WHITE HOUSE:
The White House focused this week on the situation in Israel, overturning California’s strict new emissions standards for cars, and working to modernize wildfire prevention and response.
CONGRESS:
As the One, Big Beautiful Bill slowly meanders its way through the Senate, the early opponents are sounding a more hopeful tone for its passage. The text for the Medicaid and health portions have not yet been released by the Senate Finance Committee, which are the most controversial pieces of the bill, although it is expected on Monday. Earlier this week, there was a hot minute where identifying savings via a bipartisan bill that would target upcoding in Medicare Advantage was on the table, although the appetite for tackling MA in Reconciliation appears to be waning. For now, the discussions continue with the White House standing by a goal of getting something done by July 4th. Elsewhere in DC:
- One of the early Reconciliation provisions included in the House bill that we mentioned as impacting SNF’s was the inclusion of an entire section dedicated to the ERC, audits, and recouping savings. Recognizing that those provisions would fall afoul of the Senate’s rules for Reconciliation, the entire section was stricken from the bill in a House vote this week. It’s quite the technical read. Practically, that means there are NO ERC changes coming as a result of Reconciliation (unless the Senate figures out another path).
- The NJ Gubernatorial race is set with Democratic Candidate Mikie Sherill facing off against Republican Jack Ciattarelli. Here’s a background on the candidates.
- SALT, the state and local tax deduction that blue-state Republicans are clamoring for and which would benefit folks in high tax states like NY, NJ, and CA, remains a big sticking point in the discussions.
- Looks like Democrats have found their messaging as they prepare for 2026: Protecting Medicaid.
- Two relevant CRS reports from this week:
- R48569: A guide to the healthcare provisions in Reconciliation.
- R48570: A guide to technical challenges with federal regulation related to transparency in private insurance data. While exceedingly wonky, especially as we consider Medicare Advantage and how to advocate in this arena, this can be a useful guide to the tools available to Congress and CMS to regulate insurers.
CONGRESS:
HUD announced a change to its section 232 program, enacting a new “fast lane” for applications that meet strict criteria. While not every facility will be able to take advantage of the fast lane, the hope is that it will ease the long wait times currently plaguing HUD applications. Please see below for a more detailed explanation from z-Health Advisory’s Chief Investment Officer & COO, Jay Gormley.
The OIG at HHS released an audit of how hospitals and SNF’s complied with federal requirement for PRF funding. They found that 11 of the 30 selected hospitals failed to comply with requirements while 10 of the 30 chosen SNF’s failed. The full hospital report is here and the summary is here. The full SNF report is here and the summary is here (all links are to the PDF report). The chosen facilities were not identified.
The OIG at HHS also released an audit finding fault with how CMS utilizes staffing PBJ data and reports back to states, finding that the information isn’t useful to states. The full report is here and the summary is here.
FROM THE NOTEBOOK:
- Florida finally reached a deal on their budget, which will officially be voted upon this week.
- Iowa joined the ranks of states banning PBM’s. Arkansas, which passed its bill (PDF) banning PBM’s in April, now faces a slew of lawsuits from the pharmacies.
- You know where the federal government continues to spend? On Medicare Advantage Quality Payments. KFF estimates that Quality Payments would exceed $12.5 billion in 2025.
- In light of the federal push to penalize states that offer healthcare to illegal immigrants as part of Reconciliation, at least three states have passed new laws in their final budget discussions that would roll back their existing healthcare programs for illegal immigrants.
- A new JAMA study found that support for seniors is bipartisan.
- New Jersey is considering a new sanctions bill on SNF’s that consistently receive poor ratings.
- The state of Washington is finally nearing the rollout of its new public plan to help folks afford long-term care services.
JAY’S TAKE ON HUD 232 EXPRESS LANE:
This initiative is designed to expedite the review and approval process for refinancing applications that meet a clearly defined set of low-risk criteria. Facilities that qualify for the Express Lane will receive queue priority, allowing them to bypass the standard processing timeline and move directly to underwriting and Firm Commitment issuance, provided the application is complete and free of outstanding issues.
To be eligible, applicants must meet all of the following requirements:
- Maximum loan-to-value (LTV) ratio of 70%;
- Minimum debt service coverage ratio (DSCR) of 2.0x for skilled nursing and 1.6x for non-skilled nursing, both based on unadjusted trailing 12-month net operating income;
- At least a 2-star overall rating and a 2-star health inspection rating on CMS Care Compare; and
- No abuse icon ("Red Hand") and no G-level or higher deficiencies within the past 12 months.
Notably, this appears to be the first time HUD has formally included the abuse icon as a specific underwriting exclusion. The use of minimum star ratings is also a departure from past practice.
Additional eligibility requirements include:
- Operator must have been in place at the facility for at least two years;
- No more than 20% of revenue may come from special-use populations (e.g., behavioral health, pediatric care);
- All controlling participants must have a clean FHA participation history;
- The mortgage amount must fall within regional caps: $70 million for the New York metro area and $50 million elsewhere;
- Applications must be fully underwriter-ready at the time of submission.
Why this matters:
Speed and efficiency. As of today (Friday), the HUD Lean queue had 73 active projects…meaning a 3–4 month wait just to reach initial review, followed by a 45–60 day processing timeline. By contrast, the Express Lane aims to issue a Firm Commitment within one week of submission.
However, the strict eligibility thresholds will significantly limit participation. The most common disqualifier is the 70% LTV cap. Most bridge-to-HUD refinances pencil out at around 80% LTV, especially when factoring in the payoff of partner or mezzanine debt. As a result, while the Express Lane will benefit select low-leverage borrowers, the majority of HUD 232 volume is expected to continue flowing through the traditional process.
From a policy perspective, the most notable shift is HUD’s use of the abuse icon and specific survey deficiencies as a proxy for underwriting risk --a first. This reflects the increasing role that CMS Five-Star and survey-derived metrics are playing in financial risk evaluation. While we understand the intent, we’ve raised concerns in the past about this approach due to geographic variability in survey practices and the shifting nature of Five-Star methodology, which undermines its reliability as a longitudinal performance measure.
Comments 0
Post a Comment