Labor-HHS Fiscal Year 2026 Appropriations Bill and Health Care Extenders Overview

Congress enacted the fiscal year 2026 Labor, Health and Human Services, Education, and Related Agencies (LHHS) appropriations bill, providing roughly $221 billion in total funding across the subcommittee’s jurisdiction, including about $116.6 billion in discretionary funding for the Department of Health and Human Services (HHS). President Donald Trump signed the legislation into law on Tuesday, Feb. 3, following House and Senate passage.

The measure largely tracks the bipartisan Senate funding levels proposed last summer and blocks deeper cuts proposed by the Trump administration, which had sought to reduce HHS spending to about $95 billion. House Republicans had previously floated a $108 billion topline for HHS.

Topline funding highlights include $49 billion for the National Institutes of Health (NIH), $9.2 billion for the Centers for Disease Control and Prevention (CDC), $7.3 billion for the Substance Abuse and Mental Health Services Administration (SAMHSA) and $1.9 billion for Community Health Centers. The bill provides $418 million for rural health programs, $1.4 billion for health workforce programs and $1.2 billion for maternal and child health programs. The bill also provides an increase in funding for the Children’s Hospitals Graduate Medical Education (CHGME) program to $395 million in Fiscal Year (FY) 2026.

In addition to appropriating funds, bipartisan, bicameral lawmakers finalized an agreement on a health policy package tied to the FY26 appropriations bill, reviving much of the late-2024 health agreement that collapsed amid political opposition. While some elements differ from the 2024 framework, the final package maintains its core focus on health care extenders, pharmacy benefit manager (PBM) reforms and hospital-related policies. 

The major public health and health care programs in the bill include extending Medicare telehealth flexibilities through the end of 2027 and the hospital-at-home program through fiscal year 2030, allowing facilities to continue receiving Medicare reimbursement for providing hospital-level care in patients’ homes.

The package also includes a funding increase for Community Health Centers, raising total funding to $4.6 billion for FY26, and continuing funding at that level though the end of the calendar year. In addition, it authorizes Medicare coverage for multi-cancer early detection screening tests. The legislation includes reforms targeting PBMs, placing new limits on PBM compensation models in Medicare, requiring additional transparency around PBM payment structures and strengthening oversight of PBM contracting practices with pharmacies.

The agreement does not include an extension of the enhanced Affordable Care Act premium subsidies that expired at the end of last year and have contributed to higher premiums for many marketplace enrollees.

Division F – Health Care Extenders

Title I – Medicaid

The bill includes a package of Medicaid provisions focused on provider enrollment, eligibility options for individuals with disabilities, continuity of coverage for military families, maternal health cost reporting and targeted changes to disproportionate share hospital (DSH) financing. A section of the bill incorporates provisions from the Accelerating Kids’ Access to Care Act requiring states to establish a streamlined process allowing eligible out-of-state providers to enroll in Medicaid and the Children’s Health Insurance Program (CHIP) with minimal screening beyond what is necessary to make payment, such as verifying a provider’s name and National Provider Identifier (NPI). Eligible out-of-state providers must be enrolled for a five-year period unless terminated or excluded, and the requirement takes effect three years after enactment. The bill also removes certain age restrictions under Medicaid’s optional buy-in groups for working adults with disabilities, including changes to allow coverage of individuals who would otherwise receive Supplemental Security Income (SSI) but for earnings, and provides states until Jan. 1, 2028, to comply if they already cover these groups.

The bill requires each state to conduct a study on the costs of providing maternity, labor and delivery services no later than 30 months after enactment and every five years thereafter and provides $10 million in FY26 for grants and technical assistance to certain rural, low-volume hospitals to compile cost data, plus an additional $3 million in FY26 for HHS implementation. Finally, the bill modifies DSH policy by extending Tennessee’s DSH allotments into FY26 and FY27, eliminates Medicaid DSH cuts through Sept. 30, 2027 and updates limitations on DSH payment adjustments, including provisions related to how states may distribute unspent DSH allotments from prior years up to the modified cap under specified conditions.

