Government Affairs—What You Need to Know 

ACOI Issues Call to Action to Halt Physician Pay Cut

On February 20, ACOI called on its members to contact their members of Congress in support of legislation that would halt the 2.83 percent cut to Medicare physician payments that took effect on January 1, 2025.  

The bipartisan Medicare Patient Access and Practice Stabilization Act (H.R. 879) would stop the 2.83 percent Medicare cut and provide a positive inflationary adjustment.  

ACOI encourages all its members to take a few minutes to send an email to their elected lawmakers through the ACOI Action Center.  

Administration Orders NIH Grant Funding Cuts

On February 7, the Trump Administration ordered a dramatic cut to National Institutes of Health (NIH) grants that support research institutions, with the change taking effect February 10, 2025. For any new grants, as well as existing awards, the NIH will cap the rate grants pay for “indirect funding” at 15 percent. Indirect funding is used to cover research overhead and administrative costs. These indirect costs historically are negotiated with the NIH and average about 30 percent. The NIH memo states the indirect cost cap will not be applied retroactively.  

A federal judge has issued a temporary restraining order (TRO), blocking the policy from taking effect. The judge must now decide whether to issue an injunction on the proposed change.  

ACOI is deeply concerned that this policy will have a devastating effect on the nation’s research infrastructure. It is estimated the policy would result in a loss of $4 billion in research funding.  Last week ACOI joined more than 600 organizations asking Congress to increase the NIH’s budget as it negotiates a Fiscal Year 2025 spending bill. In the letter led by Research!America, organizations asked lawmakers to support the continuation of a provision in the FY2024 Appropriations Act that prohibits changes to NIH Facilities & Administrative cost reimbursements.

The cut to NIH indirect funding is likely to be raised when the nomination of Jay Bhattacharya, MD to lead the NIH is considered by the Senate Health, Education, Labor and Pensions (HELP) Committee on March 5.  

Congress Faces Government Funding Deadline

It appears increasingly likely that Congress will opt to avoid a government shutdown by trying to pass another continuing resolution (CR) that will fund the government at current levels until September 30, 2025 — the end of the current fiscal year. At the end of last year, Congress passed a continuing resolution that keeps the government funded until March 14.  

Republicans and Democrats have been trying to reach an agreement on a spending bill, but the prospect of deal seemed to diminish last week when Republicans rejected demands by Democrats that any agreed upon spending bill prohibit the withholding of appropriated funds by the Administration.  Without a spending deal by March 14, lawmakers are faced with either a government shutdown or another CR.  

All eyes are on what other policies could hitch a ride to another CR, including extending the COVID-era telehealth flexibilities that expire on March 30, 2025. There is a good deal of skepticism that Congress will use the CR as a vehicle to stop the Medicare physician pay cut. Although, lawmakers have resumed conversations about resuscitating the health care package that was put forward at the end of 2024 that included relief from Medicare cuts and transparency requirements for pharmacy benefit management companies. Reducing or eliminating the Medicare physician payment cut will have a cost that will need to be offset by savings elsewhere.  

ACOI will provide updates as they become available on spending bill negotiations and the prospects for physician payment relief and the extension of telehealth flexibilities.