President Trump directing the HHS Secretary to ensure Medicaid rates do not exceed Medicare rates.
The House amending the OBBB to address Senate Byrd Rule.
AzHHA submitting comments on proposed Medicare rates.
President Trump directs HHS Secretary to ensure Medicaid rates do not exceed Medicare rates
On Friday, June 6, 2025, President Trump issued a Presidential Memorandum on “Eliminating Waste, Fraud and Abuse in Medicaid.”
In it, the President expressed concerns regarding the growth of assessments and state directed payments.
He further directed the Secretary of Health and Human Services (HHS) to “take appropriate action to eliminate waste, fraud and abuse in Medicaid, including by ensuring Medicaid payments rates are not higher than Medicare, to the extent permitted by applicable law.”
Why it matters: Arizona participates in a number of state directed payment programs, the largest of which is the Hospital Enhanced Access Leading to Health Improvements Initiative (HEALTHII).
This year, the HEALTHII program provides $2.3 billion in net payments to supplement inadequate Medicaid reimbursement for hospitals.
Currently, many states, including Arizona, compare total reimbursement to average commercial rates, which are typically above Medicare rates. This is due to the fact that Medicare rates significantly underpay hospitals.
The big picture: If enacted, H.R. 1 (the “One Big Beautiful Bill Act”) would freeze provider taxes at current rates and prohibit new provider assessment programs.
Relatedly, the Centers for Medicare and Medicaid Services (CMS) has proposed a rule that aims to end some states’ provider assessment programs that CMS views as using a “loophole” to impermissibly draw down federal funds for provider payments.
The Presidential Memorandum is both broader than and distinct from H.R. 1 and the CMS proposed rule. The Memorandum would seem to affect all Medicaid reimbursement rates that are greater than Medicare rates for the same services.
At the same time, the Memorandum makes clear that it intends to target enhanced or supplemental provider payments stemming from provider assessment programs as part of the initiative.
The bottom line: Although the Memorandum signals the Administration’s intent to target provider taxes and associated enhanced/additional payments, any changes that Congress makes to Medicaid rates or provider taxes in a final bill will be binding because a Presidential Memorandum or Executive Order may not override federal law.
House amends the OBBB to address Senate Byrd Rule; Senate negotiations over health provisions continue
On Wednesday, June 11, 2025, House Republicans approved changes to the One Big Beautiful Bill Act (OBBB) to make it compliant with Senate rules that would enable the bill to pass by a simple majority and avoid the filibuster.
Why it matters: As a budget reconciliation bill, the OBBB is subject to the Senate’s Byrd Rule, which requires that the bill address only federal spending, revenue or the debt limit and does not contain any “extraneous matter.”
The House GOP adopted these changes by attaching them to a separate bill to avoid having to vote on the OBBB again.
The Senate parliamentarian may still flag additional policies that violate the Byrd Rule.
Go deeper: The provisions that the House removed from the bill include $2 billion for Pentagon military intelligence programs and $500 million to develop missiles, a portion of the bill’s SNAP benefit reduction provisions and the bill’s provision that would extend a policy requiring federal agencies to procure a certain amount of biofuels or bio-based products.
Meanwhile, in the Senate, negotiations on the OBBB continue.
Most GOP senators are not opposed to work requirements with some including Sen. Josh Hawley expressing explicit support.
Several Republican senators have expressed serious concerns about the impact of the bill’s provider tax provisions on rural hospitals.
Additional concerns surround the changes that would impact the affordability of Affordable Care Act marketplace plans.
What’s next: The GOP still aims to pass the bill by Friday, July 4, 2025.
Why it matters: CMS annually updates Medicare fee-for-service rates and makes additional changes including updating quality reporting metrics.
In this year’s letters, AzHHA spent considerable time expressing the inadequacy of the rates, in particular, stating:
Hospitals continue to face high rates of inflation due to increased labor costs, increasing drug and supply costs, and the uncertainty of tariffs and potential supply shocks.
The market basket growth used in calculating the rates continue to underestimate actual growth in costs.
The 0.8 percentage point productivity reduction is unrealistic for hospitals, and even CMS has even acknowledged that hospitals are unable to achieve the same productivity gains as the general economy over the long run.
The proposed increases in high-cost outlier payments for IRFs and LTCHs are not always targeted to patients who require more intensive services with related higher costs and may cause disruptions in care.
2025 Member Survey deadline extended
AzHHA has extended the deadline for the 2025 Member Survey to 5 p.m. on Friday, June 13, 2025.
This survey is for CEOs of member hospitals only, and they received the survey link via email on Monday, June 2, 2025.
It will take no more than five minutes to complete.
Why it matters: The survey helps us understand if we are meeting the needs of our members with policy and advocacy work as well as additional services and programs.
What’s next: If you are in the target audience for this survey, please check your email for the direct link to the survey and share your feedback.
Member spotlight: Valleywise Health launches contact burn prevention awareness campaign
On Wednesday, June 11, 2025, the Diane & Bruce Halle Arizona Burn Center - Valleywise Health announced a public awareness campaign.
Valleywise Health saw a significant rise in the number of admissions from heat-related burn injuries in June, July and August of last year.
Why it matters: The campaign “In Arizona, Burns Aren’t Just from Flames” is designed to reduce the number of patients who suffer life-threatening injuries due to contact with hot outdoor services like pavement or concrete.
Help get the word out: Valleywise Health has created an informational toolkit designed to raise awareness, educate communities and help prevent contact burns, particularly during Arizona’s extreme summer heat.
You are encouraged to download, share and distribute materials to help educate and protect our community.
Thank you, Valleywise Health, for taking the lead on this very important initiative.
UPCOMING EVENTS
American Indians into Health Professions Summer Program - applications due Friday, June 13, 2025 The University of Arizona offers a week-long summer program designed to serve tribal youth and adults interested in health professions. The youth program (high school juniors and seniors) is July 21-25 and the adult program (age 18+) is July 28-Aug. 1. For application information, email jupshaw@arizona.edu.
Save the date: 2025 Arizona Hospital Leadership Conference Mark your calendar and plan to engage with healthcare leaders during the AzHHA Foundation’s 2025 Arizona Hospital Leadership Conference. This year’s conference is Oct. 29-31, 2025, at the Loews Ventana Canyon Resort in Tucson, Ariz. Stay tuned for more information!
