CMS issued the interim final rule (IFR), Medicaid Program: Community Engagement Requirement for Certain Individuals, after the market closed on Monday, June 1.
 
This IFR implements Sec. 71119 of H.R. 1 (also known as the One Big Beautiful Bill Act and the Working Families Tax Cut legislation), which conditioned Medicaid eligibility on completing 80 hours per month of community engagement activities (i.e., work, community service, or educational activities).
 
Statutory exceptions to community engagement requirements include people who are medically frail, which includes having a substance use disorder (SUD) or disabling mental disorder (DMD). The IFR does not define either SUD or DMD, but rather indicates that states will need to adopt lists of qualifying conditions and implement a process for individuals to request an exemption due to a condition excluded from the list. Importantly, the IFR clarifies that people with SUDs would only qualify for the SUD exemption if they have been in recovery for fewer than five years, and active treatment participation is not needed to qualify.
 
States are required to prioritize assessing exception eligibility using their existing data. For individuals whom states cannot verify as medically frail using their existing data, practitioners can submit documentation to demonstrate eligibility. Otherwise, individuals can self-attest to medical frailty and enroll in Medicaid for six months before information is required to substantiate their attestation. If states grant the medically frail exception, they would need to reassess this exception at least annually.

Congress directed CMS in H.R. 1 to implement community engagement requirements via an IFR, a type of regulation that bypasses a public comment process on a draft version of a rule before it takes effect. 
 
The NABH team will continue to review the IFR, which takes effect on July 31, 2026, the same day public comments are due. However, states do not need to implement the IFR’s provisions until Jan. 1, 2027.

Congressional leaders announced Wednesday night that the Substance Abuse and Mental Health Services Administration (SAMHSA) will reinstate grant awards the agency terminated on Tuesday.

SAMHSA had sent termination notices for about 2,800 awards, totaling approximately $2 billion in mental health and substance use funding. Congress showed bipartisan support to reinstate the funding, pressuring Health and Human Services Secretary Robert Kennedy to reverse the terminations.

The Substance Abuse and Mental Health Services Administration (SAMHSA) late Tuesday notified up to 2,800 awardees that the federal agency had terminated their funding, effective immediately.

SAMHSA has not released the number, type, or amount of cancelled awards; however, sources have reported the loss of grant funding could reach as high as $2 billion.  
 
SAMHSA Principal Deputy Assistant Secretary Christopher Carroll said in the termination notice that the agency is cancelling the awards to align with SAMHSA’s current priorities, including addressing “the rising rates of mental illness and substance abuse conditions, overdose, and suicide and their connections to chronic diseases, homelessness, and other challenges our nation’s communities face.”

However, SAMHSA grantees report that their terminated grant awards focus on these issues, including programs to provide services or training to address homelessness, serious mental illness among adults and serious emotional disturbances among children, first responder and naloxone distribution capacity, recovery supports, clinical best practices, and more. In addition, the size of these cuts will have a significant and negative effect on the broader behavioral healthcare system’s capacity.

If your organization or any of your community partners received a termination notice, please notify us at nabh@nabh.org. We will use this information to determine next steps to advocate for behavioral health funding with Congress and the Trump administration.

The Centers for Medicare & Medicaid Services (CMS) on Monday released the Notice of Funding Opportunity (NOFO) for the Rural Health Transformation (RHT) Program . Congress authorized the RHT Program as part of H.R. 1 (the One Big Beautiful Bill Act), allocating $50 billion to states over the next five fiscal years.

NABH encourages all members to review the NOFO and work with their states to support their RHT Program application. In the NOFO, CMS states that “all 50 U.S. States are eligible, even if they do not have a large rural population or any rural hospitals. We encourage every State to focus on how this funding could benefit its rural populations and consider applying.”

The RHT Program will grant cooperative agreements directly to states with approved applications. To be eligible for program funds, states are required to involve rural stakeholders during the application and execution of the program. NABH members would fall into this category because the NOFO includes “rural hospital CEOs, primary care providers, community leaders, patients, and tribal representatives” as examples.

CMS also requires applications to identify the organizations intended to receive RHT subawards from states, also known as subrecipients.

CMS will host two webinars for program applicants and interested stakeholders:

• Friday, Sept. 19 from 3 – 4:30 p.m. ET; register here.
• Thursday, Sept. 25 from 3 – 4:30 ET; register here.

States must submit applications by Wednesday, Nov. 5, 2025. CMS will only have one funding opportunity for this program and will announce awardees by Dec. 31, 2025.

The Centers for Medicare & Medicaid Services (CMS) will apply a 2.4% payment increase to inpatient psychiatric facilities in 2026, according to the Fiscal Year (FY) 2026 Inpatient Psychiatric Facility (IPF) Prospective Payment System (PPS) final rule the agency released Friday in the Federal Register.

The final rule also includes a slight increase in the outlier threshold as well as increases to the teaching and rural facility adjustments.

For the IPF Quality Reporting program, CMS will remove four quality measures: Facility Commitment to Health Equity, COVID-19 Vaccination Coverage Among Healthcare Personnel, Screening for Social Drivers of Health, and Screen Positive Rate for Social Drivers of Health.

