Sellers Dorsey Digest

Federal Updates

News

CMS to Recognize Traumatic Brain Injury (TBI) as a Chronic Health Condition

• After more than 15 years of advocacy groups encouraging the designation by CMS, CMS will recognize TBI as a chronic health condition starting January 1, 2025. This move enables additional public health resources to be utilized to study and address the impact of TBI and could eventually lead to enhanced benefits from Medicare and Medicaid for individuals with TBI (JD Supra, October 10).

FDA to Allow Temporary Import of Sterile IV Solutions

• The FDA is allowing the import of several sterile drug products to reduce IV solution shortages. Although there was a shortage prior to Hurricane Helene, the flooding of a major Baxter International facility during the storm significantly impacted the supply chain. Many of the products on the FDA’s list are being imported from China, with some products being produced in facilities in Canada, Ireland, and the United Kingdom. However, previous quality issues with Chinese drug products led to shortages. This also comes as Congress has called for more intense scrutiny of China-based facilities and product quality. Additionally, some lawmakers are looking to prevent American companies and the U.S. government from doing business with some China-based organizations. The federal government has not yet invoked the Defense Production Act to deal with the shortage which would require American manufacturers to accept and prioritize IV solution contracts (Inside Health Policy, October 11).

Medicare Advantage (MA) Market Holds Steady Following Open Enrollment and Star Rating Release

• On October 10, CMS released a fact sheet on the 2025 MA and Part D star ratings. The report shows that average star ratings for 2025 have decreased, with an average rating of 3.92 compared to 4.07 from 2024. A total of 7 plans received a 5-star rating and 24 received below 3 stars. While star ratings have significant financial implications for plans, research shows that consumers tend to care more about a plan’s affordability and benefits than CMS’ star ratings when it comes to choosing a plan that works best for them (Modern Healthcare, October 14; Beckers Payer, October 11).

Inflection Point Reached in CMS’ Goal for Value-Based Care (VBC) Arrangements for All Beneficiaries

• Toward the beginning of 2021, CMS’ Center for Medicare and Medicaid Innovation (CMMI) released its strategies and goals to drive changes in healthcare. One of the goals included is to guide all Medicare beneficiaries and the majority of Medicaid beneficiaries into VBC arrangements by 2030. Currently, the goal sits at an inflection point, with five years to reach the final goal. CMS must make the necessary adjustments regarding benchmarks and the level of savings that can be achieved. In January, the agency announced that 13.7 million Medicare enrollees were in an accountable care arrangement. Experts and other stakeholders express differing views on CMMI’s approach, some garnering support while others speak on their dissatisfaction, such as the slow speed in which CMMI rolls out its models and projected costs relating to the implemented changes (Modern Healthcare, October 15).

Federal Litigation

New Lawsuit Brought by States Over CMS’ Nursing Home Staffing Minimums

• On October 8, twenty states filed a lawsuit in an Iowa district court against CMS over the nurse staffing final rule requirements. The states, led by Iowa, South Carolina, and Kansas, allege that the nurse staffing requirement exceeds CMS’ authority and will negatively impact facilities and residents. The plaintiffs cited congressionally-established nurse staffing requirements from over 40 years ago and a study which found that the rule may cost nursing homes about $6.8 billion per year. This suit, State of Kansas et al v. Becerra et al., follows similar suits filed by Texas and the nursing home lobby in a Texas district court earlier this year and consolidated last month (Inside Health Policy, October 11).

