Holland & Knight Health Dose: June 2, 2026

Looking Ahead

The U.S. House of Representatives and U.S. Senate return from the Memorial Day recess facing a full agenda. The House is expected to reconvene for a short week on June 3, 2026, with plans to consider the Agriculture-U.S. Food and Drug Administration (FDA) appropriations bill among other items, and the Senate resumed session on June 1, 2026, and will focus on advancing the budget reconciliation package. In the Senate, leadership discussions and planning for an upcoming vote-a-rama – during which an unlimited number of amendments may be offered and voted on before final passage – are likely to dominate activity, though the vote-a-rama has still yet to be officially scheduled after the Senate departed for the Memorial Day recess without proceeding on the all night session as intended. President Donald Trump announced on June 1, 2026, that he would drop a push to include a $1.8 billion "anti-weaponization fund" in the bill, which had become a significant concern to leadership. With the push for the funding dropped, Republicans will look to get the package back on track for consideration. With summer approaching, both chambers face mounting pressure to act before adjourning for recess and in advance of the campaign season intensifying.

Upcoming Events

Congress

• The Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a hearing on June 3, 2026, titled "Protecting Our Children: Exposing the Dangers of Irreversible Gender Transition Procedures on Minors."
• The House Committee on Oversight and Government Reform will hold a hearing on June 3, 2026, titled "Universal Basic Fraud: Vulnerabilities in Medicaid Waiver Programs."
• The Senate Committee on Small Business and Entrepreneurship will hold a hearing on June 3, 2026, titled "Hearings to examine the burden of federal benefits cliffs on small businesses and workers."
• The Senate Committee on Homeland Security and Governmental Affairs will hold a hearing on June 3, 2026, titled "Hearings to examine COVID-19 injections and attacks on scientific publications."
• The Senate Select Committee on Aging will hold a hearing on June 3, 2026, titled "Hearings to Examine the Human Cost of Dangerous Foreign Drugs."
• The House Committee on the Judiciary will hold a hearing on June 4, 2026, titled "Medicines and IP: Balancing Innovation and Access."
• The House Committee on Foreign Affairs will hold a hearing on June 4, 2026, titled "Beijing's Poison Pipeline: The CCP's Role in the Fentanyl Crisis."
• The Senate Committee on Appropriations will hold a markup on June 4, 2026, of the Agriculture-FDA and Commerce-Justice-Science appropriations bills.

Federal Agencies

• The FDA will hold a hybrid meeting on August 25, 2026, titled "Patient-Focused Drug Development for Nonhealing Chronic Wounds."

Administrative Updates

Holland & Knight's Health AI Navigator

Holland & Knight's Health AI (Artificial Intelligence) Navigator is a centralized, interactive resource designed to help healthcare stakeholders track and interpret the rapidly evolving legal and regulatory landscape for AI in healthcare. The Navigator provides regularly updated summaries of federal and state legislative, regulatory and executive activity affecting the development, oversight and utilization of AI across the healthcare sector, including activity at Congress, HHS and the White House. In addition to a federal tracker, the Navigator features an interactive state‑by‑state map highlighting enacted and proposed laws impacting AI in healthcare, alongside curated analysis from Holland & Knight professionals. The tool is intended to support providers, payers, developers and investors seeking to understand emerging requirements, policy trends and compliance considerations as AI adoption continues to expand across healthcare.

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.

• Realigning United States Core Childhood Vaccine Recommendations with Best Practices from Peer, Developed Countries. This order announced that it is the policy of the Trump Administration to align the childhood vaccine schedule with scientific evidence and best practices from peer nations. The EO directs the Centers for Disease Control and Prevention's (CDC) Advisory Committee on Immunization Practices (ACIP) to take steps to review and update the childhood and adolescent vaccine schedule, as well as share with state government and other health officials the policies in the EO. The EO does not direct significant changes to vaccine policy and is more so a reiteration of the Trump Administration's goals on vaccine policies.
• Stephanie Haridopolos has been tapped as acting U.S. Surgeon General.
• Acting National Institute for Allergy and Infectious Disease (NIAID) Jeffery Taubenberger has departed, with other leaders within the National Institutes of Health (NIH) being reassigned to NIAID. The vast majority of the NIH centers now remain without a formal director.

