Holland & Knight Health Dose: December 9, 2025

Looking Ahead

With only two weeks left of U.S. Congress in session, a final push for a consensus on healthcare is underway. Both Democrats and Republicans are hoping to secure political wins for their parties and constituencies while the extension of Affordable Care Act (ACA) subsidies remain at a sticking point, with Republicans calling for greater restrictions and Democrats aiming for a clean extension. Though U.S. Senate Majority Leader John Thune (R-S.D.) promised a vote on extending the subsidies, it remains to be seen if the Republican party can coalesce around any degree of extension. On Dec. 8, 2025, Senate Republicans released a framework to provide federally funded health savings accounts (HSAs) for certain high-deductible ACA health plans. This proposal is one of many ideas being circulated on Capitol Hill. Further, U.S. House of Representatives Speaker Mike Johnson (R-La.) is racing to finalize a GOP healthcare package that likely combines bills that expand association health plans, HSAs and pharmacy benefit manager (PBM) reforms. On Dec. 4, 2025, a bipartisan group of rank-and-file members, led by Rep. Jen Kiggans (R-Va.) and Rep. Josh Gottheimer (D-N.J.), unveiled a plan for a one-year extension of ACA subsidies with income restrictions and extended enrollment. More than 30 members signed on, but Republican House leadership dismissed the idea, signaling continued deadlock. Conversely, Senate Minority Leader Chuck Schumer (D-N.Y.) plans to bring a three-year extension to the floor on Dec. 11, 2025, which is expected to fail.

Upcoming Events

The Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a Subcommittee on Education and the American Family hearing titled "Building Pathways: Advancing Workforce Development in the 21st Century" on Dec. 9, 2025, at 2 p.m.

The Senate Committee on Finance will hold a full committee hearing titled "Examining the Future of the U.S. Organ Procurement and Transplantation Network" on Dec. 11, 2025, at 11 a.m. 

Administrative Updates

Executive Order Updates

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

Personnel Updates

• Theresa Michele, longtime director of the Office of Nonprescription Drugs, is leaving her role at the U.S. Food and Drug Administration (FDA). The agency is moving her to a new role with FDA. Her deputy, Karen Murry, was announced to be her replacement.
• Center for Drug Evaluation and Research (CDER) Director Richard Pazdur has announced his retirement. Notably, after his abrupt departure, Pazdur met with U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. to share concerns about the agency's future direction.
• Tracy Beth Høeg has been named acting director of CDER.

Congressional Updates

Senate Finance Committee Unveils PBM Reform

Senate Finance Committee Chair Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Ore.) joined to introduce the "PBM Price Transparency and Accountability Act" bill.

The bill also has nine other Democratic cosponsors, in addition to Sen. Wyden, and 10 Republican cosponsors.

The bill would set detailed reporting requirements for PBMs that work with Medicare Part D prescription drug plans, require PBMs that serve Medicaid plans to pass Medicaid payments directly to pharmacies and require public health plans to let patients use any pharmacies willing to meet the plans' standard contract terms. The bill does not mention employer-sponsored health plans and their PBMs. A year ago, a similar PBM bill was moving through Congress in a package that included an employer plan PBM bill.

House Passes Hospital at Home Extension, Give Kids a Chance Legislation

The House passed two health-related measures last week. The Hospital Inpatient Services Modernization Act (H.R.4313) was adopted via voice vote. The legislation will extend the Medicare Acute Hospital Care at Home waiver for five years. The program is currently set to expire on Jan. 30, 2025. The Mikaela Naylon Give Kids a Chance Act (H.R.1262) was also passed by voice vote. The bill would reauthorize FDA's Rare Pediatric Disease Priority Review Voucher Program through Sept. 30, 2029. It also authorizes FDA to direct companies to study combinations of cancer drugs and therapies in pediatric trials. Both bills now head to the Senate to await further action.

Medical Foods and Formulas Access Act Introduced

The Medical Foods and Formulas Access Act has been introduced in the Senate as S.3304 and referred to the Senate Finance Committee. This legislation would require Medicare, Medicaid, the Children's Health Insurance Program (CHIP) and the Federal Employee Health Benefits (FEHB) Program to cover specialized formulas, vitamins, individual amino acids and other medically necessary foods prescribed by a physician for patients with certain gastrointestinal conditions or inherited metabolic disorders. It also provides state and federal safeguards to preserve existing coverage.

