Federal Workforce Programs, Medicare Payment Impacted by Congressional Reconciliation Bill

Congressional Republicans have approved their budget reconciliation bill, which is being referred to as the “One Big, Beautiful Bill” by President Trump. After securing support from several Republican holdouts, the U.S. House of Representatives approved the measure on May 21 by a vote of 215-214, with Democrats united in opposition. The measure seeks to extend $4.5 trillion in tax cuts while cutting federal spending by $1.7 trillion, as proposed by the president. While the measure impacts scores of federal programs, federal workforce programs and Medicare payment policy are two that may be of greatest interest to pathologists and laboratory professionals. While there are some positives with the bill, there are also areas for significant concern.

Medicare Payment Policy

ASCP has been lobbying Congress for years to address structural instability in Medicare’s physician fee schedule (PFS), which not only pays for physician professional services but also pays for the related technical services performed by laboratory professionals. For years now, PFS payment rates, which are updated annually, have continued to lose ground to inflation. Since 2001, PFS payments have declined in real terms by 33 percent. Importantly, the reconciliation bill would add an inflationary update to the PFS of .75 percent of the Medicare Economic Index (MEI), a measure of the medical practice cost inflation. For 2025, the MEI is projected at 3.5 percent.

That said, the Congressional Budget Office has raised concerns about the massive $2.3 trillion increase the bill would have on the U.S. debt, which it said would trigger mandatory spending cuts, known as sequestration. These automatic spending cuts would result in approximately $500 billion in cuts to the Medicare program between 2027 and 2034. This would amount to a 4 percent reduction to most Medicare spending, including payments to physicians, healthcare providers, hospitals, Medicare Advantage plans, and others. ASCP will be working with the AMA and others to urge the Senate to take action that would prevent these cuts from impacting Medicare.

Workforce Programs

One bright spot in the area of workforce is that the bill incorporates the provisions of the Tomorrow’s Workforce Act. The legislation would allow individuals to use their 529 funds to cover the costs of completing an accredited laboratory training program, seeking professional certification, and paying for test preparation courses and related materials. ASCP has been working with a coalition of more than 900 organizations that are part of the Tomorrow’s Workforce Coalition to get Congress to approve the Freedom to Invest in Tomorrow’s Workforce Act.

That said, the reconciliation bill hits a number of programs key to developing the physician and laboratory professional workforces, such as federal student loan programs. 

The bill would (1) eliminate undergraduate subsidized loans; (2) eliminate the Grad PLUS loan program; (3) cap loans for existing borrowers; (4) change the formula for how much federal loans students could obtain; (5) set strict limits on Parent PLUS loans and bar them from being forgiven under the Public Service Loan Forgiveness (PSLF) program or included in Income Contingent Loan Repayment Programs (ICRP); (6) restrict eligibility for Pell Grants; (7) eliminate time spent in medical residency programs from counting toward the PSLF program; and (8) consolidate ICRPs into the Administration’s proposed Repayment Assistance Plan. All told, these changes would increase the cost of financing college education and could reduce interest in medical and healthcare careers.

In response to these cuts, ASCP recently signed a letter with 31 medical organizations to congressional leaders opposing these cuts. A copy of that letter is available here.