Legislation in Federal

CY2027 Physician Fee Schedule Proposed Rule Lands — CMS Proposes the FQHC PPS Base Rate Rise to $212.91 (+2.5%), Comments Close September 14

CMS published the CY2027 Physician Fee Schedule proposed rule (CMS-1848-P, FR doc 2026-14327) in today's Federal Register — 91 FR 43842–44557, comments close September 14, 2026. This resolves the watch item carried in this file's header for the last several cycles. The headline FQHC number, verbatim from the rule at 91 FR 43959: "Multiplying the CY 2026 FQHC PPS base rate amount of $207.72 by the proposed CY 2027 FQHC market basket update of 2.5 percent ($207.72 x 1.025) results in a proposed CY 2027 FQHC PPS base rate amount of $212.91." Treat $212.91 as PROVISIONAL, not locked: CMS states it will refresh the market basket and productivity adjustment at the final rule using historical data through Q2 2026, so the final figure will move. The rule also proposes conforming regulatory text (§§405.2463(b)(3), 405.2469(d)) for CAA-2026 §6209(d), which delays the RHC/FQHC in-person visit requirement for mental-health telehealth to an extended date of January 1, 2028 — note the underlying statute (Pub. L. 119-75, Feb 3 2026) is already tracked; only the regulatory codification is new here, so do not re-report the statute as news. Two honesty notes. (1) The proposed DSMT/MNT stand-alone-visit change is an RHC proposal that aligns RHCs UP to existing FQHC treatment — FQHC payment is unchanged, and it should not be framed as an FQHC win; CMS adds that it does "not expect in future rulemaking to propose additional preventive services beyond which are currently paid for in FQHCs," i.e. it considers the FQHC preventive menu complete. (2) The ACCESS Model co-management G-codes G0676/G0677/G0678 appear ZERO times in all 716 pages, as does "ACCESS Model" — the rule that would naturally have settled FQHC billing eligibility is silent, so our UNCONFIRMED framing stands and must not be upgraded.

8th Circuit Rejects Novartis's Bid to Block Missouri's 340B Contract-Pharmacy Law — Another State Shield Survives a Manufacturer Challenge

On July 1, 2026, the 8th U.S. Circuit Court of Appeals (Novartis Pharmaceuticals Corp. v. Hanaway, No. 25-1619) affirmed the district court's denial of Novartis's preliminary-injunction bid against Missouri's S.B. 751, which requires manufacturers to deliver 340B drugs to all contract pharmacies serving Missouri covered entities. Per the Missouri Hospital Association, the court found Novartis unlikely to prevail on the merits — any extraterritorial effect of the statute was 'negligible and nondiscriminatory toward out-of-state entities' — and rejected Novartis's attempt to revisit its position on federal preemption; the case now returns to the district court for merits proceedings. The Missouri Primary Care Association (the state's FQHC association) intervened alongside MHA to defend the law. The ruling adds another upheld state 340B contract-pharmacy shield to the circuit-by-circuit map FQHC pharmacy directors are tracking, weeks after Washington's law survived a separate challenge in June.

AHA Files En Banc Review Petition After 4th Circuit Blocks WV 340B Contract Pharmacy Law — Decision Expected Mid-May

American Hospital Association filed en banc review petition April 17 after 4th Circuit panel blocked West Virginia's S.B. 325 (which forced manufacturers to ship 340B drugs to contract pharmacies). Combined with the 4th Circuit's April 14 vacatur of Maryland's similar law, drugmakers won two consecutive 4th Circuit rulings. AHA argues panel decision conflicts with 5th and 8th Circuit rulings, citing critical importance of preserving state-level 340B protections. Decision window typically 30 days. Outcome shapes whether other 4th Circuit states (NC, SC, VA) can pass 340B contract pharmacy access laws — and indirectly affects circuit-split posture for likely Supreme Court review.