Congressional Updates

Key Congressional Race Updates

• Texas Attorney General Ken Paxton (R-Texas) defeated incumbent Sen. John Cornyn (R‑Texas) in the May 26, 2026, Republican primary runoff following receipt of President Trump's endorsement in the lead up to the election. Paxton will now face current state Rep. James Talarico (D-Texas) in a November 2026 election.
• Analilia Mejia (D-N.J.) won an April 2026 special election to fill the vacancy in New Jersey's 11th District after Democrat Mikie Sherrill became governor. On June 2, 2026, Mejia will again appear on the ballot in a primary to secure the nomination for a full term.
• Thomas Massie (R-Ky.) lost his primary election to Ed Gallrein, a former military servicemember, who had received President Trump's endorsement.

SFC Ranking Member Wyden Pens Letter to Colleagues Outlining Future Priorities

Senate Committee on Finance (SFC) Ranking Member Ron Wyden (D-Ore.) sent a letter to his Senate Democratic colleagues on May 20, 2026, outlining priorities related to home care, long-term care and nursing home care, as well as announcing a larger long-term care initiative looking ahead to what a potential Democrat Senate majority would focus on. The letter emphasizes several recent policy changes to Medicaid in the One Big Beautiful Bill Act (OBBB), as well as the lack of advancement of a bipartisan bill to improve home and long-term services as the reason action is needed. The letter outlines several broad policy changes such as improving workforce development and retention, improving transparency and oversight, as well as ensuring care services remain dependable and consistently available.

House Continues Progress on Appropriations; Senate Begins Process in Earnest

To date, the House Committee on Appropriations has considered and advanced seven of 12 subcommittee fiscal year (FY) 2027 appropriations bills; the most recent to advance include the Transportation-Housing and Urban Development and the Interior subcommittee bills. The House Appropriations Committee is slated to consider several subcommittee bills, including the bill to fund the U.S. Department of Health and Human Services (HHS), on June 5 and June 9, 2026. In addition, the House Committee on Rules is expected to meet and consider the Agriculture-FDA bill and any potential amendments prior to the bill being considered on the House floor. The Senate is expected to continue holding various budget hearings in June 2026 and will soon kick off the appropriations process in earnest by agreeing to topline numbers and moving legislation through the Committee, including for the Agriculture-FDA, Commerce-Justice-Science and Legislative Branch bills. The biggest "x-factor" in the appropriations process remains the passage of the reconciliation package to fund certain activities of the U.S. Department of Homeland Security, which Congress did not pass prior to adjourning for the Memorial Day recess. While committees in both chambers move ahead on appropriations, government funding is slated to run out on September 30, 2026, making another continuing resolution until after the November 2026 elections a likely outcome in the interim.

Regulatory Updates

OPM, Treasury, DOL and HHS Release Final IDR Rule

The Office of Personnel Management (OPM) - as well as the U.S. Departments of the Treasury, Labor and HHS - issued on May 27, 2026, a long-awaited final rule regarding Independent Dispute Resolution (IDR) operations. The No Surprises Act (NSA) signed into law in 2020 and made effective in 2022 protects patients from surprise out-of-network medical bills and established the federal IDR process that providers, emergency facilities and providers of air ambulance services and health plans may use to determine the out-of-network rate for qualified items and services. However, the federal IDR process has been fraught with challenges, which this final rule aims to mitigate.

Specifically, the departments are finalizing several notable changes to the federal IDR process, including:

• additions to the open negotiation notice and establishment of a response to facilitate engagement prior to initiation of the IDR process
• requiring insurance plans to provide claim codes to out-of-network providers to indicate whether the item or service is subject to the federal IDR process, among other things
• greater flexibility to batch up to 50 line-items of qualified IDR items and services that are linked by patient and/or service type
• numerous changes to improve the timeliness of IDR eligibility determinations
• a lower administrative fee of $15 per party per dispute, rather than $115, regardless of the amount in dispute or the dispute's eligibility

The effective date will be 60 days after publication in the Federal Register, while the $15 administrative fee per party per dispute will be applicable to disputes initiated on or after five business days after the publication of the final rule. Many other changes, including modifications to the open negotiation process and eligibility review, will apply to disputes with open negotiation periods beginning 90 days after the departments issue guidance announcing that the functionality supporting these provisions has become available.