Federal Regulation and Guidance

HHS Secretary Becerra Releases Letter to Healthcare Leaders and Other Stakeholders on the Impact of Hurricane Helene

• On October 9, HHS Secretary Xavier Becerra sent a letter to healthcare leaders and stakeholders to address the supply chain impact of Hurricane Helene. One of the main focuses of the letter was on the impacted Baxter facility in Marion, North Carolina that supplies a sizable portion of IV solutions, irrigation fluids, and peritoneal solutions to the U.S. medical system. Additionally, Secretary Becerra mentioned that there were shortages that pre-dated Hurricane Helene that will likely lead to further constraints on normal saline IV fluids, normal saline irrigation fluid, sterile water irrigation, and dextrose 5% IV fluids. The letter included a compounding list published by the FDA to help minimize the impact of such shortages. As of last week, the Baxter facility has reported they have resumed shipments to hospitals, dialysis providers, and patients. Secretary Becerra also outlined what should be expected in the coming months and what stakeholders should consider due to the shortage.
  • The FDA will help the Baxter facility to identify prospective products and alternative production sites. As this occurs, the FDA will expedite reviews of these options as well as shelf-life extension requests, as appropriate.
  • The Administration for Strategic Preparedness and Response (ASPR) is working with the Baxter facility and other partners to support infrastructure restorations for the facility to resume normal operations.
  • ASPR is providing technical assistance and support to expand production at other national facilities.
  • HHS urges manufacturers, wholesalers, and distributors to assess product distribution and healthcare providers to implement product conservation strategies. HHS is encouraging all providers and health systems to conserve these crucial products (HHS, October 9).

CMCS Issues Informational Bulletin Introducing the Account Transfer 2.0 Initiative to Assist in the Modernization of Coverage Transitions and Coordination Between Medicaid and CHIP Agencies and Federal Marketplaces

• Last week, CMCS issued an informational bulletin to announce the replacement of the technology and processes supporting the coordination of eligibility and enrollment among Medicaid, CHIP, and the federal marketplace. CMS introduces the Account Transfer (AT) 2.0 program, a multi-year initiative to ensure continuous coverage for beneficiaries when moving between healthcare coverage programs. AT 2.0 intends to streamline individual’s experience, modernize technology correlated with the AT process, and improve technical assistance provided to states. Some of the innovative enhancements for the AT 2.0 services include the following:
  • Modernized data formatting;
  • Enhanced data quality and consistency;
  • Streamlined eligibility processes;
  • Reduced burden on eligible individuals; and
  • Improved traceability and data availability.

In late 2025, CMS will release the full draft of the AT 2.0 model for review by states and their system providers. Then, in 2027, states who have opted to operate as early adopters will connect to and test the AT 2.0 services. The bulletin also emphasizes scheduled improvements to the existing AT process, projected benefits for state Medicaid and CHIP agencies, and opportunities for state engagement. Lastly, the bulletin highlights the availability of enhanced federal financial participation (FFP) for any expenditures related to state eligibility system updates to meet the AT 2.0 program requirements (CMS, October 10; Medicaid.gov, October 10).

New DEA Rule May Extend Prescription Telehealth Flexibilities

• On October 10, the Drug Enforcement Administration’s (DEA’s) final rule, “Third Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications,” was received for review by the White House Office of Management and Budget (OMB). This comes as many stakeholders have advocated for the DEA to extend the pandemic-era telehealth flexibilities for prescriptions of controlled substances, including several lawmakers who asked that the agency extend flexibilities for the opioid use disorder treatment, buprenorphine. The rule is not yet available for public review and must first clear OMB review (Inside Health Policy, October 11).

CMS Releases Final Rule for Medicare Appeals

• On October 11, in response to prior court rulings, CMS released a final rule that establishes an appeals process for Medicare beneficiaries who were initially admitted as hospital inpatients but were later reclassified as outpatients who received observation services during their hospital stay. This new rule allows patients to file appeals either through a retrospective appeals process that extends as far back as January 1, 2009, a standard appeals process, or an expedited appeals process that would be resolved prior to their hospital release. Additionally, included within this final rule are clarifications for skilled nursing facility refund procedures and increases in the timeframe in which providers are given for claim submissions (Federal Register, October 15; Modern Healthcare, October 11).

