The House passed a short-term spending bill Sept. 1 that would fund the federal government through Dec. 11 and temporarily block a proposed federal grant rule that drew concerns from the American Hospital Association.
The continuing resolution passed 370-48 after the Senate approved it 90-6 in August. It now heads to President Donald Trump, who is expected to sign it, according to Politico. The legislation would avert a government shutdown when current funding expires Sept. 30 and keep federal spending largely at existing levels through Dec. 11.
Notably, the stopgap pushes negotiations over full-year government funding until after the Nov. 3 midterm elections, potentially reshaping the political dynamics around spending when Congress returns.
Six things for hospital leaders to know:
1. The measure temporarily blocks a federal grant rule hospitals warned could destabilize funding. The continuing resolution prevents the Office of Management and Budget from finalizing proposed revisions to regulations governing federal financial assistance, or issuing a similar measure, before Dec. 11.
The AHA raised concerns about the proposal in July, arguing it could make federal awards less predictable for hospitals and health systems that make multiyear investments based on those grants. The grant provision was added by the Senate and helped draw bipartisan support for the broader funding package, according to The Hill
2. The proposed rule could give federal agencies broader authority to change or terminate grants. Under the proposal, federal agencies would gain more discretion to modify award conditions, impose additional requirements during an existing award and suspend or terminate funding based on evolving agency priorities or determinations about the national interest, according to the AHA, which noted that hospitals and health systems are “among the nation’s largest recipients of federal grant funding.”
The association also raised concerns that certain changes could remove appeals processes for discretionary grant terminations. For hospital leaders, the key concern is whether already-awarded federal funding can be counted on when making long-term investment decisions.
3. The uncertainty could affect workforce, research and capital decisions. Hospitals and health systems rely on federal grants to support medical research, workforce development, emergency preparedness, maternal health, behavioral health, rural health initiatives and public health infrastructure.
Those programs can require hospitals to recruit specialized employees, purchase equipment, expand residency programs and commit capital to facilities or community partnerships. The AHA said uncertainty over whether funding terms could change after an award is made could make hospital boards and executives more cautious about those investments.
4. Rural, children’s and safety-net hospitals could face greater exposure. The AHA warned that financially vulnerable hospitals could determine that the risks associated with accepting federal grants outweigh the benefits if funding can later be modified or discontinued for reasons unrelated to recipient performance. That could discourage participation in competitive grant programs and potentially affect initiatives designed to expand access in rural and underserved communities.
5. Medicare and Medicaid-related questions remain unresolved. The AHA said it understands that Medicare and Medicaid payments for patient care services would not fall under the proposed rule, but questions remain about the scope of the exemption. The association has asked OMB to clarify whether the proposal could affect other funding streams, including the Medicare Rural Hospital Flexibility Program, certain Center for Medicare and Medicaid Innovation arrangements, supplemental Medicaid payments and capitation payments to Medicaid managed care organizations.
6. Dec. 11 is a reprieve, not a resolution. Another short-term extension into 2027 is possible if lawmakers cannot reach a broader spending agreement by Dec. 11. For hospitals, that means uncertainty around both federal spending and the OMB grant proposal could return before the end of the year. The AHA has urged OMB to preserve the stability of existing awards, apply new requirements prospectively and provide recipients with notice, an opportunity to respond and an appeals process before significant funding changes are made.
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