FDA Issues New Guidance Documents

The FDA released several new draft and final guidance documents on May 28, 2026, including:

• Bioequivalence Studies with Pharmacokinetic Endpoints for Drugs Submitted Under an Abbreviated New Drug Application. Final guidance outlining recommendations for applicants planning to submit bioequivalence information as part of an abbreviated new drug application (ANDA). The final guidance also discusses how it is applicable to immediate-release and modified-release oral dosage forms.
• Content of Human Factors Information in Medical Device Marketing Submissions. Final guidance from the Center for Devices and Radiological Health (CDRH) to provide a risk-based framework to guidance manufacturers and FDA staff on human factors information that should be included in a marketing submission to CDRH. For regulatory submissions currently pending with the FDA after publication of the guidance, as well as submissions received prior to August 1, 2026, the FDA notes it generally does not anticipate manufacturers will be ready to include the recommended information in their submissions. In tandem with the release of the final guidance, CDRH also announced it will hold a town hall on July 22, 2026, from 1-2 p.m. ET regarding the final guidance.
• Statistical Approaches to Establishing Bioequivalence. Final guidance to replace guidance previously released in February 2001 regarding how to establish and demonstrate bioequivalence for all drug products, specifically sponsors who intend to use equivalence criteria in analyzing in vivo or in vitro studies for various approval pathways and amendments.
• Oncology Pharmaceuticals: Streamlined Nonclinical Safety Studies for Biologics and Conjugated Products. Draft guidance supports sponsors who wish to use non-clinical safety assessments in the development of certain oncology medicines. The draft guidance when finalized is intended to reduce the use of animal studies, particularly for medications used in the treatment of cancer. The guidance provides recommendations for general toxicological studies, focused on three-month studies for certain oncology products, and allows for the use of approaches supplemented with new approach methodologies (NAMs), which have been of significant attention by the FDA this year and last. The guidance also clarifies when the FDA believes animal studies may be unnecessary, including cases with limited pharmacologic activity, and encourages more targeted approaches such as using a single species or replacing longer studies with risk‑based, weight‑of‑evidence assessments.
• Drug and Device Manufacturer Communications with Payers, Formulary Committees and Similar Entities. Revised draft guidance to provide answers to common questions regarding the communication of healthcare economic information for approved drugs and approved or cleared medical devices.
• Leveraging Prior Knowledge in the Development of Human Gene Therapy Products Incorporating Gene Editing. Draft guidance outlining the FDA's recommendations about how sponsors may leverage existing knowledge to increase review efficiency and accelerate product development, including for chemistry and manufacturing, as well as controls, non-clinical and clinical prior knowledge. The guidance is specifically focused on genome editing products, but some recommendations, if or when finalized, may be applicable to cell and other gene therapy products.

New Proposed Rule Would Make Significant Reforms to Federal Funding Processes

The Office of Budget and Management (OMB) released a proposed rule on May 28, 2026, that would reshape oversight of federal funding, including grants and cooperative agreements. It would give OMB and federal agencies broader authority over funding decisions by adding new limits on recipient activities and introducing political considerations into the process.

The proposed rule would revise several provisions in 2 C.F.R. Subtitle A and reverse some policy choices made by previous administrations. Key changes include revised conflict-of-interest rules, new disclosure requirements for project planning and design, the removal of fixed-amount awards and subawards, and a requirement that agencies without an existing chapter in 2 C.F.R. Subtitle B create one to support more consistent implementation.

The proposed rule also would restrict the use of federal funds for activities tied to several Trump Administration policy priorities, including diversity, equity and inclusion, gender identity and certain youth transition-related care. It also adds protections for faith-based organizations. If finalized, these changes would give agencies tighter control over grantmaking and reduce the role of peer-review-based funding decisions.

CMS Finalizes IOTA Model

The Centers for Medicare & Medicaid Services (CMS) released the final Increasing Organ Transplant Access (IOTA) Model rule on May 28, 2026, for performance year (PY) two, finalizing several changes originally proposed earlier this year while declining to move forward with others. CMS notes throughout the rule that certain proposals not finalized at this time may be revisited in future rulemaking.