Sen. Roger Wicker (R-Miss.) is joined in introducing the bill by Sens. Amy Klobuchar (D-Minn.), Sheldon Whitehouse (D-R.I.) and Chuck Grassley (R-Iowa). In the House, Reps. John Rutherford (R-Fla.), Debbie Dingell (D-Mich.) and Jim McGovern (D-Mass.) are leading the companion measure.

MedPAC December Meeting

The Medicare Payment Advisory Commission (MedPAC) met Dec. 4-5, 2025, and discussed draft payment update recommendations for 2027, which the commission will vote on in January 2026.

The sessions addressed fee-for-service payment policies, payment adequacy for skilled nursing facility services, hospital inpatient and outpatient services and outpatient dialysis services, as well as sessions addressing several mandated reports on topics such as the Medicare ground ambulance data collection system and the home health prospective payment system.

Cassidy Presses AMA to Provide Requested Information

Senate HELP Committee Chair Bill Cassidy (R-La.) has sent a letter to the American Medical Association (AMA) regarding the group's role in generating and updating the Current Procedural Terminology (CPT) coding system. The letter expands upon a previous effort by Sen. Cassidy to investigate how the AMA assesses fees for its CPT coding system; he asserts that the AMA has refused to comply with that effort. "I am concerned that the status quo focuses on enriching the AMA at the expense of patients, while the organization subsequently uses the revenue to advance a political agenda that is not representative of the majority of the medical community," Sen. Cassidy wrote. "If you are unable to voluntarily reply in a fulsome and timely manner, the committee will consider other options to secure the information requested from the AMA." He requests a response by Dec. 15, 2025.

Regulatory Updates

ACIP Updates Childhood Vaccine Recommendations

The Advisory Committee on Immunization Practices (ACIP) has approved major updates to the 2025 childhood immunization schedule after reviewing extensive safety and efficacy data. Key changes include ending the universal Hepatitis B birth dose, now recommended only for infants of mothers who are HBsAg-positive or whose status is unknown, with later doses guided by shared clinical decision-making. The schedule also incorporates the latest COVID-19 vaccine formulation for all children six months and older, updates influenza guidance to trivalent vaccines, revises meningococcal B (MenB) dosing for adolescents, and clarifies timing for respiratory syncytial virus (RSV) protection with nirsevimab. Additional refinements address measles, mumps and rubella (MMR) recommendations for international travelers and Haemophilus influenzae type b (Hib) vaccine preferences for high-risk populations.

These changes aim to simplify dosing intervals, reduce administrative complexity and improve compliance among pediatric populations. Public health officials expect the streamlined schedule to influence provider practices, electronic health record prompts and state immunization programs nationwide. Though the updates are designed to boost vaccination rates and modernize immunization strategies, the removal of the universal HepB birth dose has sparked debate among medical organizations concerned about potential gaps in protection. ACIP emphasizes ongoing surveillance and stakeholder engagement to monitor implementation and outcomes.

FDA Launches TEMPO Digital Health Pilot

FDA has launched the Technology-Enabled Meaningful Patient Outcomes (TEMPO) for Digital Health Devices Pilot – a voluntary program to expand safe access to digital health tools for cardio‑kidney‑metabolic, musculoskeletal and behavioral health conditions. Built by FDA's Center for Devices and Radiological Health, TEMPO will test a risk‑based enforcement approach in which participating manufacturers can request targeted enforcement discretion (e.g., limited relief from premarket authorization or investigational device requirements) while they collect, monitor and report real‑world performance data and real-world evidence (RWD/RWE) from clinical use. The pilot is explicitly designed to keep pace with rapid, iterative software development and home‑based care models, and will solicit statements of interest beginning Jan. 2, 2026, with plans to select up to around 10 manufacturers in each of four clinical use areas aligned to chronic disease management.