Senate HELP Chair Cassidy Releases Comprehensive 340B Reform Discussion Draft — the Federal Rewrite Vehicle Arrives

Senate HELP Committee Chair Bill Cassidy (R-LA) released a legislative discussion draft of the '340B Drug Pricing Integrity and Affordability for Patients Act' on June 25, 2026 — the most comprehensive federal 340B rewrite vehicle to emerge this cycle. Key provisions per the committee release and STAT coverage: restrictions on hospital 'child sites' (which would need to provide services beyond drug dispensing and be located in shortage areas) and a requirement that hospital covered entities adopt sliding fee scales — a discipline FQHCs already live under by statute. For health centers, the draft lands in a crowded field: the health-center-side '340C' proposal (a voluntary, transparent subset with contract-pharmacy protection and WAC reimbursement for Medicaid drugs) and the already-tracked bipartisan H.R. 7391 340B FQHC Protection Act remain the CHC counter-positions. Strategic read: most of Cassidy's draft targets hospital behavior, not health centers — but any comprehensive 340B rewrite that moves opens the whole program, contract-pharmacy rules included, while the December 31 CHC Fund cliff still has no legislative vehicle of its own. Status: discussion draft (not yet introduced); comment and stakeholder engagement expected over summer 2026.

The work-requirement map, 6 months out: 4 states going early, Nebraska's freeze is the preview, and Georgia's 5% enrollment rate is the warning

With CMS-2454-IFC taking effect July 31 (the Federal Register DATES section publishes an effective date only, no comment deadline — corrected 2026-07-22) and full implementation due January 1, 2027, the state map has taken shape. Four states are going early: Nebraska (enforcing since May 1), Montana (July 1), Arkansas (soft launch July 1), and Iowa (December 1, with no high-unemployment hardship exception) — plus Idaho (Dec 31 statutory deadline with the nation's longest 3-month lookback) and Kentucky (HB 2's pre-enrollment proof requirement, enacted over the governor's veto). Nebraska's 'soft start' is producing the first hard national data: ZERO new Medicaid enrollees in May versus a typical ~15/month at the state's health centers (a pure chilling effect — termination checks don't even begin until July 31), with 20,000-28,000 of ~70,000 expansion enrollees flagged for documentation. Georgia's Pathways — the only mature work-requirement program — has enrolled ~16,183 people in three years, about 5% of its potential population. Two mitigations worth copying: Utah exempted homeless individuals (FQHC-designed, NACHC-endorsed), and Oregon exempted FQHC visits from new cost-sharing. The operational takeaway repeats Nebraska's lesson everywhere: the chilling effect arrives before the disenrollments do, and clinics' navigation capacity is the rail it all runs on.

MACPAC's June report hands FQHCs two federal hooks: a work-requirement monitoring mandate and a human-review requirement for AI prior-auth denials

MACPAC — Congress's independent Medicaid advisory commission — voted 15-2 to recommend that CMS publish a transparent monitoring and evaluation plan for the H.R. 1 community-engagement (work) requirements before the January 1, 2027 implementation, anchored on minimizing administrative burden, timely public state data, and measuring actual employment and health outcomes. The same June 2026 report cycle carries four recommendations on automation in Medicaid prior authorization: every adverse PA determination must be reviewed by a human with relevant clinical expertise (automation alone cannot deny), CMS must extend the same rule to fee-for-service, issue managed-care AI oversight guidance, and require MCOs to disclose AI use to states. For FQHCs juggling 10-20 Medicaid MCO contracts, the human-review recommendation is the federal counterweight to algorithmic denial engines — and the monitoring framework gives state PCAs the yardstick to hold their Medicaid agencies to as work requirements roll out.

Washington's 340B protection law survives — and the national map now splits clean: 22 state laws, two circuits upholding, one blocking, DOJ siding with manufacturers

On June 9, 2026 a federal judge denied AbbVie, AstraZeneca, Novartis, and PhRMA's bid to block Washington's SB 5981, letting the nation's 22nd state 340B contract-pharmacy protection law take effect June 10 with penalties up to $5,000/day. The ruling sharpens the cleanest circuit split in health law: the 5th Circuit upheld Louisiana's law (Feb 9) and Mississippi's in two separate cases (Apr 9), Minnesota's state appeals court upheld its law (Feb 17) — while the 4th Circuit blocked West Virginia's as likely federally preempted (Mar 31) and a North Dakota judge struck that state's law in April. Two more wrinkles tilt the field: the Trump DOJ filed amicus briefs in the Colorado and Rhode Island cases (Feb 2026) backing the manufacturers' preemption theory — a first — and Kansas becomes the only state moving backward, its protections expiring June 30 after the renewal bill died. Multiple law firms now expect Supreme Court review. For multi-state FQHC networks, 340B contract-pharmacy security now varies by federal judicial circuit; the NACHC state-law tracker is the canonical map.

