Top Legal Challenges for the Health Care Industry in 2026

1. The Medicaid Program After the OBBBA

The 2025 passage of the One Big Beautiful Bill Act (OBBBA) by the Republican majority in US Congress was designed to reshape the Medicaid program as we know it. It is being phased in overtime, restructuring eligibility requirements and the financing of the joint federal and state health care program. In 2025, the law placed a moratorium on new and existing state provider taxes, lowered the cap on state directed payments, excluded certain family planning providers from participating in Medicaid, and curtailed Medicaid program access by non-citizens. For 2026, the Centers for Medicare & Medicaid Services (CMS) have issued $10 billion, between $147 million and $281 million to each state, to comply with the provisions of the OBBBA’s Rural Health Transformation Program. Rural health care providers should look to the states to access this funding. Bigger Medicaid program changes are expected for 2027, when OBBBA’s Medicaid recipient work requirements go into effect and certain limitations on state Medicaid provider taxes go into effect.

2. The Future of Enhanced APTCs

Enhanced Advanced Premium Tax Credits (APTCs) were passed by Congress during the COVID-19 pandemic and extended under the Inflation Reduction Act (IRA) in 2022. The purpose of enhanced APTCs was to expand eligibility based on family income (exceeding the 400% of the federal poverty limit cap) and increase the subsidy for health insurance exchange plans available under the Affordable Care Act (ACA). The enhanced APTCs expired December 31, 2025, and their expiration was a contributing factor to the longest government shutdown in history. There is an expectation that expiration of the enhanced APTCs will increase ACA plan insurance rates and cause an overall reduction of health insurance coverage for millions of Americans. While Congress failed to act in 2025, there has been bipartisan movement on Capitol Hill to restore enhanced APTCs. On January 8, the House passed a law extending enhanced APTCs for three years, sending the legislation to the Senate. However, it is unclear whether the Senate and President Trump have any interest in passing the extension.

3. AI in Health Care: Increasing Federal and State Tension

Artificial intelligence’s (AI) role in health care will increasingly be shaped by tension between federal efforts to promote a unified, minimally burdensome framework and continued state-level momentum toward sector-specific regulation. The Trump Administration’s December 11, 2025, Executive Order on AI signals a preference for consistent national standards, but it does not itself preempt state law or materially alter existing compliance obligations. As a result, health care organizations deploying AI should expect that state laws and enforcement actions will remain operative in the near term, particularly in areas such as patient-facing AI tools, clinical decision support, mental health applications, and payer use of algorithms for coverage and utilization management decisions. For instance, in December 2025, Governor Ron DeSantis of Florida pushed for an Artificial Intelligence Bill of Rights that would require, among other things, that consumers be notified when interacting with an AI chat bot, prohibit AI entities from providing licensed therapy services, ensure inputted AI data is private and secure, and limit insurance companies from using AI as a sole determination for adjusting an insurance claim.

Meanwhile, federal health agencies are advancing AI-related initiatives that will further shape the regulatory environment. The US Food and Drug Administration is developing its approach to AI-enabled medical devices and real-world performance monitoring; CMS is exploring AI in payment models and program integrity; and the US Department of Health and Human Services (HHS) has unveiled an agency-wide AI strategy that emphasizes responsible deployment within health programs. Even if federal legislation or litigation eventually narrows the scope of state authority, it is likely to leave room for state action in targeted areas and for continued application of cross-cutting privacy, nondiscrimination, and consumer protection laws. In this evolving landscape, health care entities should focus less on predicting preemption outcomes and more on strengthening internal AI governance structures and oversight practices that can adapt to both federal and state requirements.

4. Pharmaceutical Manufacturers Deal With Implementation of IRA and “Most Favored Nation” Pricing Initiative

2026 is the first year IRA-negotiated prices for Medicare Part D drugs go into effect. These negotiated prices are called maximum fair prices (MFPs) and will be in effect for 10 Medicare Part D drugs in 2026. The law sets the Medicare Part D reimbursement to the pharmacy for dispensing those drugs to a Medicare Part D beneficiary. On the Most Favored Nations (MFN) front, it is unclear how the White House negotiated “deals” with 16 branded pharmaceutical manufacturers to obtain MFN pricing for Medicare and Medicaid beneficiaries alike, as well as lower prices for cash-paying customers. These deals are essentially commitments by the manufacturers to offer cash-pay programs on certain branded pharmaceuticals on the “Trump Rx” website, as well as commitments to participate in three Centers for Medicare & Medicaid Innovation Centers (CMMI) demonstrations: (1) the Medicaid GENEROUS demonstration, which allows participating states to enter into state supplemental rebate agreements with manufacturers, lowering the net price to Medicaid to an MFN price — the net price of the drug in comparable developed nations; (2) the Medicare Global Benchmark for Efficient Drug Pricing model, for drugs covered by Medicare Part B; and (3) the Guarding US Medicare Against Rising Drug Costs model, which aims to bring the net price of certain branded prescription drugs to an MFN price for Medicare Part D beneficiaries.