TEMPO is tightly coupled to the CMS Innovation Center's new Advancing Clinical Care, Equity, and System Sustainability (ACCESS) model, which tests outcome‑aligned payments for technology-enabled chronic care and provides a reimbursement framework that can help providers adopt remote monitoring devices and artificial intelligence (AI)-enabled applications in routine practice. Under TEMPO, selected devices – potentially including wearables running on off‑the‑shelf platforms and tools leveraging AI – will be used with clinician oversight in outpatient settings, with manufacturers submitting safety/benefit data, risk‑mitigation plans, performance goals and timelines toward eventual FDA filings. FDA and CMS describe TEMPO as a bridge to mainstream integration. By reducing premarket friction while demanding transparent RWD/RWE and accountability through ACCESS, the program aims to accelerate patient access to personalized digital therapies, support health‑system uptake and inform future regulatory pathways – signals that stakeholders view as a pivotal step toward embedding digital health into standard treatment plans.

FDA Plans Single-Study Approval Path

FDA Commissioner Marty Makary has been reported to be considering a significant policy shift that would allow certain medical products to be approved based on a single pivotal clinical trial instead of the traditional two. The potential change aims to speed up innovation and reduce development costs while maintaining rigorous safety standards. Industry leaders have welcomed the proposal, noting its potential to accelerate access to life-saving therapies. Critics, however, caution that robust post-market surveillance will be essential to ensure patient safety.

HHS Encourages Use of Claude Government AI

HHS is urging employees across its agencies to begin using Claude Government, an AI tool designed for secure government applications, alongside ChatGPT. The directive, outlined in a Dec. 3, 2025, email from Deputy Secretary Jim O'Neill, reflects the department's commitment to leveraging AI for efficiency and decision support. Officials say the move will help streamline internal workflows and improve responsiveness to emerging health challenges. Training resources and usage guidelines are expected to follow in the coming weeks.

FDA to Deploy Agentic AI Internally

FDA announced plans to implement agentic AI systems within its regulatory operations to enhance data analysis and decision-making. These advanced AI models will assist in reviewing complex submissions, identifying safety signals and streamlining approval timelines. The initiative underscores FDA's commitment to modernizing its processes and keeping pace with technological advancements. Officials expect the deployment to improve efficiency without compromising regulatory rigor.

HHS Releases AI Action Plan

HHS released its 21-page Artificial Intelligence Strategy on Dec. 4, 2025, as a continuation of its year-long AI effort and as a follow-up to several directives, including the AI Action Plan, EO 14179 (Removing Barriers to American Leadership in AI) and Office of Management and Budget (OMB) memoranda M-25-21 and M-25-22. This strategy represents the next phase of HHS' push to make AI an integral part of the federal workforce's toolkit, integrating AI across internal operations, scientific research and public health programs. It fulfills HHS' commitment to leverage cutting-edge technologies to enhance efficiency, foster American innovation and improve patient outcomes in alignment with the Trump Administration's AI policy goals. Led by HHS' Acting Chief AI Officer Clark Minor, the plan puts a finer point on the Trump Administration's vision for AI by expanding its use throughout the department in a responsible, mission-driven manner. In Minor's words, the strategy is about "harnessing AI to empower our workforce and drive innovation across the Department."

The HHS AI Strategy is built on five core pillars that together provide a comprehensive roadmap for AI integration:

• ensure governance and risk management for public trust
• design infrastructure and platforms for user needs
• promote workforce development and burden reduction for efficiency
• foster health research and reproducibility through gold standard science
• enable care and public health delivery modernization for better outcomes

With intention to keep pace with rapid technological advances, these pillars will be revisited and updated as needed to maximize AI's impact across HHS.

It's worth noting how this HHS-wide plan dovetails with parallel AI initiatives in its sub-agencies, particularly FDA. Just days before HHS rolled out this strategy, FDA made headlines on Dec. 1, 2025, with a major AI deployment of its own. The agency announced it launched a secure, agency-wide "agentic AI" platform available to all FDA employees. This agentic AI system allows staff to use AI agents for complex, multi-step tasks (i.e. managing regulatory meeting schedules, assisting in pre-market product reviews or automating parts of post-market surveillance and inspections). Importantly, FDA's announcement underscored that AI has built-in human oversight and is optional for employees. The HHS strategy explicitly mentions that its "OneHHS" approach includes every division, naming FDA alongside U.S. Centers for Disease Control and Protection (CDC), CMS, National Institutes of Health (NIH) and others. FDA's agentic AI deployment is expected to be the first of many concrete steps within HHS agencies, as the strategy's guidance takes hold.

