Congress Continues Federal Government Funding Negotiations Ahead of Looming Deadline

The U.S. Senate is debating a bipartisan $1.2 trillion government funding package that would keep the federal government open for the rest of fiscal year (FY) 2026, through September, and extend several key healthcare programs set to expire at the end of the month.  The spending package was adopted by the U.S. House of Representatives on Thursday, January 22.  If the Senate fails to pass the spending plan by Friday, January 30, federal government funding will run out for several key agencies and prompt a partial shutdown.

The agreement includes funding for the Departments of Health and Human Services (HHS), Defense, Homeland Security (DHS), Labor, Education, Transportation, and Housing and Urban Development.

The healthcare proposals in the legislation would renew Medicare telehealth coverage for two years and hospital-at-home coverage for five years, boost pay to physicians participating in Medicare alternative payment models, and require greater transparency and flat fees from pharmacy benefit managers (PBMs).  It would also extend the low-volume hospital adjustment, the Medicare-dependent hospital program, and further delay scheduled Medicaid DSH cuts.  Notably, a provision requires health systems to assign unique identification numbers for hospital outpatient departments (HOPDs) as a condition of payment under Medicare or group health plans, enabling the Centers for Medicare & Medicaid (CMS) to track pricing and potentially mark a step toward site-neutral Medicare reimbursements.

Connecticut’s congressional delegation joins most Democrats in opposition to the bill over appropriations for DHS’s Immigration and Customs Enforcement (ICE), with all of Connecticut’s U.S. representatives voting against the bill.

The package does not address the enhanced subsidies for health insurance exchange plans that lapsed at the end of 2025.  Debate over the expiring subsidies fueled the 43-day federal government shutdown that ended in November 2025.

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