Among the most notable provisions, CMS:

• finalizes the proposed modification to the eligible kidney transplant hospital criteria to exclude veteran's affairs medical facilities and military medical facilities from PY 2-6
• finalizes an increase in the low-volume threshold from a minimum of 11 kidney transplants annually during each baseline year to 15 transplants for patients 18 years or older, regardless of payer
• finalizes updates to the composite graft survival rate measure; beginning in PY 2, CMS will risk-adjust the observed graft survival rate for each PY to account for differences among IOTA participants in donor and candidate characteristics expected to influence graft survival
• finalizes inclusion of Medicare Advantage beneficiaries in the calculation of both upside and downside risk payments
• declines to finalize the proposed reduction in the maximum upside payment from $15,000 to $10,000; CMS notes that its final decision to leave the upside risk payment at $15,000 came after updated analyses from the CMS Office of the Actuary that showed an increased incentive effect from higher payments, which could ensure more beneficiaries receive kidney transplants and yield additional savings for the Medicare Trust Fund
• finalizes a requirement that downside risk payments be remitted to CMS in a single payment within 60 days of a demand letter
• declines to apply broader Extreme and Uncontrollable Circumstances (EUC) flexibilities, instead continuing to use the existing Quality Payment Program EUC framework
• finalizes, without modification, requirements for IOTA participants to notify Medicare beneficiaries within 10 days when there is a change in the beneficiary's waitlist status; see Table 11 on page 190
• removes voluntary Health Equity Plan submissions consistent with EO 14151
• finalizes authority for CMS to terminate an IOTA participant if HHS or the Organ Procurement and Transplantation Network (OPTN) determines the participant violated OPTN policies, management and membership requirements, or applicable HHS regulations

The final rule comes amid significant proposed changes and other changes in the implementation phase related to organ donation and transplantation, as well as larger shifts in CMS payment policies.

CMS Issues Two Rules Implementing Portions of OBBB: Rules to Cap Medicaid State-Directed Payments, Implement Community Engagement Requirements Released

CMS released on May 20, 2026, and June 1, 2026, respectively, two rules implementing changes to certain Medicaid processes that were included in H.R. 1, the OBBB. The proposed rule released on May 20, 2026, would enact major changes to the regulations that govern state-directed payment (SDP) programs, while the interim final rule (IFR) with comment period issued on June 1, 2026, implements statutory requirements from OBBB related to community engagement requirements or work requirements for Medicaid beneficiaries.

CMS Proposed Rule on SDPs:

• The proposed rule codifies and builds upon guidance issued by CMS late last year and in February 2026, implementing statutory payment limits for SDPs and capping average commercial rates paid in states based on whether a state did or did not expand their Medicaid programs under the Affordable Care Act. The proposed rule has a public comment period which closes July 21, 2026. For a more in-depth overview of the proposed rule, identification of questions that remain unanswered, as well as analysis regarding where the proposal rule may exceed statutory direction, please see our recent Holland & Knight alert.

CMS IFR on Community Engagement Requirements:

• CMS also released an IFR with comment period on June 1, 2026, implementing a statutory requirement pursuant to OBBB to mandate certain adults enrolled in Medicaid to satisfy an 80-hour-per-month community engagement or work requirement. The rule takes effect on July 31, 2026, giving states just under two full months to implement significant changes to their processes, with changes to generally be implemented no later than January 1, 2027. States can and have sought to implement these changes earlier. Pursuant to the IFR, states are required to verify an individual's qualifying medical condition and how the condition impairs compliance with the community engagement requirement.

Individuals ages 19 through 64 will be required to demonstrate that they are meeting the work requirement activities, with certain exemptions for individuals who are pregnant, postpartum, disabled or medically frail, as well as veterans with a total disability rating, American Indian or Alaskan Native individuals, parents or caregivers of young children, those complying with existing requirements under the Supplemental Nutrition Assistance Program or Temporary Assistance for Needy Families Program, and certain others. Individuals subject to the work requirement may meet the requirement on a monthly basis if they work, complete community service or participate in a work program for no fewer than 80 hours. Individuals may also meet the requirement if they enroll in an educational program at least part-time, complete a combination of the aforementioned activities or have a monthly income that is not less than the federal minimum wage times 80 hours.

States may offer hardship exemptions in certain circumstances. In addition, states must determine how many months an individual meets the requirement and may complete more frequent verification checks between renewals. If a state cannot verify that an individual meets the requirement, that person must be provided 30 days to verify they meet the requirement. Those disenrolled from Medicaid for failing to verify the requirement may reapply for Medicaid coverage. Public comments may be submitted through July 31, 2026.

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.