CMS Publishes the Medicaid Work-Requirements Rule (CMS-2454-IFC) — 80 Hours/Month, Effective July 31, States Must Implement by Jan 1, 2027

On June 1, 2026 — ahead of its June statutory deadline — CMS issued the interim final rule implementing H.R. 1's Medicaid 'community engagement' (work) requirement. Adults in the expansion group must document 80 hours/month of qualifying activity (employment, work programs, community service, or at-least-half-time education) — or earn roughly $580/month — to keep coverage. The rule is effective July 31, 2026 (the comment period closes the same day), states must begin member outreach by August 31, and full implementation is required by January 1, 2027; it also tightens illness/incapacity exemption eligibility. The Commonwealth Fund estimates 5.6 million community-health-center patients are exposed nationwide. This is the operational floor FQHCs in both California and Texas have been waiting on: it converts the abstract 'work requirement' into a concrete navigation problem — every center now has roughly four weeks to finalize its eligibility-redetermination and patient-navigation playbooks before the state outreach window opens. The rule resolves the platform's two prior 'watch' items (it was due; it is now published).

CMS Interim Final Rule on Medicaid Work Requirements Published June 1 — Defines Exemptions, Reporting, and Enforcement

CMS published an Interim Final Rule (CMS-2454-IFC) on June 1, 2026 defining critical work requirement implementation details: exemption criteria, reporting mechanisms, compliance verification, and non-compliance consequences. The 80-hour/month requirement scope depends entirely on this rule — narrow exemptions could mean millions losing coverage, broad exemptions could limit damage. States must conduct member outreach June 30–August 31, 2026. CMS is distributing $200M in 'Government Efficiency Grants' for state tracking systems, but no direct funding flows to FQHCs despite bearing the patient-facing burden.

HHS Medicaid Work-Requirements Interim Final Rule Published June 1 — FQHC Eligibility Teams Need a Playbook Now

HHS published the Interim Final Rule (CMS-2454-IFC) implementing H.R. 1's Medicaid community-engagement (work) requirements on June 1, 2026. The rule will define operational standards: verification methods, qualifying activities, exemption criteria, and how the 80-hr/month threshold is measured. States must then conduct mandatory member outreach between June 30 and August 31, 2026, ahead of the December 31, 2026 implementation deadline. Commonwealth Fund estimates 5.6M CHC patients are at risk of losing Medicaid under this framework. Strategic implication: FQHC eligibility and enrollment teams have ~30 days from rule publication to retrain staff before the June 30 state-outreach window opens. Late or vague guidance = redetermination chaos in FQHC navigation workflows starting July 1. CA's outreach burden is one of the largest in the country (~5M expansion enrollees). Pair with CHAI/NACHC Medicaid-eligibility AI Best Practice Guides (already tracked) — those provide the AI guardrails; this rule sets the legal floor.

CMS Proposes Medicare-Based Caps on Medicaid State-Directed Payments (CMS-2449-P) — Comments Close July 21

CMS's proposed rule on Medicaid managed-care state-directed payments and fee-for-service targeted Medicaid practitioner payments (CMS-2449-P, published in the Federal Register May 22, 2026; FR doc 2026-10292) implements Section 71116 of H.R. 1, proposing to cap total payment rates for targeted services at 100% of the published Medicare rate in expansion states and 110% in non-expansion states. Compliance would begin January 1, 2029, with grandfathered state-directed payments phasing down 10 percentage points a year starting January 1, 2028; CMS projects roughly $775 billion in total savings over ten years (~$510B federal). The Association of Clinicians for the Underserved flags the stakes for safety-net providers, noting Medicaid payment 'is already often below the cost of providing care.' Comments are due July 21, 2026 (docket CMS-2026-1916) — the near-term action item for state PCAs and health-center advocates in states that use directed payments to lift Medicaid rates.

Federal Government Appeals 340B Child Site Ruling — FQHC Site-Expansion Strategies Back in Legal Limbo

The federal government has appealed the March 3, 2026 district court ruling that struck down HRSA's 340B child site registration requirement. The original ruling let 340B child sites access discounts immediately upon opening — without waiting for Medicare cost report filing and HRSA database registration. That was a significant operational win for FQHCs expanding sites (especially during the H.R. 1 site-multiplication strategy CFOs have been pursuing). An appeal could reverse that win, force FQHCs back to delayed eligibility (potentially 6-18 months of delayed 340B savings on new sites), and disrupt FQHC site-expansion strategies. The government may also seek a stay during appeal — which would effectively pause the favorable ruling while the appellate court considers it. Strategic implication: any FQHC that announced or is mid-flight on new site openings should immediately: (1) document existing 340B savings projections, (2) prepare contingency revenue forecasts assuming delayed eligibility, (3) coordinate with NACHC for amicus support if the appellate timeline accelerates. Pairs with the 4th Circuit contract pharmacy ruling already tracked — 340B litigation is a constant moving target through 2026.

