Congress is staring down a fast-approaching Sept. 30 government funding deadline. For hospitals and health systems, the outcome could shape years of strategy and operations.

House Republicans are preparing to introduce a short-term continuing resolution to keep the government open through Nov. 20, but Democrats are warning they won’t support any deal that omits key healthcare provisions, according to Politico. Chief among them: an extension of enhanced Affordable Care Act premium tax credits, which are set to expire at the end of 2025.

The tax credit debate is one of several healthcare issues expected to factor into the coming negotiations. HHS is also advancing a series of regulatory changes, including site-neutral payment reforms and a proposed 340B rebate pilot, that could reshape reimbursement and care delivery. At the same time, two bipartisan bills could determine whether pandemic-era flexibilities — expanded Medicare telehealth coverage and the hospital-at-home waiver — become permanent fixtures of care delivery or fade out just as they gain traction.

Here’s a look at the biggest federal healthcare policies hospital and health system leaders should watch this month:

Will Republicans extend enhanced credits?

The expiration of enhanced ACA premium tax credits at the end of 2025 poses an immediate challenge for health systems. Since their introduction, the credits have led to a boom in marketplace coverage, with enrollment rising past 24 million in 2025 and the vast majority of enrollees receiving subsidies. In response to a possible expiration, insurers proposed an 18% median rate increase for 2026 ACA coverage, with many rate requests already approved in states around the country as November open enrollment approaches.

The American Hospital Association has warned that the loss of the credits will upend emergency departments and worsen provider burnout. More uninsured individuals or those facing higher premiums would likely delay or forgo care, exacerbating health disparities and increasing uncompensated care. That shift could result in a $28 billion reduction in hospital spending over the next decade.

Democrats first expanded the tax credits under the American Rescue Plan in 2021 and extended them under the Inflation Reduction Act in 2022. A growing number of House Republicans are backing the Bipartisan Premium Tax Credit Extension Act, which would extend the subsidies to Jan. 1, 2027. Meanwhile, CMS has expanded eligibility for catastrophic health coverage on the marketplace in 2026 to prepare for a possible expiration.

What will happen with HHS’ 2026 budget?

On Sept. 9, the House Appropriations Committee advanced a funding bill that will give HHS $108 billion for fiscal year 2026, down 6% from the 2025 enacted level. The funding reflects a set of shifting priorities, with reductions for certain agencies but increases for some rural and community-focused programs.

Under the funding bill, the CDC would see an 18.9% cut from 2025, dropping to $7.5 billion. It removes funding from multiple global programs within the CDC’s Center for Global Health, including those that address global HIV/AIDS, global tuberculosis and some international vaccine activity. The bill does maintain 2025 funding for the Global Public Health Protection programs and global polio vaccination, while transferring Parasitic Diseases and Malaria support to the National Center for Emerging and Zoonotic Infections Diseases, according to a Sept. 11 KFF report.

The National Institutes of Health would get $47.8 billion, a 0.9% reduction from 2025, which is higher than the White House’s proposed $29.3 billion for NIH funding. The NIH’s Fogarty International Center, which supports health research and training globally, would receive 2025 level funding. The Health Resources and Services Administration would also see a 10.6% cut to $7.4 billion.

Despite the cuts, the bill would expand support in specific areas, with $100 million allocated to the Make America Healthy Again Initiative, which will help HHS invest in prevention innovation programs in rural areas and will also invest in telehealth for chronic care and nutritional services. Rural health will receive $515.4 million in funding, up 41.4% from 2025.

Will HHS move forward with the 340B rebate pilot?

HHS is facing mounting pressure from hospitals and lawmakers to press pause on plans for a 340B pilot program that would do away with the current upfront discount structure.

In late July, the Health Resources and Services Administration shared plans for a pilot model that would give drugmakers the option to provide discounts for drugs purchased through the 340B program via post-sale rebates. Applications from manufacturers whose products are included in the Medicare Drug Price Negotiation Program were due by Sept. 15, with the model officially set to launch Jan. 1, 2026. Initially, the pilot will be limited to 10 drugs selected for price negotiations, though HRSA may expand the list to include additional drugs after the program’s first year.

Hospital groups — including the American Hospital Association and America’s Essential Hospitals — are urging federal health officials to scrap plans for the pilot, saying it would increase costs for safety-net hospitals already facing intense financial strain. Should the model proceed, hospitals are urging HRSA to require participating drugmakers to cover all associated administrative and operational costs.