5. What to Expect in Federal Health Care Fraud Enforcement

Federal health care fraud enforcement in 2026 is poised to remain a top priority, anchored by the revived US Department of Justice (DOJ) and HHS Office of Inspector General (OIG) False Claims Act (FCA) Working Group, expanded health care fraud taskforces in US Attorneys’ Offices, and a continued emphasis on enforcement around core statutes like the FCA and Anti-Kickback Statute (AKS). Expected areas of scrutiny include Medicare Advantage risk adjustment practices; drug, device, and biologics pricing and reporting; traditional kickback cases involving remuneration to health care providers in exchange for prescribing specific drugs or devices or in exchange for referrals for items or services; barriers to patient access (e.g., network adequacy); defective medical devices; and manipulation of electronic health record (EHR) systems to inflate utilization or billing.

EHR-related risks remain front of mind, with the Working Group’s focus signaling scrutiny of tools or workflows that could alter documentation or drive inappropriate utilization. AI features embedded in clinical or revenue-cycle systems may draw added attention due to the risk of upcoding or overbilling, even as formal enforcement in this subarea remains nascent.

These priorities reflect explicit agency signals and recent enforcement experience, and they are likely to drive investigation targets into 2026. Expanded health care fraud resources in certain high-profile US Attorneys’ Offices (e.g., Chicago, Illinois, and Massachusetts/New England) and closer DOJ–OIG coordination are expected to accelerate case development timelines, while heightened use of the Health Care Fraud Data Fusion Center and advanced analytics (including AI-enabled tools) will increase the government’s ability to detect outliers across claims, coding, and remuneration patterns–all of which signals continued robust health care fraud enforcement in 2026.

6. Constitutional Challenges to the FCA’s Qui Tam Provisions

In 2026, courts are expected to continue wrestling with the constitutionality of the FCA’s qui tam provisions. Throughout 2025, FCA defendants regularly challenged the provisions as being unconstitutional, leading to a series of district court decisions reaching different conclusions. As cases move through the appeals process, it will be important to watch both how courts rule on the constitutional question and how they analyze the degree of control the executive branch, through the DOJ, must have over cases that whistleblowers file in the government’s name, and whether existing tools — like the government’s power to intervene, dismiss, settle, or steer a case; the initial confidential filing period; and oversight during evidence-gathering and appeals — are sufficient to address the constitutional concerns.

2026 could also produce a clear split among courts, increasing the odds of US Supreme Court review. Justice Clarence Thomas has long indicated that he views the qui tam provisions as potentially violating the executive branch’s Article II Appointments Clause authority, and he was recently joined by Justice Brett Kavanaugh in authoring a concurring opinion urging the Court to take up the question. To the extent the Supreme Court ultimately rules the qui tam provisions unconstitutional, it could upend FCA enforcement, particularly in the health care industry, where cases are often initiated by whistleblowers. The full impact of a ruling that the provisions are unconstitutional will depend on two factors: whether the Court signals that increased government involvement in such cases could resolve the issue, and whether whistleblowers may continue when the DOJ declines to intervene. If the Court precludes any FCA case brought on behalf of a whistleblower, regardless of the DOJ’s involvement in the process, there is likely to be a substantial decrease in the number of FCA cases. If, however, the Court permits whistleblowers to continue to bring cases to the DOJ’s attention, but requires more oversight from the DOJ, enforcement may continue at a similar pace as in the past. Companies in the health care industry, particularly those that are facing potential FCA liability, should closely monitor these ongoing cases in 2026 to determine whether and how their resolutions will impact FCA enforcement going forward and whether such impact changes a company’s risk tolerance.

7. Continued State Scrutiny of REIT and Private Equity Ownership

State legislators have been increasingly focused on real estate investment trust (REIT) and private equity and other non-traditional ownership of health care facilities, such as trusts, and we expect this trend to continue throughout the year. Several states have enacted or proposed laws requiring parties to notify state attorneys general or other bodies prior to closing covered transactions. Though the specific requirements vary by jurisdiction, the laws are intended to capture a wide range of health care providers, investors, and transaction structures, including sale-leaseback arrangements and indirect ownership acquisitions. Certain laws also establish routine reporting obligations after the transaction has closed.

