Health Headlines – January 26, 2026

Supreme Court Nixes Sixth Circuit Decision on Abortion Referral Requirement for Title X Grants

On January 20, 2026, the Supreme Court issued an order vacating the decision of the United States Court of Appeals for the Sixth Circuit in Tennessee v. Becerra, 131 F.4th 350 (6th Cir. 2025). The case involved the State of Tennessee’s challenge to a 2021 rule adopted by HHS under the Biden Administration that required states receiving grants for family planning projects under Title X of the Public Health Service Act (“PHSA”) to provide nondirective counseling and abortion referrals (the “2021 Rule”). The Sixth Circuit upheld the 2021 Rule relying principally on Chevron-era precedent and declined Tennessee’s invitation to revisit that precedent in light of the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 412 (2024).  The Supreme Court’s order from last week remanded the case with instructions for the lower courts to dismiss the case as moot because the Trump Administration has disavowed the 2021 Rule and is permitting Tennessee to participate in Title X.

Title X of the PHSA authorizes HHS to award discretionary grants to fund family-planning projects and to promulgate rules attaching “appropriate” conditions to such grants. Section 1008 of the PHSA provides that, “[n]one of the funds appropriated . . . shall be used in programs where abortion is a method of family planning.” 

HHS’s interpretation of Section 1008 has ping-ponged over the years. In 1988, HHS adopted regulations prohibiting Title X grantees from providing counseling or referrals for abortion as a method of family planning. Affected grantees challenged that rule, and the Supreme Court upheld it in Rust v. Sullivan, 500 U.S. 173 (1991). Applying Chevron, which at the time was the prevailing standard for resolving disputes over agency interpretations of statute, the Rust court held Section 1008 is ambiguous with respect to the use of funds for counseling or referrals, and that the agency’s rule was based on a permissible interpretation of the statute because HHS adequately explained its choice. 

In 2000, HHS reversed course and adopted rules mandating that Title X projects provide nondirective counseling and referrals for abortion. The first Trump Administration flipped the regulations in 2019 to once again prohibit counseling or referrals for abortions. The Biden Administration changed the rule in 2021 again to require Title X projects to provide nondirective counseling and referrals for abortion. 

The 2021 Rule spawned two cases that ended up before the Sixth Circuit. The first was Ohio v. Becerra, 87 F.4th 759 (6th Cir. 2023). In Ohio, twelve states brought a facial challenge to the 2021 Rule, arguing that Section 1008 of the PHSA unambiguously prohibits HHS from adopting regulations that make abortion counseling and referrals a condition of Title X funding. The Sixth Circuit ruled that it was bound by the Supreme Court’s finding in Rust that Section 1008 is ambiguous with respect to counseling and referrals. Applying Step 2 of the Chevron framework, the Ohio court found that the 2021 Rule is a permissible interpretation of the statute.

Tennessee v. Becerra was the second case to reach the Sixth Circuit challenging the 2021 Rule.  There are two important differences between the Ohio and Tennessee cases. First, instead of the facial pre-application challenge in Ohio, Tennessee was an as-applied challenge, meaning that HHS had applied the 2021 Rule in deciding not to extend Tennessee’s Title X funding based on the agency’s determination that the State was not in compliance with the rule. 

Second, and more fundamentally, Tennessee was decided after the Supreme Court’s decision in Loper Bright. In Loper, the Court overturned Chevron USA v. Natural Resources Defense Council, decided in 1984, which established a legal doctrine known as Chevron deference.  Under the Chevron framework, courts were required to defer to an agency’s interpretation of an ambiguous statute if the agency’s interpretation was reasonable. Under the newly minted Loper standard, courts may not defer to an agency’s construction of an ambiguous statute but must instead exercise independent judgment to identify and apply the best reading of the statute. 

In Tennessee, the plaintiff argued that the Sixth Circuit was no longer bound by the Supreme Court’s holding in Rust or even its own decision in Ohio, because those cases were decided on the now defunct Chevron framework. But the Sixth Circuit disagreed that Loper automatically overturned all cases decided on Chevron, noting that the Loper decision states plainly that it “do[es] not call into question prior cases that relied on the Chevron framework.” In the court’s view, “while Loper Bright opens the door to new challenges based on new agency actions interpreting statutes, specific agency actions already resolved via Chevron deference analysis will not automatically fall.” On that basis, the Sixth Circuit again affirmed the 2021 Rule, as it did in Ohio. 