The rule also noted CMS will modify the reporting period from one to two years for the 30-day Risk-Standardized All Cause Emergency Department Visit Following an IPF Discharge measure and will delay its initial use to the FY 2029 payment determination.

These changes align with the agency’s proposed rule. Click here for a summary of provisions that take effect on Oct. 1, 2025.

The Centers for Medicare & Medicaid Services (CMS) on Monday released its Calendar Year 2026 Physician Fee Schedule (PFS) proposed rule along with an accompanying fact sheet. 

CMS has proposed several significant changes to how Medicare reimbursement for practitioner services is generally calculated, such as a higher conversion factor for practitioners participating in a qualifying alternative payment model (+3.83%) compared with those who are not (+3.62%), and modifications to the practice expense methodology to capture increased indirect costs for office-based practitioners. 
 
NABH is pleased to see the proposed rule aims to improve access to behavioral healthcare services in various ways, such as creating three optional add-on codes to advanced primary care management that would better enable the provision of behavioral health integration and collaborative care model services, and by expanding coverage of digital therapeutics to include those to treat attention-deficit/hyperactivity disorder.
 
NABH is reviewing the proposed rule and will send more information to members soon. Please contact NABH Vice President of Public Policy Dan Schwartz if you have questions.

The House on Thursday, July 3 passed H.R. 1, the One Big Beautiful Bill, adopting Senate language that cuts Medicaid by nearly $1 trillion – a deeper cut than the original House bill’s $800 billion cut. 

The vote was 218 to 214. Republicans concerned about Medicaid cuts and who were originally opposed to the bill were persuaded by the bill’s inclusion of a Rural Health Transformation Program and assurances from the Trump administration about working with Congress to implement this bill— and the Rural Health Program in particular.
 
The Senate bill added the $50 billion rural program— distributed over five years — to offset some of the losses rural hospitals will face because of the provider tax phase down. A complicated and burdensome package, the rural provider fund provides just a tiny fraction of nearly $1 trillion in cuts the bill makes to Medicaid.

There are numerous unanswered questions about the Rural Health Program regarding language and implementation, access for rural mental health and SUD treatment providers, and the communities they serve. NABH will work with Congress, the administration and CMS to help ensure the program is implemented effectively.

Other opportunities to effect change include the congressional appropriations process and a potential second budget reconciliation bill in late 2025/early 2026.  
 
Thanks to all of the NABH members who contacted their representatives and senators. More than 1,500 members responded to our action alerts. Working with allied healthcare and patient organizations, we will continue this effort to educate Congress and the administration about the Medicaid cuts’ drastic effects on patients, communities, and providers as we seek solutions. 

The legislation now moves to President Trump’s desk for his signature.
 
NABH will release additional analysis and details as we learn more. Please contact NABH Vice President of Government Relations Andy Dodson at andy@nabh.org if you have questions. 

The Senate on Tuesday narrowly passed H.R. 1, the One Big Beautiful Bill Act, which would cut Medicaid by nearly $1 trillion – a deeper cut than the House bill’s already controversial $800 billion cut to the federal healthcare program.
 
The Senate passed the measure in a 51-50 vote, with Vice President Vance breaking a tie. Republican Sens. Susan Collins (Maine), Rand Paul (Ky.) and Thom Tillis (N.C.) joined Democrats in voting no.
 
The House must now accept the Senate changes to the bill or amend the legislation, which would force a Conference Committee between the two chambers — a move that congressional leaders are trying to avoid.
 
The bill did not change the provisions establishing a national Medicaid work requirement; however, exclusions for individuals with substance use disorder (SUD), a disabling mental disorder, or a serious or complex medical condition remain. The bill also includes more frequent Medicaid eligibility checks, and cost-sharing requirements for certain expansion populations, although exclusions for mental healthcare services and SUD services are included.
 
The Senate changed several other important provisions from the original House bill, including:

• Reducing the current 6% provider tax limit to 3.5% for states that expanded Medicaid under the Affordable Care Act (40 states and Washington, D.C.). This change would be phased in by lowering the limit by 0.5% each year between 2027 and 2031. And it makes a technical correction that ensures eligible tax programs include local “units of government.” 
• Beginning a phase down of state-directed payments to Medicare rates (110% in non-expansion states) in 2028. The bill expands “grandfathered” SDP programs to include those that have not been approved to date but where a “pre-print” has been submitted to the Secretary by date of enactment. It also gives the HHS secretary discretion in defining equivalent “Medicare” rates based on current or future regulations.  
• Creating a Rural Health Transformation Program (FY 2028–32) to support rural providers. The fund would allocate $10 billion annually from 2028 to 2032. The rural health facility definitions include community mental health centers and opioid treatment programs located in a rural census tract of a metropolitan statistical area. The bill’s use of funds includes definitions supporting access to opioid use disorder treatment services, other SUD treatment services, and mental health services.
• Permanently allowing high-deductible health plan members to get telehealth visits for free, even if they haven’t hit their minimum out of pocket spend and still qualify for tax-advantaged health savings plans.
• Updating the Physician Fee Schedule with a 2.5% bump for 2026 only.

NABH will continue to apprise members about the status of this legislation.

Please email NABH Vice President of Government Relations Andy Dodson if you have questions.