Hospitals File Emergency Court Order to Block 340B Rebate Pilot — Third Litigation Front Opens

Hospital plaintiffs filed an emergency motion in late April / early May 2026 seeking an injunction against HRSA's 340B Rebate Model Pilot Program, alleging irreparable harm. This is the third litigation front against the rebate model: (1) the AHA/MHA Maine District Court case that already vacated the original rebate notice in February 2026, (2) the AHA en banc petition in the 4th Circuit on the WV contract pharmacy law, and now (3) this emergency injunction filing. The HRSA RFI (April 20) and ICR (April 27) comment periods both closed with industry-unified opposition (AHA, NACHC, ASHP, WHA all filed). HHS is now in review phase before any pilot relaunch. If the emergency motion succeeds, the rebate pilot is frozen nationally — direct cash-flow protection for FQHC pharmacy economics. If it fails, FQHCs face the prospect of paying full price upfront with 30-90 day rebate lag. CA FQHCs heavily 340B-dependent (AltaMed, FHCSD, San Ysidro, Vista Community Clinic, Asian Health Services, La Clinica de la Raza) should be running both scenarios in their FY26-27 cash flow projections. Pairs with the AbbVie 340B patient-definition lawsuit (April 8) and the Lilly/Novo claims-data mandate already active.

Bipartisan H.R. 8629 Would Build the FQHC Workforce Pipeline — NHSC Priority, Loan Repayment, CHW & Behavioral-Health Hiring

Reps. Raul Ruiz (D-CA-25) and Gus Bilirakis (R-FL) introduced the 'Developing the Community Health Workforce Act of 2026' (H.R. 8629) on April 30, referred to House Energy & Commerce and Ways & Means. It is the federal supply-side counterpart to H.R. 1's demand-side Medicaid cuts: it gives FQHCs and RHCs priority for National Health Service Corps assignments, expands loan repayment, funds health-center workforce pipelines and CHC–hospital GME partnerships, and grows the interdisciplinary behavioral-health workforce (physicians, nurses, social workers, community health workers, pharmacists). It is early-stage (committee referral), so it is a watch item — not law — but it signals bipartisan federal intent to shore up the FQHC labor supply just as California's CHW Medi-Cal benefit (AB 403) and the December 2026 funding cliff put workforce front and center. Note: this is a distinct, real Ruiz bill, not to be confused with the phantom '340B' bill that circulated earlier.

HRSA 340B Rebate Model RFI — Comment Deadline April 20

HRSA's Request for Information on the 340B rebate model closes April 20, 2026. FQHCs have a narrow window to shape how manufacturer rebates, contract pharmacy oversight, and documentation requirements are structured. Combined with 2026 Data Request List changes tightening contract pharmacy scrutiny, this deadline is the single most consequential 340B policy window of the year. NACHC is mobilizing comments.

HRSA 340B Rebate Model RFI: Comment Deadline April 20 — Possible Expansion to All IRA Drugs

After a Maine federal court vacated the original 340B rebate pilot program, HRSA is gathering stakeholder input with a 60-day comment window closing April 20. HRSA has signaled it may expand the rebate model to ALL drugs selected for Medicare price negotiation under the IRA through 2027. FQHCs that depend on 340B upfront discounts for cash flow could face a shift to delayed rebate payments — a devastating change for smaller FQHCs without reserves.

PhRMA Sues Washington State Over 340B Contract Pharmacy Law — Ruling Will Set National Precedent for CA AB 1460

The pharmaceutical industry trade group PhRMA filed suit April 15 against Washington State's SB 5981, which requires drug manufacturers to reimburse 340B-covered entities when contract pharmacies are used. If courts enjoin the law before its June 10 effective date, it will freeze similar CA legislative action (AB 1460); if SB 5981 survives, AB 1460 has a significantly clearer path to passage and enforcement. This is the most directly applicable state-level 340B precedent for California FQHCs in 2026.

Nebraska Becomes First State to Enforce Medicaid Work Requirements May 1

Nebraska will enforce 80-hour/month work requirements starting May 1, 2026 — 8 months ahead of the federal January 2027 mandate. This is the first real-world test of how work requirements affect community health center patient panels and revenue. KFF estimates work requirements nationally will leave 5.3 million newly uninsured. Nebraska CHCs will serve as the early warning system for California FQHCs.