The Sixth Circuit’s decision in Tennessee was not unanimous. In Judge Kethledge’s dissenting opinion, he was skeptical of the viewpoint that “Chevron lives on in perpetuity as to any statute that the Supreme Court has ever deemed ambiguous under that doctrine.” Rather, he interpreted Loper to mean that to the extent that “a specific agency action” was ruled lawful under Chevron, that specific determination would not be revisited, but future agency actions—even those invoking the same statutory language—were fair game. “The ‘specific agency action’ held lawful in Rust was the 1988 Rule, which has since been rescinded. Thus, in this appeal, we have no occasion to defer to that holding.” 

Not long after the Sixth Circuit issued its decision in Tennessee, the Trump Administration restored funding to Tennessee’s Title X program. Despite having its funding restored, Tennessee opted to appeal the Sixth Circuit’s decision to the Supreme Court. In its petition for writ of certiorari, Tennessee asked the Supreme Court to remand the case with instructions to dismiss it as moot. In its petition, Tennessee argued that the Sixth Circuit’s ruling, if left intact, threatened to “undermin[e] the court’s transformative Loper Bright decision” and create “disuniformity” among the circuits.

In its order issued last week, the Supreme Court seemingly agreed that the Sixth Circuit’s decision was incorrectly reasoned since it affirmatively vacated the decision and remanded the case back to the lower court with instructions to dismiss the case as moot. In her brief concurrence, Justice Jackson said she would normally require a party seeking vacatur to establish equitable entitlement to that relief, but where, as in this case, “mootness occurs through the unilateral action of the party that prevailed in the lower court.” 

The Sixth Circuit’s decision is available here. The Supreme Court’s order is available here.

Reporter, Alek Pivec, Washington, D.C., +1 202 626 2914, apivec@kslaw.com

Bipartisan FY26 Funding Bill to Fully Fund Government Before January 30th Deadline includes Provisions Affecting Hospitals and Providers; Potential Shutdown Possible over Department of Homeland Security Funding

On January 23, 2026, by a vote of 341-88, the House of Representatives passed a bipartisan, three-bill minibus to fund the Departments of Labor, HHS, Education, Defense, Transportation, Housing and Urban Development and related agencies, totaling roughly $1.2 trillion in spending. HHS would be fully funded until October 2026. It includes provisions requiring hospital outpatient departments to obtain a separate National Provider Identifier (“NPI”), the extension of telehealth flexibilities, a reduction in cuts to Medicaid Disproportionate Share Hospital (“DSH”) payments, and other program renewals and extensions.

Under a House procedural measure, this three-bill minibus was combined with three other appropriations bills, including funding for the Department of Homeland Security (“DHS”), before being sent to the Senate for its approval this week. However, following recent events in Minneapolis, Senate Democrats—at least seven of whom are needed to join with Republicans to pass the appropriations package—are insisting on changes to the DHS/ICE provisions before approving the six-bill package. Democrats contend that the Senate could pass five of the six bills and renegotiate the DHS bill, but the House—which would need to approve the amended appropriations package—is out of session this week.

The package provides $116.6 billion in discretionary funding to HHS across a broad range of healthcare areas, including rural health, support for community health centers, skilled healthcare providers, the Centers for Disease Control and Prevention (“CDC”), Head Start, and block grants for mental health and substance use. 

Specific provisions of the package related to healthcare providers include the following:

• Hospital Outpatient Department Requirements – The bill would require off-campus hospital outpatient departments to obtain a separate NPI and use it to bill for services provided in the outpatient department. The deadline to obtain and start using the separate NPI is January 1, 2028. Hospitals would also be required to submit an attestation certifying compliance with Medicare requirements for outpatient departments to be sufficiently separate from the hospital. The bill also requires HHS-OIG to conduct an analysis of the reviews and determinations in connection with these rules by January 1, 2030.
• Telehealth Flexibilities – The bill extends telehealth flexibilities through 2027, including federally qualified health centers, rural health clinics, and providers of mental health services furnished through telehealth. Additionally, the acute-care hospital-at-home program is extended through FY30.
• Out-of-State Provider Eligibility – The bill allows eligible out-of-state providers to furnish items and services to Medicaid beneficiaries without facing screening or enrollment requirements above the minimum necessary requirements, such as the provider’s name and NPI.
• Medicaid Disproportionate Share Hospital Payments – The bill delays and reduces the contemplated DSH payment cut from $24 billion over three years to $8 billion in one year, FY28. The bill also gives states the option to distribute unspent DSH allotments from prior years to a hospital up to a modified cap, so long as the retroactive allotment of unspent funds does not extend farther back than September 2022. Additionally, the bill protects hospital funds previously received, prohibiting recoupment of payments already made to hospitals based on the previous methodology. Finally, the bill extends Tennessee DSH allotments through the end of FY 2026 and into 2027 and eliminates DSH allotment reductions that would have stretched into 2028.
• MA Plan Requirements – The bill imposes stricter requirements for MA plans to maintain accurate provider directories.
• Other Program Renewals and Extensions – The bill extends increased inpatient hospital payment adjustments for certain low-volume hospitals through 2027; add-on payments for ambulance services through 2027; and provides a 3.1% bonus for physicians who participate in advanced alternative payment models through 2026.

