Consolidated Appropriations Act 2026: Healthcare Provisions Impacting Insurers
On February 3, 2026, the Consolidated Appropriations Act, 2026, was enacted, providing crucial healthcare provisions poised to impact hospitals, physicians, and insurers. Key adjustments include changes to Medicaid Disproportionate Share Hospital (DSH) payments and extensions affecting telehealth and rural hospitals.
The legislation delays cuts to Medicaid DSH payments until fiscal year 2027, offering stability to safety-net hospitals. A significant cut of $8 billion is scheduled for FY 2028. Modifications to the DSH program include an expanded definition of uncompensated care and enhanced state flexibility in fund distribution, benefiting hospitals with substantial uninsured populations.
Rural hospitals are supported through 2026, with continued aid for facilities dealing with low patient volumes. The extended 3.1% bonus for Advanced Alternative Payment Model (AAPM) participants up to 2028 incentivizes clinicians in value-based care models, promoting more efficient care delivery.
Telehealth provisions, originally introduced during the COVID-19 pandemic, are extended to 2027. This extension maintains geographic waivers and expanded practitioner eligibility, crucial for Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs). The Acute Hospital Care at Home initiative, extended through 2030, continues supporting home-based care investments.
Further adjustments include maintaining the floor on the physician work Geographic Practice Cost Index (GPCI) through 2026 and supporting ambulance services until 2028. Critical amendments for rural hospitals include a reinstatement of Critical Access Hospital (CAH) status, conditionally for distance criteria.
The act allocates $5.8 billion for Community Health Centers through 2026, securing primary care in underserved regions, alongside $25 million for smaller hospitals with specific wage conditions. Meanwhile, Medicare Advantage plans must ensure accurate provider directories to diminish out-of-pocket expenses, enhancing transparency and addressing surprise billing.
Bipartisan reforms target Pharmacy Benefit Managers (PBMs) with transparency measures, prohibiting rebate retention by employer-sponsored PBMs, influencing health plan earnings. Additionally, compulsory National Provider Identification (NPI) numbers for off-campus Hospital Outpatient Departments (HOPDs) by 2028 necessitate operational changes for hospitals working with insurers.
To finance these provisions, Congress has extended the Medicare sequester for five months, maintaining fiscal pressure on Medicare reimbursements. Healthcare organizations should monitor these legislative impacts closely, potentially consulting professionals to navigate the shifting regulatory landscape.