HHS Shuts Down Minority Health Offices — CLAS Training Infrastructure at Risk for FQHCs

The CMS Office of Minority Health (~40 employees eliminated) and HHS Office of Minority Health have been restructured under federal cost-cutting. OMH sponsors Think Cultural Health and free CLAS Standards training that FQHCs rely on for staff cultural competency education. CMS funding would drop $674M, explicitly eliminating health equity funding categories. FQHCs may need to self-fund cultural competency training previously available free from HHS. FY2026 budget proposes ~26% cut to HHS discretionary spending.

CMS LEAD Model Replaces ACO REACH — 10-Year Horizon, Fixed Benchmark, FQHC/RHC Services Classified as Primary Care

CMS Innovation Center launched the Long-term Enhanced ACO Design (LEAD) Model on March 31, 2026 — a 10-year voluntary ACO model (PY 2027 through PY 2036) that replaces ACO REACH (sunsetting Dec 31, 2026). Two-sided risk with capitation options. Three structurally important features for FQHCs: (1) CMS classifies all FQHC and RHC services as primary care, auto-enrolling FQHC/RHC participants in the Primary Care Components (PCC) track with predictable monthly primary-care payments (the model's '3%' figures are a quality withhold ACOs earn back on performance, plus a 1.75–3% benchmark discount for Global-risk ACOs — not an FQHC-reserved savings share); (2) financial benchmark NOT rebased for the entire 10-year period — fixed historical baseline updated annually by blended national/regional growth factors (huge improvement over MSSP's 5-year rebasing that punished successful ACOs); (3) current ACO REACH participants get a streamlined 'abbreviated' application; New Entrant minimum 5,000 beneficiaries, High-Needs ACOs 1,250. Application window closed May 17, 2026 — so for CY27 PY1 entry, the gate is now whether your enabler (C3, MHN, Aledade) applied; future cohorts expected. Strategic implication: this fundamentally rewrites the Dec 31, 2026 'triple cliff' story. Until LEAD, ACO REACH was sunsetting with no successor — a real existential question for the FQHC-governed Medicare-ACO model. LEAD answers that with a 10-year horizon + fixed benchmark + a primary-care-centered design that counts FQHC/RHC services as primary care. Pairs with C3 / Carina / MHN as the enabler-MSO chassis CA FQHCs can join.

Executive Order 14398 Bans DEI Activities by Federal Contractors — FQHCs as HRSA Grantees Face Compliance Risk

Trump signed EO 14398 prohibiting 'racially discriminatory DEI activities' by federal contractors and grantees. FQHCs receiving HRSA Section 330 grants face compliance deadlines: contract clauses (30 days), FAR guidance (May 25), agency reports (July 24). The EO creates direct tension with CLAS Standards requiring culturally concordant workforce recruitment. Violations can trigger contract termination, debarment, and False Claims Act liability. FQHCs with workforce diversity programs, culturally concordant hiring, or race/ethnicity-targeted training need compliance review.

Bipartisan Bill H.R. 7391 Would Exempt FQHCs from 340B Rebate Model — 35 Cosponsors

Reps. Auchincloss (D-MA) and Bergman (R-MI) introduced the Community Health Center Drug Pricing Protection Act to exempt FQHCs from HRSA's 340B Rebate Model Pilot Program. The bill mandates upfront ceiling-price purchasing — no post-purchase reconciliation. Currently has 35 cosponsors. HRSA's RFI on 340B rebates has comments due April 20, 2026. FQHCs account for 1% of healthcare spending but treat 10% of Americans.

Medicare Telehealth Distant-Site Flexibilities for FQHCs Extended Through Dec 31, 2027

The Consolidated Appropriations Act 2026 (H.R. 7148) extends FQHC/RHC ability to serve as Medicare distant-site telehealth providers for non-behavioral-health visits through December 31, 2027. This preserves a revenue stream and access pathway that would otherwise have sunset, giving FQHCs a 21-month planning horizon for telehealth program staffing, platform investment, and Medicare care-coordination workflow design. Behavioral health telehealth remains permanent.

H.R. 1 Signed: Largest Medicaid Cuts in U.S. History

The 'One Big Beautiful Bill' includes $1 trillion in national Medicaid cuts over 10 years, with California projected to lose $30 billion annually. Work requirements, enrollment freezes, and PPS rate changes directly threaten FQHC funding models.