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LUGPA Policy Alert:
House Committees Advance Budget Reconciliation; White House Targets Drug Pricing

May 2025 

Congress Advances Health Reforms via Budget Reconciliation

This week, the House Ways & Means and Energy & Commerce Committees advanced portions of H. Con. Res. 14, the FY2025 Budget Resolution, along party lines. The reconciliation package authorizes up to $4.5 trillion in deficit increases over 10 years, offset by $2 trillion in mandatory spending cuts, many affecting federal healthcare programs.

Key Health Provisions Affecting LUGPA Practices

1. Medicare Physician Payment Reform

The bill proposes tying the Medicare Physician Fee Schedule (MPFS) conversion factor to the Medicare Economic Index (MEI):

  • 75% of MEI in 2026
  • 10% of MEI in subsequent years

An amendment to increase physician payments was rejected. While we are pleased that physician payments are being addressed in the bill, this proposal falls short of what is needed.   Importantly, it does not address the payment cut in 2025, which means future updates are based on this 2.85 percent lower baseline, and future updates do not track practice costs (the Medicare Economic Index).

LUGPA is working closely with Rep. Greg Murphy (R-NC), a urologist and co-chairman of the Doctors Caucus to substantially improve the physician payment section of the bill.  Murphy has conveyed to Leadership that he is a no vote unless more resources are added and payments are significantly improved to doctors. 

LUGPA urges Congress to:

  • Reverse the payment cut in 2025, at least for the latter part of the year.
  • Fully align MPFS updates with MEI or a more accurate cost index
  • Ensure permanent, predictable payment updates
  • Support independent, physician-led care
  • Add the Protecting Patient Access to Cancer and Complex Therapies Act, which would protect physicians' add-on payments for Part B drugs subject to Secretary negotiation under the IRA.

2. PBM Reform

The bill includes long-overdue PBM reforms, especially in Medicaid and Medicare Part D:

  • Ban on spread pricing in Medicaid
  • Mandatory disclosure of PBM financial arrangements
  • PBM compensation limited to bona fide service fees

These changes reflect LUGPA’s long-standing push for transparency and fair drug pricing.

3. Medicaid Changes and Cuts

Over $700 billion in Medicaid savings are proposed via:

  • Fraud prevention measures, including verifying eligibility
  • Exclusion of undocumented immigrants
  • FMAP penalties for states covering non-citizens
  • Freezing State provider taxes at current rates and prohibiting States from creating new provider taxes moving forward
  • Ending enhanced FMAP for new expansion states
  • Revising the payment limit for certain state-directed payments
  • Requiring States to establish work requirements for certain individuals with redetermination as frequently as once a month

4. Streamlining Enrollment

Simplifies Medicaid and CHIP enrollment for out-of-state providers, reducing delays in care delivery.

Next Steps

The bill now moves to the House Budget Committee, then to the House Rules Committee, likely early next week, and to the full House floor for a vote, hopefully before Memorial Day recess. The Senate is expected to debate and amend the package substantially over the next several months.

Executive Order on Drug Pricing: A Most-Favored-Nation Approach

Also, this week, the White House issued an Executive Order targeting global drug price inequities. The U.S. accounts for ~75% of global pharmaceutical profits despite having just 5% of the population.  The EO claims that American consumers are financing most of the fixed R&D costs and that other developed countries are freeloading on American patients.

Key measures include:

  • MFN pricing caps to match the lowest prices in other developed countries (How that would be enforced remains unclear in the EO).
  • Expanded drug importation
  • Directive to the US Trade Representative and Commerce Secretary to prohibit foreign freeloading on American pharmaceutical pricing.
  • Antitrust enforcement and possible FDA revocation of non-compliant products (Though the legal authority to effectuate is unclear).