Health Headlines: December 2025

The House of Representatives passed a healthcare bill earlier this month effectively ending efforts to extend the expanded tax credits to subsidize Affordable Care Act (ACA) health plan premiums, which we previously discussed in our September 2025 newsletter. According to KFF (formerly, the Kaiser Family Foundation),the end of the subsidies will result in an estimated average increase of $1,016 in premium payments for subsidized ACA health plan enrollees in 2026, effectively doubling premiums.

The bill will allow for expanded association health plans, federal funding of cost-sharing subsidies, additional price transparency from pharmacy benefit managers, and the creation of choice accounts. The bill is expected to reduce the federal deficit by $35.6 billion over 10 years. The bill passed despite a last-minute effort by House Democrats and four Republicans to pass a petition forcing a vote on extending the subsidies for three years. The House will consider the petition during the first week of January, after the subsidies have already expired.

This month, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit heard arguments regarding the constitutionality of the qui tam provision of the False Claims Act (FCA). This appeal follows a federal judge’s 2024 ruling dismissing a whistleblower’s FCA claims on the grounds that the qui tam provision violates the Appointments Clause of the U.S. Constitution.

The qui tam provision of the False Claims Act allows private citizens, or “whistleblowers,” with information regarding potential false claims to raise concerns to the federal government so it can decide whether to pursue these claims. The qui tam provision has been in place since 1863 and is the source of a significant portion of the more than 1,000 FCA cases filed annually, many of which allege false claims in the healthcare industry. When a qui tam case is initially brought by a private citizen, the U.S. Department of Justice may decide to intervene and lead the prosecution, may dismiss the case, or may decline to intervene, allowing the private citizen to pursue the case. The government elects to intervene in approximately 20% of FCA cases.

The case before the Eleventh Circuit deals with qui tam claims in which the federal government has declined to intervene. Qui tam opponents argue that it is unconstitutional for an unappointed, private individual to exercise executive power by pursuing litigation on behalf of the federal government and seeking significant penalties from defendants. U.S. Supreme Court Justice Clarence Thomas commented on this issue in a 2023 dissent, raising concerns that the qui tam provision violates Article II. Justices Kavanaugh and Barrett signaled agreement that the qui tam provision may be inconsistent with the Constitution and should be considered by the Supreme Court in an appropriate case.

Supporters of a whistleblower’s ability to pursue an FCA claim without government intervention cite the qui tam provision’s established history as an enforcement mechanism to deter fraud and bring in significant settlement and judgment dollars to the government. They distinguish the role of the whistleblower from that of a government-appointed position because the whistleblower is not using government resources to pursue the cases but litigating in a manner more akin to a private fraud litigant.

The Eleventh Circuit has not yet issued an opinion after hearing arguments on this issue but appeared to weigh both the long-standing history of the qui tam provision and consideration of incompatibility with the Appointments Clause of the U.S. Constitution. A decision to uphold the lower court’s decision that the qui tam claims are unconstitutional could significantly shift the landscape of healthcare fraud claims, allowing fewer claims to move forward.

On December 29, 2025, a federal judge granted a preliminary injunction blocking the U.S. Department of Health and Human Services (HHS) 340B Rebate Model Pilot Program (the Pilot) from going into effect as scheduled on January 1, 2026. The order, issued by the U.S. District Court for the District of Maine, halts implementation of the Pilot while a lawsuit brought by hospital groups proceeds. As discussed in our August 2025 alert, under the Pilot, certain drug manufacturers would shift from providing up-front discounts under the long-standing 340B Drug Pricing Program to issuing rebates after the point of sale.

The underlying lawsuit, filed on December 1, 2025, was brought by the American Hospital Association, the Maine Hospital Association, and several safety-net hospitals. The plaintiffs contended that the Pilot was adopted without appropriate adherence to the Administrative Procedure Act’s notice-and-comment requirements, rendering the rollout procedurally unlawful. They also argued that requiring hospitals to pay full price up front and pursue rebates afterward could strain cash flows and divert resources from patient care.

On December 3, 2025, the Centers for Medicare & Medicaid Services (CMS) published an interim final rule titled “Medicare and Medicaid Programs; Repeal of Minimum Staffing Standards for Long-Term Care Facilities.” This new rule withdraws the portion of a previous rule that would have required long-term care facilities to have a registered nurse on-site at all times.

The prior rule, “Medicare and Medicaid Programs; Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting,” was published by the CMS in 2024. This rule established minimum staffing requirements for long-term care facilities that receive reimbursement from the CMS. Prior to the 2024 rule, existing long-term care facility staffing regulations required a registered nurse (RN) to be on-site for eight consecutive hours of a 24-hour day. The 2024 rule revised this to require long-term care facilities to have an RN on-site 24 hours a day, seven days a week. This rule was set to go into effect in the 2026 fiscal year.

The 2025 interim final rule repeals this portion of the 2024 rule. This comes after the U.S. District Court for the Northern District of Texas issued a decision on April 7, 2025, finding that the CMS exceeded its authority in enacting the “24 hours a day, seven days a week” provision of the 2024 rule. The 2024 rule’s other minimum nursing staffing levels remain in place.

On December 2, 2025, Judge Indira Talwani of the U.S. District Court for the District of Massachusetts enjoined the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) from implementing or enforcing a section of the Budget Reconciliation Act that would have blocked Medicaid reimbursements to Planned Parenthood clinics.

The legislation at issue is section 71113 of “an Act to provide for reconciliation pursuant to Title II of H. Con. Res. 14, Pub. L. No. 119-21, 139 Stat. 72, 300-01 (July 4, 2025) (‘Section 71113’ of the ‘Budget Reconciliation Act’).” Section 71113, enacted on July 4, 2025, provides in part that “[n]o Federal funds that are … provided to carry out a State [Medicaid plan] … shall be used to make payments to a prohibited entity for items and services.” It also includes in the definition of a “prohibited entity” an entity that “provides for abortions” other than specific cases permitted under the Hyde Amendment (such as when the pregnancy either threatens the life of the pregnant person or is the result of rape or incest).

The complaint, filed on July 29, 2025, alleged violations of Congress’ Spending Clause power and sought preliminary and permanent injunctive relief, as well as a declaration that section 71113 is unconstitutional. The plaintiff states claimed (1) that section 71113 failed to provide them with clear notice because it is “impermissibly ambiguous” in its definition of “prohibited entities” and (2) that restriction of which healthcare providers can receive Medicaid reimbursement functions here as an improper post-acceptance condition of federal funds that would “dramatically change the relationship between States and the federal government” because it “constitutes an unconstitutional retroactive condition that Plaintiff States could not have anticipated when they joined Medicaid.”

The District Court found that the plaintiff states “demonstrated a strong likelihood of success on the merits” of both claims. In granting the preliminary injunction, the District Court also found that the plaintiff states had standing to challenge section 71113.

This action was brought by 22 states (California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin) and the District of Columbia against HHS, CMS, Robert F. Kennedy Jr. in his official capacity as HHS secretary, and Mehmet Oz in his official capacity as CMS administrator.

The defendants appealed the order granting the preliminary injunction to the U.S. Court of Appeals for the First Circuit on December 4, 2025, and the District Court’s action is currently stayed pending the resolution of that appeal. A related action filed by Planned Parenthood is also pending, likewise before Judge Talwani in the District Court for the District of Massachusetts.