Jackson Hammond is a Senior Policy Analyst at Paragon Health Institute. He has been active in the federal and state health policy space since 2017.
Prior to joining Paragon, Jackson was a health care policy analyst for American Action Forum (AAF). While at AAF, his work focused on payer issues including private insurance, Medicare, and Medicare Advantage. Furthermore, Jackson wrote extensively about the 340B Program and contributed to AAF’s research on a variety of drug pricing issues.
Today, the House of Representatives will likely vote on the Consolidated Appropriations Act of 2026 (the Act), which includes a health care extenders title. As is typical for health care extenders, the majority consists of straightforward extensions of expiring policies that should not be too controversial. Of note, several reforms are aimed at pharmacy benefit managers (PBMs). This Prognosis summarizes the extender provisions as well as highlights some of the non-extender policies included in the Act.
Public Health Extenders
The package would extend funding for community health centers, the National Health Service Corps, and teaching health centers that operate graduate medical education (GME) programs. Community health centers would receive an extension of discretionary funding through December 31, 2026, including prorated amounts for the first quarter of fiscal year 2027. Teaching health centers that operate GME programs would see their payment authority extended through the end of 2026. The Act would extend the Special Diabetes Programs, including both the Type 1 Diabetes Research Program and the Special Diabetes Program for Indians, through the end of the year.
Medicare Extenders
The package includes several hospital-focused extenders designed to support facilities facing financial pressures. The legislation would extend through 2026 the Medicare-dependent hospital (MDH) program, which provides enhanced payments to small rural hospitals that serve a high proportion of Medicare patients, and the Medicare Low Volume Adjustment. Other Medicare provisions would extend add-on payments for ground ambulance services and the work geographic index floor under the physician fee schedule.
Medicaid DSH
The Act would delay the reductions included in the Affordable Care Act (ACA) to the Medicaid disproportionate share hospital (DSH) program until 2028. These cuts have been repeatedly delayed since they were scheduled to take effect in 2014, although the reductions did take effect starting in fiscal year 2025. Previous Paragon research has found that the Medicaid DSH program is very inequitable (meaning it provides more funds to states with fewer uninsured) and needs significant reform. The ACA reduced DSH payments because of massive expansions of government spending, which was intended to reduce uncompensated care. Delaying these cuts is unwise and results in more money for hospitals that are oversubsidized, particularly in the aftermath of the ACA.
Medicare Telehealth Extenders
The legislation would extend several Medicare telehealth flexibilities for two years. These extensions maintain access to telehealth services that were first made available during the COVID public health emergency. Telehealth has reduced travel costs and improved access to certain services, especially mental and behavioral health services. As states implement the Centers for Medicare and Medicaid Services’ Rural Health Transformation Program (RHTP)—a $50 billion initiative contained in the One Big Beautiful Bill—telehealth expansion is a recurring theme in state RHTP plans, with many citing mobile units and virtual care as key tools for sustaining rural provider networks. Paragon has previously identified areas of concern that deserve continued monitoring, such as increases in telehealth utilization and spending without a corresponding improvement in health outcomes.
PBM Reforms
The Act also includes new policies on pharmacy benefit managers (PBMs), which were included in a similar package at the end of 2024. As a recent PBM 101 from Paragon discusses, PBMs negotiate rebates on drugs on behalf of insurers—typically keeping a percentage of those rebates as compensation—which can help reduce premiums. The rebate structure often causes higher list prices, which raise patient out-of-pocket costs since cost sharing is generally a function of list prices. PBMs also manage insurers’ pharmacy networks and decide which pharmacies to include and exclude, among other administrative activities.
As with last year’s package, the Act would require PBMs to pass through 100 percent of the rebates they negotiate with pharmaceutical manufacturers for Medicare Part D drugs.
The Act also would require that PBMs pass 100 percent of the rebates and discounts that they negotiate on behalf of employer-sponsored plans, subject to the Employee Retirement Income Security Act of 1974 (ERISA), to the plan sponsor (employer). Although it is fully within the bounds of Congressional purview to determine how and what Medicare will pay for a given service, there are, of course, concerns with Congress prescribing terms within private market contracts.
Paragon’s PBM 101 notes that there are many concerns, especially from employers, about the opacity of PBM business practices and the impact of the rebate structure on price and patients. But as highlighted by our piece, the market distortions and complex nature of the rebate structure are a result of policy choices made by the government and shaped by legal decisions from the courts.
This package would also require increased transparency about the nature of rebates, discounts, fees, and other sources of revenue generated by PBMs in the conduct of their services. Increased transparency would enable plan sponsors to better understand the services and value that their PBM is providing. The Congressional Budget Office estimates the PBM reform provisions would reduce on-budget deficits by $2.18 billion over ten years.
Other Provisions
While most of the package focuses on extensions, it also includes several non-extender policies that help lower-income families. One such policy is language incorporating key elements of the Accelerating Kids Access to Care Act. This provision streamlines enrollment for out-of-state providers treating children with complex medical conditions on Medicaid and CHIP, allowing pediatric specialists and subspecialists enrolled in one state to furnish services to enrolled children from another state without needing separate enrollment in the child’s home state. This change addresses a long-standing impediment to cross-state access to specialized care, especially for pediatric patients with rare conditions, while advancing needed reforms to reorient Medicaid toward its most vulnerable beneficiaries.
Another family-focused provision addresses military families. The Act includes a measure allowing certain TRICARE-eligible children who are also dually eligible for Medicaid to receive coordinated care more seamlessly, reducing administrative hurdles for military families who frequently relocate. For military families changing stations, this helps ensure continuity of coverage and access.
The package would also establish Medicare coverage for multi-cancer, early-detection screening tests. As screening technology advances, we can now detect multiple cancers at earlier stages when they are most treatable, dramatically improving patient outcomes. For example, five-year survival rates for breast cancer have risen from around 75 percent in the mid-1970s to over 91 percent today, largely due to earlier detection through mammography. Similarly, five-year prostate cancer survival rates have climbed from about 68 percent to 97 percent over the same period, thanks to Prostate-Specific Antigen (PSA) testing and improved diagnostics. Multi-cancer tests have the potential to build on this progress.
Subscribe
Sign up now for your health policy updates.