Title II – Medicare

The bill includes a broad package of Medicare extensions and reforms affecting hospital payments, telehealth, alternative payment models, pharmacy access, Medicare Advantage (MA) transparency and pharmacy benefit manager (PBM) accountability. It extends the Low-Volume Hospital (LVH) payment adjustment and Medicare-Dependent Hospital (MDH) program through Dec. 31, 2026. The bill also extends the work geographic index floor through Dec. 31, 2026. Additionally, the bill extends incentive payments for participation in eligible Alternative Payment Models (APMs), including a 3.1% bonus for 2028, and updates related physician fee schedule provisions for 2028 and 2029.

The bill extends COVID-19 telehealth flexibilities through Dec. 31, 2027, which includes the removal of geographic restrictions, and expands originating sites and eligible practitioners to provide telehealth services, extends coverage of telehealth at Federally Qualified Health Centers and Rural Health Clinics, allows for audio-only telehealth and use of telehealth for hospice face-to-face encounters. It delays in-person visit requirements for mental health telehealth services until Jan. 1, 2028, and requires new modifiers for certain telehealth claims beginning in 2027. It also requires HHS to issue guidance within one year on best practices for telehealth services for individuals with limited English proficiency.

The bill extends the Acute Hospital Care at Home waiver through Sept. 30, 2030, and funds additional evaluation of the model, including a new comprehensive study due by Sept. 30, 2029, with $2.5 million in FY26 for CMS program management to carry out these activities. It also directs education and outreach on screening for medication-induced movement disorders by Jan. 1, 2028, requires a Government Accountability Office (GAO) report on wearable medical devices within 18 months, and extends temporary Part D coverage of authorized oral antiviral drugs through Dec. 31, 2026.

The bill reduces cost-sharing for low-income Part D beneficiaries, setting copays at no more than $1-3 before 2028 and eliminating copays for generic drugs beginning in 2028, with inflation-limited amounts for other drugs. It also requires Medicare Advantage (MA) plans to maintain accurate provider directories beginning in plan year 2028, verify data at least every 90 days, protect enrollees from higher cost sharing when they rely on incorrect directory information and publicly post accuracy scores beginning in 2029. The bill provides $4 million in FY26 for CMS to implement these MA directory reforms. The bill also establishes coverage and payment rules for multi-cancer early-detection screening tests. Furthermore, it requires that each off-campus outpatient department obtain a unique billing identifier and provider-based status attestation beginning in 2028, with $20 million in FY26 for CMS to implement these requirements.

Furthermore, the bill includes pharmacy and PBM reforms. It requires Part D plans to allow any willing pharmacy that meets standard contract terms to participate, establishes standards for “reasonable and relevant” contract terms by April 2028, creates an allegation and enforcement process for pharmacies beginning in 2029 and requires extensive reporting on essential retail pharmacies starting in 2028. It provides $188 million in FY26 for CMS to implement pharmacy access and enforcement provisions. 

The bill modernizes PBM oversight beginning in 2028, requiring PBMs to operate only on bona fide service fees, pass through rebates to Medicare Part D plans, disclose detailed pricing and utilization data, submit standardized annual reports, and be subject to audits and enforcement. It provides $113 million in FY26 for CMS and $20 million in FY26 for the HHS Office of Inspector General to implement PBM accountability provisions. Finally, the bill increases the Medicare Improvement Fund from $1.4 billion to $2.1 billion and sets future Medicare sequestration rules, maintaining a 2% reduction for FY33.

Title III – Human Services

The bill includes an extension of the Temporary Assistance for Needy Families (TANF) program through Dec. 31, 2026, operating under the same authority and conditions used for FY25, with the federal government appropriating whatever funds are necessary from the U.S. Treasury to support it during that period.

