal fiscal year 2029.
- Off-Campus Hospital Outpatient Departments: The Bill requires hospitals to obtain and use a National Provider Identifier (NPI) and to provide an attestation for each of their off-campus outpatient departments. Hospitals must comply by January 1, 2028, to continue receiving payment for their campuses under the Outpatient Prospective Payment System. The Bill also requires HHS OIG to review and make recommendations concerning the agency’s process for reviewing attestations.
- Telehealth: The Bill extends, through December 31, 2027, the telehealth waivers that permit patients to receive services from home. The bill also directs HHS to implement new codes for telehealth claims furnished by physicians that have a payment arrangement with the telehealth virtual platform used to provide the services.
- Medicare Extenders: The Bill extends the Medicare low-volume hospital (LVH) adjustment and the Medicare-dependent Hospital (MDH) designation through December 31, 2026. Both the LVH adjustment and the MDH designation had expired September 30, 2025.
- Sequestration: The Bill provides that the Medicare sequestration will remain in effect at 2 percent until 2033.
- Clinical Lab Cuts: The Bill postpones the Protecting Access to Medicare Act (PAMA) of 2014 scheduled reduction in clinical lab reimbursement through 2026. The bill also shifted the PAMA data collection period from January 1-June 30 of 2019 to January 1-June 30 of 2025. The subsequent PAMA data reporting period is now May 1, 2026-July 31, 2026.
- Streamlined Enrollment for Out-of-State Providers: The Bill requires states to establish a streamlined process for allowing eligible out-of-state providers to enroll in Medicaid that will require providers to provide no more information than is otherwise needed to authorize payment, such as the provider’s name and NPI.
- Medicaid Eligibility for Relocated Military Personnel: The Bill requires states to regard active military members as residents of the states in which they are stationed for purposes of determining eligibility under the State Plan.
- Work Geographic Index Floor: The Work Geographic Index Floor is a statutory provision that sets a minimum value of 1.0 for the work component of the Medicare Physician Fee Schedule. The Bill extends the floor through December 31, 2026.
- Hospice Cap Adjustment: The Bill provides that the cap on hospice payments will continue to be adjusted by the hospice rate update factor through FY 2035.
- Directory of In-Network Providers: The Bill requires MA plans to publish directories of all in-network providers, including name, specialty, contact information, primary office, whether the provider is accepting new patients, accommodations for people with disabilities, and telehealth capabilities. This mandate takes effect in 2028.
A copy of the bill is available here.