A copy of the bill is available here.

Reporter, Doug Comin, Atlanta, GA, +1 404 572 3525, dcomin@kslaw.com

OIG Releases Fall 2025 Semiannual Report

On January 21, 2026, OIG released the Fall 2025 Semiannual Report to Congress, summarizing its activities between April 1, 2025, and September 30, 2025.

The Fall 2025 Semiannual Report (the “Report”) begins with a message from the Inspector General that provides a summary of OIG’s accomplishments, including its financial impact, its partnership with law enforcement concerning health care fraud, and its oversight activities. The Report highlights OIG’s monetary impact of $2.43 billion, which reflects $12.70 in expected recoveries and receivables for every $1 invested in OIG’s work.

The Report focuses on OIG’s activities in six main categories: (1) combatting health care fraud, (2) strengthening financial integrity, (3) protecting patients from harm, (4) addressing public health crises, (5) advancing excellence in health and human service programs, and (6) strengthening cybersecurity.

Combating Health Care Fraud

• OIG used advanced data analytics to detect trends for additional follow-up from HHS programs or investigations, including, for example, skin substitutes and remote patient monitoring.
• OIG’s investigation of health care fraud and abuse during this period led to 352 criminal actions and 481 civil actions. This included the “largest health care fraud takedown in DOJ and OIG history,” which concerned durable medical equipment fraud, diagnostic testing, telemedicine, wound care, and drug diversion.
• OIG excluded 1,336 individuals and entities from participation in federal health care programs and partnered with Medicare Fraud Control Units on 1,115 joint investigations.

Strengthening Financial Integrity

• OIG’s oversight includes preventing and detecting improper payments, including, for example, improper autism service payments and provider relief payments.
• During this period, OIG also identified $146.4 million in potential savings and issued 195 recommendations “aimed at strengthening program performance and integrity.” This includes, for example, estimations regarding trauma team activation claims and charges that did not comply with Federal or Medicare requirements and payments for evaluation and management services that were provided on the same day as eye injections that were at risk for noncompliance with Medicare requirements.
• OIG has also prioritized oversight of managed care, including conducting “comprehensive financial reviews, detecting and preventing fraud within managed care plans, and ensuring payment accuracy.” This includes, for example, high-risk diagnosis codes, medical loss ratio remittances, MCO payments for personal care assistant services, and MCO fraud, waste, and abuse referrals.

Protecting Patients from Harm

• OIG’s oversight also focuses on fostering patient safety, advancing nursing home resident safety, and enforcement actions against abusive providers.
• The Report includes several examples of this oversight including:
  • Hospital identification of patient harm events
  • Patient Safety Organization programs
  • Safety in intermediate care facilities
  • Rates at which Medicare enrollees leave hospitals against medical advice
  • Enforcement actions to address “grossly substandard care in nursing homes” and ensure nursing home quality of care (such as preventing falls and complying with staff background checks)

Addressing Public Health Crises

• OIG focuses on the substance use disorder crisis and the behavioral health crisis.
• Examples of OIG’s actions include:
  • Addressing gaps in substance abuse treatment services
  • Access to medication to treat opioid use disorder
  • Enforcement actions to address illegal prescribing and distribution of opioids and other controlled substances
  • Behavioral health provider availability
  • Suicide-related follow-up care for children
  • Enforcement actions against behavioral health providers

Advancing Excellence in Health and Human Service Programs

• OIG conducts oversight regarding the costs and outcomes of HHS programs, including, for example, the following actions:
  • Controlling the grant payment system
  • Contract awarding, monitoring, and closeout
  • Sanitation facilities construction program projects
  • Domestic food facility inspections

Strengthening Cybersecurity

• OIG provides oversight of the Department’s cybersecurity, with a focus on protecting information systems and technology that store or use sensitive data, including risks to genomic data, and oversight of contractor cybersecurity.

The Report also addressed the impact of its recommendations, summarizing its finding that the 195 recommendations it issued identified $983.9 million “in questioned costs and funds put to better use.” 

The full Report can be found here.