The push for more oversight is not limited to state legislatures. State licensing authorities are scrutinizing corporate ownership interests during the health care facility licensure process as well. Necessary disclosures are usually limited to individuals or entities that have a certain percentage of ownership or control over the applicant. However, some state licensing authorities are requiring applicants to identify minority owners, passive financial investors, and even public shareholders. By contrast, there has not been the same level of scrutiny at the federal level. Although Congress has scrutinized private equity and other corporate ownership of health care facilities in the past, particularly for nursing homes, Congress has not enacted any new legislation targeting such ownership.

8. Data Privacy and Security in the Era of Big Data Breaches

As in recent years, 2026 is likely to be marked by large data breaches, vendor-involved incidents, and access-related complaints. For covered entities and business associates regulated under the Health Insurance Portability and Accountability Act (HIPAA), foundational compliance obligations, particularly risk analysis, risk management, and timely access to records, are expected to remain key areas of enforcement activity by the HHS Office for Civil Rights. Reported breaches, especially those affecting large populations, will continue to invite scrutiny of how organizations assess and respond to security risks.

At the same time, the regulatory landscape suggests that HIPAA itself may be poised for change. The Trump Administration’s Unified Agenda places in the “final rule” stage, with potential action in 2026, both the proposed overhaul of the HIPAA Security Rule issued at the end of the Biden Administration and the long-pending proposed HIPAA Privacy Rule updates from the first Trump Administration. Industry stakeholders have raised significant concerns about the prescriptiveness and burden of the Security Rule proposal, with more than 100 industry groups urging HHS Secretary Robert F. Kennedy Jr. in a December 8, 2025, letter to withdraw it. While any final rules are likely to be more measured than the proposals, some degree of reform appears likely. Health care organizations should prepare for incremental but meaningful changes and, in the interim, prioritize proactive compliance efforts that emphasize adaptability, robust documentation, and coordination across legal, compliance, information technology, and operational teams.

9. Antitrust: Collective Pricing and Data Sharing Top the List

Expect 2026 to be shaped by continued acceleration of health care antitrust enforcement and litigation, with several pending cases poised to set important precedents. Discovery has begun in the MultiPlan/Claritev multidistrict litigation and in the parallel litigation against Zelis. Ultimately, the courts will have to address whether alleged algorithm-like coordination and intermediary-facilitated data exchanges between health care payers, third-party administrators, and payer data/repricing vendors violate Section 1 of the Sherman Act. These cases should further clarify the legal boundaries of shared data inputs, standardized repricing methodologies, and common contractual terms across payers, potentially reshaping provider approaches to direct actions and class participation. Beyond the courts, the DOJ’s Task Force on Health Care Monopolies and Collusion is expected to continue probing algorithmic coordination, serial acquisitions, and cross-entity data-sharing, reinforcing diligence around benchmarking, vendor overlap, and access to competitively sensitive information. Additionally, oversight of pharmacy benefit managers remains intense following the Federal Trade Commission’s interim findings and the US Government Accountability Office analysis. Finally, labor market theories — spanning alleged wage suppression tied to provider concentration and scrutiny of noncompete and no-poach provisions — will continue to be an area of focus for state attorneys general, warranting legal review of workforce terms in markets where health systems are dominant employers.

10. Court Cases Challenge 340B Contract Pharmacy and Rebate Policies

In recent years, pharmaceutical manufacturers have restricted if and when contract pharmacies can purchase covered outpatient drugs on behalf of a covered entity in the 340B Drug Discount Program, contravening Health Resources and Services Administration Office of Pharmacy Affairs guidance. This trend has resulted in significant litigation at the federal level, which the manufacturers by and large have won. As a result, numerous states, beginning with Arkansas, enacted laws prohibiting pharmaceutical manufacturers from restricting the recognition of contract pharmacies acting as agents of 340B covered entities. The state laws triggered substantial litigation, and recent decisions have resulted in conflicting wins for pharmaceutical manufacturers and the states. For instance, manufacturer plaintiffs successfully challenging a West Virginia contract pharmacy law in federal district court, with an appeal pending in the Fourth Circuit. On the other hand, Louisiana successfully defended its contract pharmacy law with an appeal pending in the Fifth Circuit. The ultimate appellate decisions could set up a circuit split that might be ripe for writ of certiorari to the Supreme Court.

Meanwhile, manufacturers with Medicare Part D drugs with 2026 MFPs were supposed to be permitted to honor the 340B ceiling price through a rebate model once the Health Resources and Services Administration approved the manufacturer plans. The American Hospital Association launched a legal challenge to the rebate model in federal court in Maine and the rebate model is currently enjoined. The Trump Administration has indicated it is negotiating with American Hospital Association and other plaintiffs to arrive at a compromise to allow manufacturers to use a rebate model. Stay tuned!