“There is no sound reason for HRSA to make such a profound change,” the AHA said in an Aug. 27 letter to HRSA administrator Thomas Engels. “It is a “solution” in search of a problem. More accurately, it is a “solution that will create a host of problems for those who provide care for rural and other underserved Americans.”

How HHS may respond to intensifying criticism from lawmakers and industry groups remains to be seen. In a Sept. 8 letter to HHS Secretary Robert F. Kennedy Jr., a group of 162 bipartisan lawmakers condemned the rebate model pilot, saying it would harm safety-net hospitals. The lawmakers also shared concerns about the quick implementation timeline. The same day, the AHA called on the Federal Trade Commission and the Department of Justice to launch an antitrust investigation into drugmakers’ 340B rebate models, which a growing number of manufacturers have introduced over the past year.

The 340B program was created by Congress in 1992 to help providers stretch limited resources by requiring drugmakers participating in Medicaid to offer steep outpatient drug discounts to eligible safety-net hospitals and clinics. It has faced growing scrutiny in recent years as drugmakers move to impose restrictions, including limits on drugs dispensed through contract pharmacies and replacing upfront discounts with rebates.

The latest on site-neutral payment policy

CMS is advancing site-neutral payment reforms in its proposed 2026 Hospital Outpatient Prospective Payment System (OPPS) rule, a move that has drawn support from insurers and lawmakers and pushback from hospitals. The proposed rule’s public comment period closed Sept. 15.

CMS estimates that hospitals are paid about 60% more than physicians’ offices for similar services due to longstanding differences in how Medicare reimburses professional and facility fees. Under the proposed rule, CMS would pay for drug administration services furnished in grandfathered off-campus hospital outpatient departments at the site-neutral rate of 40% of the OPPS rate, cutting an estimated $280 million in OPPS spending in 2026. The agency also requested feedback on whether site-neutral payment should be expanded to clinic visit services provided in on-campus outpatient departments.

The proposal builds on years of congressional and regulatory focus on narrowing payment disparities between hospital and office settings. Policymakers have argued that the current system incentivizes hospitals to acquire physician practices to capture higher payments, driving up Medicare expenditures and patient out-of-pocket costs.

Site-neutral payment policies would require Medicare to pay the same rate for a service regardless of where it is delivered. Currently, Medicare recognizes key differences between hospital outpatient departments and other settings, which is why hospitals are paid more.

The proposed rule also includes a plan to phase out the inpatient-only (IPO) list over three years, beginning with the removal of 285 mostly musculoskeletal procedures in 2026. The IPO list details procedures that Medicare has considered safe only in an inpatient setting. Eliminating the list would mean hospitals could no longer bill Medicare for certain services solely as inpatient procedures, accelerating the migration of surgical care to outpatient settings.

Will Congress extend Medicare telehealth and hospital-at-home waivers?

Congress faces a narrowing window to decide the future of two pandemic-era flexibilities that have reshaped care delivery: expanded Medicare telehealth coverage and the acute care hospital-at-home waiver program. Both are set to expire Sept. 30, unless lawmakers act.

Two bipartisan bills now before Congress aim to prevent that outcome. The Telehealth Modernization Act of 2025 would extend Medicare telehealth benefits through 2027 and reimburse the hospital-at-home program through 2030. It would also preserve key waivers, such as eliminating geographic restrictions, covering audio-only visits for patients without internet, and expanding eligible services to areas including behavioral health, hospice and dialysis.

A second proposal, the Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act, would go even further, making many telehealth flexibilities permanent, including lifting geographic limits altogether and removing in-person requirements for telemental health.

More than 300 hospitals currently offer hospital-at-home programs, according to the American Hospital Association. Many others have expressed interest in launching their own programs but remain hesitant without long-term certainty from Congress.

The decisions made by lawmakers in the coming months will determine whether two of the most transformative innovations of the pandemic era become permanent fixtures of care delivery or temporary experiments rolled back just as they reach scale.
All of this is unfolding against a backdrop of budget negotiations. The White House has asked Congress to extend federal funding through Jan. 31, setting up a fall showdown that could shape healthcare policy in broader ways, according to Politico. Telehealth flexibilities, Medicaid DSH cuts and ACA subsidy renewals are all tied up in the same set of talks.

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