Reporter, Lindsay Campbell, Los Angeles, +1 213 218 4032, lgreenblatt@kslaw.com

GAO Recommends Reforms to Organ Transplantation Oversight

On Thursday, January 22, 2026, the U.S. Government Accountability Office (GAO) released a report containing three main recommendations for improving the oversight and operations of the Organ Procurement Transplant Network (OPTN), a public-private partnership composed of Organ Procurement Organizations (OPOs) and hospital programs providing transplantation services. Specifically, the GAO recommends that HHS and the Health Resources and Services Administration (HRSA) (1) make a detailed plan for what steps are needed in the OPTN Modernization Initiative, (2) improve the transparency in what OPTN contractor fees are optional as opposed to mandatory, and (3) set firmer and more specific milestones for tracking providers’ effectiveness.

HRSA’s OPTN Modernization Initiative

Despite over 41,119 organ transplants occurring from deceased donors in 2024, there remains a nationwide shortage of organs and over 100,000 patients remain on the national organ transplant waiting list. To address the national shortage and concerns expressed by Congress, academics, and the press, HRSA launched the OPTN Modernization Initiative in March 2023. One of the first steps that HRSA implemented as part of the initiative was executing contracts to study seven areas of potential weaknesses:

1. Organ Matching IT System: Improving the OPTN’s system for matching donors and patients and addressing potential data security issues in the system.
2. Policy Development: Shortening the amount of time it takes OPTN to develop and implement new policies.
3. Organ Transportation: Improving the tracking of organs and addressing logistical challenges.
4. Organ Allocation: Ensuring that the distribution of organs is “equitable, consistent, and transparent[.]”
5. OPTN Oversight of Members and Patient Safety: Setting performance metrics for OPOs and transplant hospital and investigating patient safety concerns.
6. Communications: Improving transparency, such as keeping patients on the waiting list abreast of “when transplant programs decline organs on their behalf,” and sharing patient safety issues with both patients and their families.
7. Financial Management of OPTN Operations: Improving transparency in the process used to set the OPTN registration fee, a charge that transplant programs need to pay each month for each patient they add to the national waiting list.

In December 2025, HRSA reported that it had received the results of these studies but was still working on how to best address these issues.

The GAO’s Evaluation of the OPTN Modernization Initiative

In its January 2026 report, the GAO evaluated the effectiveness of HRSA’s OPTN Modernization Initiative by analyzing HRSA’s reports between 2019 and 2025, interviewing HRSA officials, and interviewing HRSA stakeholders such as OPOs, transplant hospitals, transplant surgeons, and transplant patients. Though the GAO lauded HRSA’s OPTN Modernization Initiative for its effort to study potential weaknesses, the GAO identified three actions that it believes are necessary to move the initiative forward:

1. Creating a Detailed Plan for Addressing the Identified Weaknesses: Though the GAO indicated that it was broadly happy with the contracts that HRSA entered to study issues with the organ transplantation system, the GAO also indicated that it believes HRSA’s plans for addressing these issues need a greater level of detail.
2. Studying Risks Related to Services that OPTN Contractors Charge: The GAO indicated that it did not believe HRSA did enough to study the lack of transparency in the charges that OPTN members pay to OPTN contractors. Specifically, the GAO is concerned that OPTN contractors may be vague in communicating what fees are required and which fees are for optional, supplemental services.
3. Setting Specific and Actionable Milestones for Measuring Success: The GAO indicated that HRSA’s Organ Transplant Affinity Group (OTAG) should create an action plan that “includes specific, actional steps with milestone completion dates and markers for measuring success[.]”

The GAO’s report, highlights, and recommendations can be found here.

Reporter Gregory Fantin, Washington DC, +1 202-626-9271, GFantin@kslaw.com

Client Alert

King & Spalding Client Alert: Navigating Recent Developments in the Health Information Technology Sector

New litigation and federal government policy statements demonstrate the ever-evolving nature of the health information technology landscape. These new developments will impact how businesses operating in the health information technology sector share information and operate going forward. On January 31, 2025, President Trump issued Executive Order 14192 “Unleashing Prosperity Through Deregulation,” that has led to several new proposed rules, RFIs, and FAQs aimed at accelerating AI adoption and deregulating health information exchange and access to information. In addition, a new lawsuit filed by Epic Systems, a health record manager against Health Gorilla and its clients, signifies that private actions will also influence how health data is shared and used. Actors in the health information technology sector will need to closely monitor shifting health data developments in both the public and private sectors. King & Spalding’s full Client Alert with additional insight is available here.

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Editors: Chris Kenny and Ahsin Azim

Issue Editors: Rebecca Hsu and Marcia Foti