Congress Debates FY2027 Health Budget as RFK Jr. Testifies, CDC Director Nominated

April 21, 2026

Holland & Knight Health Dose: April 21, 2026

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Looking Ahead

The U.S. Congress remains in session with healthcare activity continuing to center on budget oversight and committee hearings. U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. is scheduled to appear before the U.S. House of Representatives Committee on Energy and Commerce, as well as the U.S. Senate Committee on Appropriations Subcommittee on Labor, HHS, Education, and Related Agencies, Senate Committee on Finance and Senate Committee on Health, Education, Labor, and Pensions (HELP), extending scrutiny of the Trump Administration's fiscal year (FY) 2027 health proposals. Committees are also beginning work on FY 2027 appropriations, with most internal deadlines concluding.

HHS Secretary Kennedy testified before multiple House committees on April 17, 2026, as part of ongoing scrutiny of the Trump Administration's FY 2027 health priorities. During appearances before the House Committee on Ways and Means, the House Appropriations Committee Subcommittee on Labor, HHS, Education and Related Agencies, and House Committee on Education and the Workforce, members questioned proposed research and public health funding levels, agency staffing decisions, vaccine policy and the implementation of programs such as Medicare preventive services, the No Surprises Act and the 988 crisis line. Discussions also addressed rural health funding, National Institutes of Health (NIH) investments, drug pricing and pharmacy benefit managers (PBMs), prior authorization barriers, mental health and opioid response efforts, and access to emerging technologies. Across the hearings, Secretary Kennedy emphasized the administration's focus on chronic disease prevention, nutrition, price transparency and healthcare affordability under the Make America Healthy Again (MAHA) agenda. He is expected to continue highlighting these themes in upcoming testimony before the House Energy and Commerce Committee and Senate Appropriations Committee Subcommittee on Labor, HHS, Education, and Related Agencies, along with the Senate Finance and HELP committees.

Additionally, Centers for Medicare & Medicaid Services (CMS) Medicare payment rules advanced to the Office of Management and Budget review, including the Physician Fee Schedule and Hospital Outpatient Prospective Payment System proposed rules, which are expected mid-year.

Upcoming Events

Congress

• The House Energy and Commerce Committee Subcommittee on Health will hold a hearing on April 21, 2026, titled "The Fiscal Year 2027 Department of Health and Human Services Budget."
• The Senate Appropriations Committee Subcommittee on Labor, HHS, Education, and Related Agencies will hold a hearing on April 21, 2026, titled "A Review of the President's Fiscal Year 2027 Budget Request for the Department of Health and Human Services."
• The Senate Finance Committee will hold a full committee hearing on April 22, 2026, titled "The President's Fiscal Year 2027 Department of Health and Human Services Budget."
• The House Education and the Workforce Committee Subcommittee on HELP will hold a hearing on April 22, 2026, titled "Profits Over Patients: The PBM Business Model Under Scrutiny."
• The Senate HELP Committee will hold a full committee hearing on April 22, 2026, titled "Hearing on the Fiscal Year 2027 Department of Health and Human Services Budget." Administrative Updates

CDC Director Selection

The Trump Administration has nominated Erica Schwartz to serve as director of the Centers for Disease Control and Prevention (CDC). Schwartz previously served as deputy surgeon general during President Donald Trump's first term and is viewed as a more traditional public health pick following months of leadership turnover at the agency. If confirmed, she would assume leadership of the CDC as Congress continues heightened oversight of federal public health policy, vaccine recommendations and agency governance under the HHS.

Executive Order Updates

The Trump Administration has continued to release wide-ranging executive orders (EOs). For the latest updates, see our "Trump's Second-Term Executive Orders (2025-2026)" tracking chart.

Congressional Updates

Sen. Cassidy Unveils Affordability Agenda Focused on TrumpRx and PBMs

Senate HELP Committee Chair Bill Cassidy (R-La.) released a broad healthcare agenda outlining priorities to expand TrumpRx, increase price transparency and further regulate PBMs. The framework also emphasizes chronic disease prevention, expanded access to nutritious food and consumer affordability initiatives. As part of the proposal, Cassidy suggested allowing individuals who lose enhanced Affordable Care Act (ACA) subsidies to use health savings accounts and cost-sharing reductions to help offset exchange plan costs, revisiting legislation he previously advanced after efforts to extend the enhanced subsidies stalled last Congress.

CLEAR Labels Act

The Consumer Labeling for Enhanced Active Pharmaceutical Ingredient (API) Reporting and Legitimate Accountability for Base Entity Listings Act (CLEAR) Labels Act, introduced in February 2026 by bipartisan leaders of the Senate Special Committee on Aging, would require prescription drug manufacturers to disclose the countries where finished drug products, APIs and certain key components are manufactured. The proposal is gaining attention after former FDA officials said the legislation is unlikely to significantly influence consumer purchasing decisions, but it could enhance FDA's oversight and inspection capabilities. The bill is intended to increase transparency around pharmaceutical supply chains and provide regulators with additional visibility into drug sourcing, particularly for products with complex or global manufacturing arrangements. If enacted, the information could be used by federal agencies in carrying out oversight, inspection and compliance activities related to drug manufacturing and distribution.

House GOP Bill Seeks to Close TrumpRx Coverage Gap for DTC Drugs

Republicans on the House Ways and Means Committee introduced legislation aimed at strengthening TrumpRx by requiring drug prices paid through direct-to-consumer (DTC) platforms to count toward patient deductibles and out-of-pocket maximums under private insurance plans. Supporters argue the proposal would significantly enhance the cost-saving potential of TrumpRx by ensuring patients receive credit toward plan cost-sharing requirements when purchasing drugs outside traditional pharmacy benefit structures.

