Bringing you the latest news impacting our network from Congress and the Administration.
In this Edition:
Medicaid Risks Shift to Reconciliation 3.0
Escalating Focus on “Waste, Fraud, and Abuse”
Here We Stand Hill Day + New Resources for You!
New Roadblock for Bipartisan Housing Bill Amidst White House Objections
Join Us for the Next Capitol Conversations Webinar
May 21, 1PM ET
What We Are Reading
Medicaid Risks Shift to Reconciliation 3.0
With Congressional action and the President’s signature, the Department of Homeland Security (DHS) is now funded through the end of the fiscal year. As we shared previously, the reconciliation instructions in this package applied only to immigration and homeland security committees and as such, the final DHS funding agreement did not include new healthcare cuts. However, House passage was not straightforward.
Not so fast
The measure cleared the chamber following a nearly five‑hour vote and only after Republican leaders made explicit commitments to hard‑line members to facilitate a third reconciliation bill later this year. That assurance effectively positioned this effort as the second of potentially three reconciliation bills in this Congress.
Now what?
While the timing, legislative vehicle, and degree of internal GOP unity remain uncertain, leadership’s promise of a third bill materially increases the likelihood that Budget Reconciliation 3.0 moves forward. Unlike Reconciliation 2.0, a third package could include instructions to committees with jurisdiction over Medicaid and other health programs.
What’s at Stake?
Reconciliation 3.0 is widely expected to focus on an expanded “anti‑fraud” agenda and renewed Medicaid spending reductions. Options could include further eligibility restrictions, benefit or payment changes, financing limits, or other program integrity policies. Specific details remain weeks away, but healthcare—and Medicaid in particular—now represents the central area of concern as Congress turns its attention to a possible next phase of reconciliation.
What can you do?
Use our newly updated Here We Stand resources to schedule meeting(s) with your members of Congress: make your voice heard with the key message “no more cuts to Medicaid.” Be on the lookout for a sign-up for one-on-one assistance beginning the week of May 25 to support your further advocacy-related efforts using Here We Stand materials.
Escalating Focus on “Waste, Fraud, and Abuse”
In recent weeks, the Administration and Congressional Republicans have intensified efforts framed as combatting “waste, fraud, and abuse” (WFA), with significant implications for Medicaid providers—particularly those delivering home‑ and community‑based services (HCBS). These actions come as providers continue to face severe workforce shortages, rising administrative demands, and payment pressures, raising concern that WFA initiatives may function less as targeted oversight and more as a blunt instrument for reducing services and spending.
More Federal action
At the Administration level, CMS Administrator Oz announced that states are being asked to rapidly revalidate Medicaid providers operating in “high‑risk” areas. That announcement was followed by letters issued April 23 to all Governors and State Medicaid Directors, giving states just 10 business days to indicate whether they will commit to expedited revalidation of high‑risk providers and submit a proposed timetable, alongside a separate 30‑day deadline for a broader two‑year revalidation strategy. CMS also directed states to explain how they will assess enrollment for providers without National Provider Identifier (NPI) numbers—an issue of particular consequence related to HCBS, where many direct care workers do not hold NPIs and state practices vary widely.
Now what?
From a provider perspective, these directives raise more immediate operational concerns. Although states are not explicitly required by statute to comply, CMS warned that states’ responses will factor into ongoing fraud risk assessments, effectively pressuring states to act quickly. Accelerated revalidation timelines, heightened scrutiny of HCBS, and new expectations around worker identification could disrupt services, delay payments, and further destabilize the caregiving workforce—especially in aging and disability services. These concerns are reinforced by Administration talking points that question the legitimacy of paid caregiving and repeatedly frame HCBS as work that families “used to do for free.”
What’s ahead
Congressional activity adds another layer of uncertainty. Several Republican lawmakers have introduced sweeping WFA legislation, including Senator Joni Ernst’s 17-bill package entitled Protecting American Taxpayers Act and House proposals from Budget Chairman Arrington and Oversight Chairman Comer. While these measures are problematic on their own, providers are particularly concerned that elements of this legislation could be folded into a potential third reconciliation package, creating a new pathway for Medicaid reductions under the banner of fraud prevention. Taken together, these actions signal growing financial, operational, and workforce risk for Medicaid providers, with HCBS squarely in the spotlight.
Here We Stand Hill Day + New Resources for You!
Our advocacy efforts include our recent April 23 Here We Stand advocacy day which featured meetings with over 40 lawmakers to further protect and strengthen Medicaid. Our federal-focused resources include messaging and turn-key tools to support advocacy and media efforts. We will continue to monitor:
State Medicaid agency responses to CMS revalidation letters;
New or accelerated provider revalidation requests that could affect enrollment status, payments, or workforce participation;
Congressional movement on WFA legislation, especially signals that provisions may be included in a possible third reconciliation bill; and
Further Administration messaging or guidance that could clarify—or escalate—expectations for providers and states.
New Roadblock for Bipartisan Housing Bill Amidst White House Objections
A major bipartisan housing package that once appeared on track for swift House action now faces new uncertainty after President Trump privately raised objections to key provisions of the Senate‑passed 21st Century ROAD to Housing Act. Although the White House had signaled support for the bill, Trump has now taken issue with language he previously requested requiring large institutional investors to sell certain single‑family rental homes to owner‑occupants within seven years. His concerns have given added leverage to House members already pushing to amend the bill, threatening to unravel one of the most ambitious housing affordability efforts Congress has considered in years.
What now?
The controversy comes as Senate leaders continue to press the House to pass the legislation unchanged to avoid reopening negotiations and delaying relief amid a national housing shortage. These objections are compounded by other disputes slowing House consideration, including a provision temporarily banning the Federal Reserve from issuing a central bank digital currency. Together, the policy disagreements have put House leaders in a difficult position: move the Senate bill as-is, amend it at the risk of losing bipartisan support, or send it to a conference committee—any of which could stall momentum on urgently needed housing reforms.
What can you do?
As Congressional negotiations remain fragile, Lutheran Services in America network members from the Policy and Advocacy Committee, the Disability Network, and the Board of Directors used our April 23 Hill Day to reinforce the urgency of legislative action. Participants asked lawmakers to advance the 21st Century ROAD to Housing Act despite emerging obstacles and to also support the Yes in God’s Backyard (YIGBY) Act, which would unlock faith‑based land for affordable housing development. These conversations underscored the importance of keeping housing solutions moving forward even as political headwinds intensify.
For more information, please contact Sarah Dobson, Senior Director of Public Policy and Advocacy.
Lutheran Services in America is one of the nation’s largest national networks of health and human service providers with a mission to cultivate caring communities that advance health and opportunity for all. With 300 nonprofit organizations across 1,400 U.S. communities and more than $26 billion in combined annual services, the Lutheran Services in America network advances equitable outcomes for children, youth and families, improves independence and choice for older adults, champions meaningful services and support for people with intellectual and developmental disabilities, and strengthens stability and purpose for veterans and others. Formed in 1997, Lutheran Services in America brings together a network of leaders, partners and funders to catalyze innovation, strengthen organizational capacity and advance public policy.
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