Title IV – Public Health and Other Extenders

The bill extends funding for Community Health Centers (CHCs), the National Health Service Corps and teaching health centers that operate Graduate Medical Education (GME) programs. Specifically, the bill provides a significant boost, to $4.6 billion in funding for CHCs in FY26 and $1,1.2 billion for CHCs between Oct. 1 and extends funding at that rate, pro rata, through Dec. 31, 2026. The bill also provides $350 millionfor FY26 and $88 million between Oct. 1 and Dec. 31, 2026, for the National Health Services Corps. On GME funding, the bill provides $225 million for FY26, $250 million for FY27, $275 million for FY28 and $300 million for FY29.

It also extends certain national health security programs as well as the Special Diabetes Program (SDP), providing $200 million in FY26. The appropriations bill also includes provisions for further No Surprises Act implementation, including $42.,1 million in funding through Dec. 31, 2026.

Title V – Public Health Programs

The appropriations bill also reauthorizes $100 million in funding for FY26 through FY30 to prevent maternal deaths. This funding supports activities such as identifying and disseminating best practices related to preventing maternal morbidity and mortality, no less than once per fiscal year. It also includes several reforms to the Organ Procurement and Transplantation Network (OTPN). These reforms require a GAO report and new transparency measures, such as requiring the agency to post the amount of registration fees collected from each member of the network and a list of activities such fees are used to support.

It also reauthorizes $25 million for FY26 through FY28 to support studies of drugs for pediatric populations. Furthermore, the bill includes reauthorization of funding for the PREEMIE Reauthorization Act through FY30 for research related to preterm labor and delivery and the care, treatment and outcomes of preterm and low birthweight infants. It also reauthorizes the Dr. Lorna Breen Health Care Provider Protection Act for five years, which covers education and awareness initiatives encouraging the use of mental health and substance use disorder services by health care professionals and other programs to promote mental health among the health professional workforce. 

Title VI – Food and Drug Administration

The bill also notably includes the Mikaela Naylon Give Kids a Chance Act, which provides for further research into pediatric uses of drugs and additional authorities of the Food and Drug Administration (FDA) regarding molecularly targeted cancer drugs. The bill also extends the FDA’s authority to issue Priority Review Vouchers (PRVs) to encourage treatments for rare diseases through Sept. 30, 2029. This section also requires that no later than eight years after the date of enactment, the GAO must conduct a study of the effectiveness of the provisions in the development of drugs and biological products for pediatric cancer indications, and a report no later than 10 years after enactment. Furthermore, it clarifies FDA’s longstanding interpretation of the Orphan Drug Act and orphan drug exclusivity.  

The bill also establishes the Abraham Accords Office within the FDA, which will work to strengthen the international oversight of regulated commodities, including good manufacturing practices and other issues relevant to manufacturing medical products that are regulated by the FDA. in Abraham Accords countries. It also requires HHS to submit a report to Congress on the Abraham Accords Office no later than three years after enactment.

Title VII – Lowering Prescription Drug Costs

The bill establishes comprehensive PBM oversight and transparency requirements for group health plans and group health insurance coverage. Title VII requires PBMs to provide detailed, standardized and machine-readable reports to plans on drug pricing, rebates and fees, pharmacy reimbursement rates, affiliated pharmacy arrangements and PBM compensation structures. The provisions are designed to increase transparency, improve plan oversight of PBM practices and reduce incentives tied to higher drug prices.

In comparison to the 2024 health care package, the bill notably does not include measures to ban PBMs from employing spread pricing in contracts with Medicaid managed care plans. It also does not prohibit brand drugmakers from creating “patent thickets” by placing more patents than necessary on a single drug to extend the product’s market exclusivity and delay generic or biosimilar competition or include a full reauthorization of the Pandemic and All-Hazard Preparedness Program (PAHPA), though some expiring PAHPA programs were continued through Dec. 31, 2026.

Health Care Extenders Expiration Timeline

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