Chronic Care Management Improvement Act Introduced

Reps. Suzan DelBene (D-Wash.) and Mike Kelly (R-Pa.) introduced the Chronic Care Management Improvement Act, bipartisan legislation aimed at expanding Medicare beneficiaries' use of chronic care management services by eliminating the current beneficiary cost-sharing requirement. Under existing policy, Medicare beneficiaries who receive chronic care management services are responsible for a 20 percent coinsurance. The bill, if passed as introduced, would waive this cost-sharing requirement. The proposal reflects ongoing congressional interest in improving management of chronic conditions through delivery system reforms and care coordination, particularly for Medicare beneficiaries with multiple chronic diseases, rather than through broader coverage expansions.

Sen. Thune Signals Narrow Reconciliation Plan, Excluding Medicare and Medicaid Changes

Senate Majority Leader John Thune (R-S.D.) indicated that Senate Republicans are pursuing a narrowly tailored reconciliation package that will not include changes to Medicare or Medicaid. Instead, the legislation will focus on addressing the partial government shutdown affecting the U.S. Department of Homeland Security (DHS). Thune also confirmed that reconciliation instructions will not be directed to the Senate Finance Committee, which has jurisdiction over Medicare and Medicaid spending.

Reps. Scott, DeSaulnier Push to Expand PBM Transparency Rule

House Education and the Workforce Committee Ranking Member Bobby Scott (D-Va.) and Subcommittee on HELP Ranking Member Mark DeSaulnier (D-Calif.) are urging the Employee Benefits Security Administration to broaden its proposed rule on PBMs. In a letter, the lawmakers acknowledged the rule as a meaningful step toward improving transparency – particularly its provisions requiring disclosure of direct and indirect compensation – but argued it should go further. Specifically, they called for the inclusion of fully insured plans and expanded transparency requirements for other service providers such as third-party administrators. While praising the proposal's progress, the lawmakers encouraged the U.S. Department of Labor (DOL) to finalize these provisions and take additional steps to strengthen the rule and reduce costs for workers and their families.

Regulatory Updates

FDA Considers Broader Interpretation of "New Dietary Ingredient" for Supplements

The FDA is considering a broader interpretation of what qualifies as a "new dietary ingredient" under the dietary supplement framework, an approach that could affect how substances such as peptides are regulated. Under existing policy, certain peptides have been treated as subject to the new dietary ingredient notification process or regulated as drugs, depending on their structure and intended use. The agency's potential shift would move away from a narrower, ingredient-by-ingredient assessment and toward a more flexible framework for determining whether substances can be marketed in dietary supplements. The approach has prompted questions about how the FDA would distinguish supplements from drugs and how the change could affect oversight, enforcement and product classification going forward.

Secretary Kennedy's Plans for USPSTF

Secretary Kennedy told the House Ways and Means Committee that he intends to pursue changes to the U.S. Preventive Services Task Force (USPSTF) in the near term. The USPSTF plays a central role in determining which preventive services must be covered without cost-sharing under the ACA. Appearing before lawmakers as part of ongoing testimony on the department's FY 2027 budget request, Secretary Kennedy indicated that he plans to appoint new members to the task force and implement broader reforms to its structure. The panel, which typically meets three times annually, has seen significant disruption, with HHS canceling three of its four scheduled meetings since the start of President Trump's second term.

CMS Releases Medicaid and CHIP Policy Implementation Road Map

CMS recently released a Medicaid and Children's Health Insurance Program (CHIP) Policy Implementation Road Map, along with a detailed multiyear implementation timeline, to support state planning for upcoming policy and operational changes. The road map is designed to help state Medicaid agencies assess provisions with potential systems and technology implications, particularly those affecting Medicaid Enterprise Systems, rather than serving as a comprehensive inventory of all regulatory requirements. The accompanying timeline outlines key implementation milestones spanning 2025 through 2034 across policy areas, including eligibility and enrollment, managed care, quality reporting and pharmacy. CMS notes that the timeline is illustrative and not exhaustive, and states will need to consult underlying rules and applicability guidance to determine specific compliance obligations.

Legal Updates

Federal Court Allows States' Challenge to HHS Reorganization and Layoffs to Proceed

A federal judge has allowed a lawsuit brought by 19 states and the District of Columbia to move forward challenging the HHS' reorganization and reductions in force carried out last year. The court denied the department's motion to dismiss, finding that the states plausibly alleged that HHS failed to provide sufficient justification for the scope and execution of the restructuring and workforce reductions. The lawsuit argues that the actions exceeded HHS' authority and hindered the department's ability to carry out statutory responsibilities across key health programs. The case will now proceed as the court considers claims under the Administrative Procedure Act and constitutional authorities governing agency operations.

NIH Blocked from Implementing 15 Percent Indirect Cost Cap as DOJ Declines Further Appeal

The U.S. Department of Justice (DOJ) has opted not to seek review by the U.S. Supreme Court in litigation over a February 2025 policy issued by the NIH, which aimed to impose a uniform 15 percent cap on indirect cost reimbursement across all NIH grants. The guidance, released on February 7, 2025, would have replaced long-standing negotiated rates but has since been vacated. The U.S. Court of Appeals for the First Circuit previously upheld a district court ruling in favor of the plaintiffs – including major research institutions and higher education associations – resulting in a permanent injunction that blocks NIH from implementing the cap. With the DOJ declining further appeal, the injunction remains in place, and the litigation is now effectively concluded.

Despite the outcome, President Trump's FY 2027 budget request signals continued interest in the policy, stating that the administration intends to pursue a 15 percent cap on indirect cost rates to prioritize direct scientific research spending over administrative overhead.

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