What the federal spending package does for hospitals: Questions and Answers

After a lengthy government shutdown in the fall, Congress and the White House managed to avoid a repeat and agree on a $1.2 trillion spending package for key federal programs.

President Trump signed the spending bill Tuesday afternoon, and it offers some key provisions hospitals and healthcare providers have been seeking.

Here’s a rundown on the key items.

Q: What’s the biggest win for health care in the package?

A: Healthcare organizations are celebrating key extensions for telehealth programs. Health systems have been pressing Congress and the White House for a multi-year extension for a couple of years and it finally happened.

The bill includes an extension of Medicare waivers for telehealth programs through the end of 2027.

In addition, the package also includes an extension of waivers for hospital-at-home programs through September 2030.

Since the end of 2024, telehealth waivers have been tied to short-term spending bills. Telehealth programs suffered serious disruptions during the government shutdown last fall.

Alexis Apple, vice president of public affairs at the American Telemedicine Association, told Chief Healthcare Executive® last week, “Our members are still feeling the impact of the last shutdown. Some members haven't even restarted or started telehealth services since the last shutdown.”

Q: Is there funding for rural hospitals?

A: The spending package extends two key Medicare programs that support rural hospitals through the end of the year: the Medicare-dependent Hospitals and Low-volume Adjustment programs. The programs help rural hospitals with a high volume of Medicare patients and those with only a small number of patients.

Both programs were slated to lapse, but Congress has preserved them a number of times.

Q: What’s in it for safety-net hospitals?

A: The spending package preserves funding to the Medicaid disproportionate share hospital (DSH) program, which was facing cuts. Those cuts are now averted until October 2027. The program offers additional support to hospitals with a high number of Medicaid patients.

Jennifer DeCubellis, president and CEO of America’s Essential Hospitals, welcomed the preservation of the funding and the telehealth extensions.

“These policies are even more critical in light of the onerous hospital cuts passed by Congress last summer,” she said in a statement.

Q: What about funding for the National Institutes of Health?

A: President Trump alarmed healthcare leaders and researchers when he proposed a 40% cut to the NIH’s budget. But Republicans and Democrats both objected to such steep cuts to the nation’s leading source of federal funds for medical research.

The final package offers a $48.7 billion budget for the NIH, an increase of about $415 million.

U.S. Sen. Maria Cantwell, a Democrat from Washington state, said last week, “This funding package shows that there remains strong bipartisan congressional support and understanding of the importance of supporting innovation and progress in medicine and healthcare.”

The measure also includes $9.2 billion for the Centers for Disease Control and Prevention. The president initially proposed a $5.2 billion budget last year.

Q: What’s the budget for the Department of Health & Human Services?

A: The agency will receive $116.8 billion in total discretionary spending, a $446 million increase over the 2025 fiscal year, the American Hospital Association says. The White House initially called for a $40 billion cut for the health department’s budget.

The Health Resources and Services Administration will get $8.9 billion, an increase of $929 million. The spending package also includes $1.2 billion for maternal and child health.

Q: What about medical education?

A: The Association of American Medical Colleges saluted lawmakers for funding for training doctors.

The package offers “funding for all Health Resources and Services Administration Title VII health professions and Title VIII nursing workforce development programs, largely maintaining funding levels close to those of previous years,” the AAMC says. “The bill also includes increases in funding for the Medical Student Education Program and the Children’s Hospitals Graduate Medical Education (GME) Program.”

The bill reauthorizes the Teaching Health Centers Graduate Medical Education program through the 2029 fiscal year.

Q: What would healthcare leaders have liked to see?

A: Hospitals and health systems have been urging Congress to restore tax credits supporting the Affordable Care Act. Those subsidies expired at the end of December.

The enhanced tax credits are not part of the spending plan, and industry analysts project millions will drop coverage due to higher premiums, which are doubling. Hospitals can expect to treat more patients without the ability to pay.