Funding Package Extends Medicare Telehealth, Enacts PBM Reforms, and Updates Hospital Oversight
On February 3, 2026, President Donald Trump signed a broad government funding package that includes multi-year extensions for Medicare teleath and hospital-at-home programs, new oversight requirements for pharmacy benefit managers (PBMs), and additional reporting obligations for Medicare Advantage plans and hospitals.1 The House approved the legislation earlier in the day by a 217–214 vote, following Senate passage on January 31, 2026.
Legislative Path to Passage
While the broader funding agreement included unresolved negotiations over Department of Homeland Security appropriations (DHS), health-related agencies (including the Department of Health and Human Services [HHS] and the Centers for Medicare & Medicaid Services [CMS]) received full-year funding under the package.
The Senate passed the $1.2 trillion funding package on January 31 by a 71–29 vote. A delay in House action triggered a short partial shutdown over the weekend, though though they are clearing the way for implementation of several health policy provisions.
Health Care Provisions in Focus
HHS Funding
The legislation provides $116.6 billion in discretionary funding for the HHS. According to a House Appropriations Committee fact sheet, the bill includes a reduction of more than $100 million in administrative spending at the agency.2
HHS funding priorities outlined in the legislation include rural health programs, workforce development, maternal and child health services, mental health and substance use treatment, and biomedical research. The package also maintains long-standing policy riders and directs funding toward community health centers and hospitals serving high proportions of government-insured patients.
Telehealth and Hospital-at-Home Extensions
The funding package finalizes several health care extenders that had been set to expire, including:
- A 5-year extension of the Medicare Acute Hospital Care at Home waiver
- A 2-year extension of Medicare telehealth flexibilities
Telehealth provisions remove Medicare’s geographic restrictions and expand the types of clinicians eligible to furnish telehealth services. The extensions also provide continued coverage for virtual care services that have become more widely used across Medicare since the COVID-19 public health emergency.
The aim of the multiyear extensions is to offer greater predictability for care delivery models while allowing additional time for data collection and evaluation of long-term impacts.
PBM Oversight and Transparency Measures
The legislation includes several reforms aimed at pharmacy benefit manager practices, particularly within Medicare Part D and employer-sponsored plans. Provisions include:
- Limiting PBM compensation arrangements tied to the list price of prescription drugs
- Expanding price transparency requirements for employer PBM contracts
Pharmacy groups, including the National Community Pharmacists Association, praised the changes as steps toward improving transparency and addressing concerns about reimbursement practices.3
PBM industry representatives, including the Pharmaceutical Care Management Association (PCMA) opposed the provisions, arguing that the changes could increase prescription drug costs and shift negotiating leverage toward pharmaceutical manufacturers.4
Medicare Advantage and Hospital Transparency
Additional health care provisions address oversight and data reporting across Medicare:
- Medicare Advantage plans will be required to maintain accurate provider directories to address concerns about inaccurate or outdated networks.
- Hospitals and health systems must establish unique identification numbers for outpatient services, enabling CMS to better track pricing and utilization in these settings.
Hospital groups welcomed the continuation of safety-net funding and telehealth extensions but raised concerns about potential increases in administrative requirements tied to outpatient reporting.5
Health Agency Funding Overview
The Labor, Health and Human Services, Education, and Related Agencies Appropriations Act provides $221 billion in total funding, supporting biomedical research, workforce training, rural health initiatives, and program integrity efforts across federal health programs, among other changes for other federal agencies.
What to Watch Next
With the funding package now enacted, federal agencies will begin implementing new requirements related to PBM oversight, Medicare Advantage compliance, and outpatient service reporting. Policymakers will also continue to debate whether temporary health care extensions—particularly Medicare telehealth flexibilities—should be made permanent in future legislation.
References
- The Hill Staff. Live updates: partial government shutdown ends as Trump signs funding package into law. The Hill. Published February 3, 2026. Accessed February 5, 2026. https://thehill.com/homenews/administration/5718985-live-updates-trump-government-shutdown-colombia/
- Fact sheet: Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, 2026. Appropriations Chairman Tom Cole. Accessed February 5, 2026. https://appropriations.house.gov/sites/evo-subsites/republicans-appropriations.house.gov/files/evo-media-document/final-fy26-lhhs-minibus-4-summary.pdf
- NCPA cheers as Trump signs first major PBM reform in decades. National Community Pharmacists Association. News release. Published on February 3, 2026. Accessed February 5, 2026. https://ncpa.org/newsroom/news-releases/2026/02/03/ncpa-cheers-trump-signs-first-major-pbm-reform-decades
- Buck, B. PBM reform is done…now what? PCMA. Blog. Published on February 3, 2026. Accessed February 5, 2026. https://www.pcmanet.org/pcma-blog/pbm-reform-is-done-now-what-2/02/03/2026/
- DeCubellis J. America’s Essential Hospitals commends Congress for passing government funding package. America’s Essential Hospitals. News release. Published February 3, 2026. Accessed February 5, 2026. https://essentialhospitals.org/americas-essential-hospitals-commends-congress-for-passing-government-funding-package/
