Telehealth Secured, PBMs Scrutinized in Latest Spending Bill

The newly signed federal funding bill marks a pivotal moment for U.S. healthcare policy by pairing short-term budget stability with long-term shifts in care delivery and drug pricing regulation. Signed into law by President Trump on February 4, the legislation extends key telehealth flexibilities, prolongs the Acute Hospital Care at Home waiver, and implements the most substantive pharmacy benefit manager (PBM) reforms to date.

Though overshadowed by the partisan standoff that briefly shut down the government, the healthcare provisions embedded in this “minibus” package carry implications that will resonate across health systems, payer networks, and digital infrastructure planning through the end of the decade.

A Lifeline for Telehealth Stability

Most notably, the bill extends Medicare telehealth flexibilities through December 31, 2027, preserving the temporary policies first granted during the COVID-19 public health emergency. This four-year extension offers rare clarity for health systems and digital health vendors that have spent the past two years navigating rolling expirations and uncertain reimbursement policies.

Also included is a five-year extension of the Acute Hospital Care at Home waiver, now running through September 30, 2030. This program allows qualifying hospitals to treat select patients at home under full inpatient-level reimbursement, contingent on meeting safety and staffing protocols. The extension signals federal confidence in the clinical and financial viability of hospital-at-home models.

In-home cardiopulmonary rehabilitation flexibilities were also extended through January 1, 2028. Additionally, the bill requires the Department of Health and Human Services (HHS) to issue guidance within one year on delivering telehealth services to individuals with limited English proficiency—a provision long sought by equity advocates and providers serving linguistically diverse populations.

The American Telemedicine Association (ATA) and its advocacy arm, ATA Action, praised the legislative package as a milestone for virtual care. Kyle Zebley, CEO of the ATA and executive director of ATA Action, called it “a significant and hard-earned win,” reflecting bipartisan commitment to modernizing care access.

From a policy planning perspective, these multi-year extensions buy time for regulators and stakeholders to consider permanent frameworks for remote care, balancing reimbursement parity, fraud safeguards, and digital equity without the pressure of imminent expiration dates.

PBM Reform Targets Hidden Pricing Structures

Less headline-grabbing but equally significant are the PBM-related provisions embedded in the funding bill. These reforms echo the bipartisan goals of the earlier Lower Costs, More Transparency Act, focusing on price clarity, rebate flow, and competitive market access.

Among the core changes:

• PBMs must separate their revenue from the list price of drugs in Medicare Part D, eliminating incentives to favor high-cost medications with large rebates.
• PBMs are now required to pass 100% of rebates to Medicare plans and report all pricing, reimbursement, and cost-sharing data to plan sponsors.
• The FDA must issue improved guidance on ingredient differences to help generic drug manufacturers bring alternatives to market faster.

While these reforms do not touch list prices directly, they aim to dismantle the opaque rebate structures that critics say distort formulary design and inflate patient costs. Merith Basey, CEO of Patients for Affordable Drugs Now, called the bill “a step toward stronger competition and transparency,” but emphasized that “Congress must go further to rein in Big Pharma.”

These provisions signal that federal scrutiny of PBMs is shifting from hearings and rhetoric to enforceable structure. For plan sponsors, health systems, and self-insured employers, the new requirements could create more visibility into drug pricing mechanics, and eventually, more leverage in contract negotiations.

What’s Missing and What’s Next

Despite the scope of the bill, some notable proposals were left on the cutting room floor. Enhanced Affordable Care Act premium tax credits, crucial to marketplace plan affordability, were not revived after their expiration on December 31, 2025. Nor did the bill include provisions from President Trump’s healthcare platform aimed at expanding consumer health savings accounts.

Still, the bill’s passage provides temporary stabilization for the Department of Health and Human Services and other agencies after a brief three-day shutdown. The Department of Homeland Security received only two weeks of funding due to ongoing partisan conflict, but the healthcare components emerged largely intact.

With regulatory mandates now stretching through 2027 and beyond, healthcare leaders have a defined runway to invest in remote care infrastructure, compliance frameworks for PBM data exchange, and home-based care models that align with new reimbursement certainty.

This is not just a bridge bill. It is a structural pivot. As telehealth, hospital-at-home, and prescription drug oversight enter multiyear regulatory phases, healthcare organizations must prepare not only to comply, but to compete.