Ultimately, the strategy document signals a decisive shift in how HHS approaches AI: it aims to rid the agency of a fragmented collection of isolated pilot projects and establish coordinated AI capability. By aligning with previous AI documents out of this administration and by laying out clear responsibilities, HHS aims for an AI-innovation forward agenda for the coming years. The strategy's core message is that AI will be harnessed to augment the workforce, not replace it, improving how HHS employees do their jobs. It is worth noting that this document comes at a time of significant staff tumult, with the recent turnovers/replacement of several key leaders in the agency. The plan is ambitious in scope (topically ranging from information technology infrastructure to ethics), but also grounded in pragmatic steps (like inventories, policy updates and training programs). In the near term, it concentrates on modernizing internal operations and building a foundation of data, infrastructure and skills. In the longer term, it creates a foundation for public-private collaboration. As Deputy Secretary O'Neill put it, "By guiding innovation toward patient-focused outcomes, this Administration has the potential to deliver historic wins for the public – wins that lead to longer, healthier lives." With this strategy, HHS is effectively declaring that AI will play a central role in advancing the nation's health and well-being and positions HHS as leading the way in ensuring this technology is deployed in a responsible, secure and ultimately life-improving manner.

NIH Delays Onboarding Pending Hiring Panel

Despite lifting its hiring freeze in October 2025, NIH is delaying onboarding of new staff until HHS finalizes a strategic hiring committee. The panel will set priorities for recruitment and ensure alignment with broader workforce planning goals. Sources indicate the pause could affect critical research programs if prolonged. NIH leadership is working closely with HHS to expedite the process and minimize disruptions.

CMS Rescinds Nursing Home Staffing Rule Provisions

CMS has formally rescinded portions of the Biden-era nursing home staffing rule that were previously delayed under the One Big Beautiful Bill Act. The rollback, announced in an interim final rule on Dec. 2, 2025, removes requirements that providers argued were overly burdensome. CMS says the decision reflects stakeholder feedback and aims to balance quality care with operational realities. Advocacy groups remain divided, with some warning the changes could impact resident safety.

FDA Moves to Reduce Primate Testing

FDA issued draft guidance recommending reduced reliance on non-human primates for monoclonal antibody safety testing. Under the proposal, sponsors can use shorter toxicity studies and alternative species such as dogs or mini-pigs, paired with existing data from similar antibodies. The move aligns with FDA's broader effort to minimize animal testing while maintaining scientific integrity. Industry experts view this as a milestone in ethical research practices.

FDA Issues RFI on Nonprescription Drug Access

FDA has published a request for information (RFI) seeking input on strategies to expand access to nonprescription drugs. The agency is exploring ways to improve affordability and availability without compromising safety standards. Stakeholders are invited to submit comments on innovative approaches, including digital tools and streamlined labeling requirements. The feedback will inform future policy development aimed at empowering consumers and reducing barriers to care.

CMS Releases New State Guidance on Work Requirements

CMS issued state guidance on Dec. 8, 2025, implementing community-engagement (work) requirements under the Working Families Tax Cut Act. Beginning Jan. 1, 2027 (or earlier at the state option), certain non-elderly adults enrolled in Medicaid's adult group or comparable Section 1115 coverage will be required to complete 80 hours per month of work, community service, participation in a work program or half-time enrollment in education/training, or meet an income threshold equivalent to 80 hours at the federal minimum wage. The policy includes exclusions, such as for pregnant individuals, people with disabilities or serious medical needs, caregivers, veterans with specified disabilities, American Indian/Alaska Native individuals and others.

States must conduct substantial outreach, rely first on existing data sources to verify compliance and issue clear notices before any adverse action. Individuals who fail to demonstrate compliance receive a 30-day period to resolve the issue or claim an exception before coverage can be terminated, with full appeal rights preserved. CMS also clarifies that managed care organizations (MCOs) may not determine compliance and announces that further regulatory guidance – including an interim final rule – is expected by June 1, 2026.

This overhaul introduces far-reaching implications across the Medicaid landscape.

• States, payers and MCOs may experience shifts in enrollment, acuity profiles and capitation assumptions as beneficiaries cycle in and out of eligibility.
• States will need upgraded systems to track, verify and enforce monthly compliance, driving demand for technology, compliance, data integration and analytics solutions.

Given Medicaid's scale, these reforms have the potential to reshape federal and state budgeting, influence MCO contracting strategies, and alter state-level health-economics and delivery-system dynamics.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.