U.S. funding bill extends Medicare telehealth, reforms PBMs
ILLINOIS, UNITED STATES — A sweeping federal funding package signed on February 3, 2026 by President Donald Trump extends Medicare telehealth flexibilities through 2027 and advances pharmacy benefit manager (PBM) reforms, delivering long-sought stability for hospitals and health systems while ending a brief government shutdown.
According to a report from Healthcare Finance News, the legislation, which funds the Department of Health and Human Services (HHS) and cleared the Senate 71-29 and the House 217-214, preserves pandemic-era virtual care policies. On one hand, legislation includes bipartisan prescription drug pricing reforms that will enhance Medicare Part D transparency.
Medicare telehealth and hospital-at-home extended
The bill extends Medicare telehealth flexibilities through December 31, 2027, and the Acute Hospital Care at Home waiver through September 30, 2030. In-home cardiopulmonary rehabilitation flexibilities were extended through January 1, 2028.
The multiyear extensions that health systems obtained will eliminate the workforce planning challenges that have emerged from digital health investments and their care redesign efforts.
During COVID-19, many hospitals implemented virtual platforms and hospital-at-home programs, which included remote monitoring and virtual consults, together with home-based acute care as part of their standard operations.
Telehealth advocates hailed the move as a critical win.
“This is a significant and hard-earned win for ATA Action, the ATA and our members, as well as for patients, caregivers, clinicians and healthcare organizations, demonstrating the strength of sustained, credible, strategic advocacy,” said Kyle Zebley, CEO of the American Telemedicine Association (ATA) and executive director of ATA Action.
“We are deeply grateful for the continued bipartisan, bicameral backing of our congressional champions, holding steady on their support for telehealth and virtual care services,” Zebley added.
The bill also requires HHS to issue guidance within one year on providing telehealth services to individuals with limited English proficiency, a provision that may prompt hospitals and clinics to reassess language access capabilities across digital platforms.
“These multiyear extensions will give government agencies, legislators and advocates needed time to hammer out the details of permanent provisions,” said Alexis Apple, deputy executive director of ATA Action.
PBM reforms target Medicare Part D transparency
Beyond telehealth, the funding measure includes the Q1/Q2 drug pricing provisions previously part of the Lower Costs, More Transparency Act.
The reforms separate PBM revenue from the price of drugs in Medicare Part D and require PBMs to report pricing data to plan sponsors and pass 100% of rebates to Medicare plans.
The measure also creates a requirement for the U.S. Food and Drug Administration (FDA) to establish clear distinctions between drug ingredients. The advocates believe this requirement will assist generic manufacturers in developing lower-cost alternatives to market.
For hospitals and clinics operating outpatient pharmacies or managing high drug spend, greater transparency in Part D could influence formulary decisions and patient affordability strategies.
“Strengthening competition and increasing transparency are key to lowering prescription drug prices,” said Merith Basey, CEO of Patients For Affordable Drugs Now.
“One in three Americans is unable to afford their prescriptions, and Congress must go further to tackle the root causes of high drug prices and rein in Big Pharma,” Basey added.
Healthcare leaders now face the task of translating these policy extensions into long-term operational strategy while awaiting potential permanent reforms.