State Updates

News

Michigan Recommends Nine Payers for MI Coordinated Health, Expanded Medicare/Medicaid Dual-Eligible Special Needs Program (D-SNP)

• UnitedHealth, Humana, and Priority Health are among nine payers Michigan’s health department recommended to provide services to its dually enrolled special needs program population. MI Coordinated Health is an updated and expanded plan replacing the pilot program, MI Health Link. Contracts will run for at least seven years, with three one-year extension options for each contract. One set of contracts will take effect in 2026 with the remaining contracts starting in 2027. As of 2023, 362,000 Michiganders were dually enrolled in Medicare and Medicaid, with approximately 127,000 individuals enrolled in D-SNPs (Health Payer Specialist, October 11).

$28 Million of L.A. Care Fine Donated to Community Health Programs, Payer Can Count Penalty Against Medical Loss Ratio (MLR)

• In March 2022, L.A. Care was fined $55 million by the California Department of Managed Health Care (DMHC) and the California Department of Health Care Services (DHCS) for allegedly not appropriately responding to beneficiary complaints. Last week, L.A. Care and state regulators came to an agreement, with $28 million of the fine being donated to community health programs throughout Los Angeles County. L.A. Care took the position that the funds being allocated to the community is a priority for the insurer, as part of its health equity advancement commitment. It is believed that the investment will be permitted to be included in the insurer’s MLR calculation (Health Payer Specialist, October 14).

Delaware Fines Highmark for Violating Parity Laws

• The Delaware Department of Insurance has fined the health payer Highmark $329,000 for violating the Mental Health Parity and Addiction Equity Act. The violations cited include disparities in coverage levels, preauthorization processes, and medication access between mental health and medical or surgical procedures. Additionally, there were some violations with in vitro fertilization coverage, insulin cost-sharing caps, and step therapy exception laws. Highmark showed some improvement with complaint resolutions, chronic care management, and utilization reviews among other areas. Insurance Commissioner Trinidad Navarro highlighted the ongoing scrutiny of payers to ensure fair treatment for Delawareans (Health Payer Specialist, October 11).

Montana Lawmakers Draft Presumptive Eligibility Bill for Medicaid

• Lawmakers in Montana have drafted a bill to allow older adults and those with a physical disability to have presumptive eligibility for Medicaid. This would allow individuals who are likely eligible for the program to receive needed in-home and community-based services while waiting for final eligibility approval. At least 11 other states have presumptive eligibility for older adults and people with disabilities to access in-home care, including Rhode Island and New Jersey. The services in the draft legislation subject to presumptive eligibility include meal delivery and in-home medical equipment. Lawmakers in the state continue to debate whether the bill would assist beneficiaries in moving into long-term care. However, some legislators were not supportive of the bill, citing concerns that people would lose services after being found ineligible. The state’s legislative session begins in January (KFF Health News, October 10).

Alabama Facing Ongoing Dental Health Crisis

• A recent report found that there is an average of 41.68 dentists per 100,000 residents in Alabama. Currently, Alabama is the only state that does not cover emergency dental services for adults on Medicaid, so residents must pay out of pocket or find a private insurer for their dental health coverage. The state’s Medicaid benefit currently covers individuals through the age of 21 and pregnant beneficiaries through 60 days postpartum. Regarding the issues they face, dentists have voiced concerns about low insurance reimbursement rates, especially the rates paid through Alabama’s Medicaid program. The current dental crisis within the state sees patients waiting up to a year for oral surgeries and dentists struggling to keep their doors open. A Fall 2024 report by the Alabama Department of Public Health revealed that in rural Alabama, there were approximately 3,845 patients per dentist. (AL, October 9; Alabama Political Reporter, October 10).

SPA and Waiver Approvals

Waivers

• 1115(a)
  • Louisiana
    • On September 27, 2024, Louisiana submitted a request for a new five-year 1115 demonstration titled, “Louisiana Reentry Demonstration.” The state seeks authority to provide Medicaid coverage to qualified individuals prior to release from prison or jail. The state would cover Medicaid services, including case management, medication-assisted treatment (MAT), and a 30-day supply of prescription drugs, among other services, for 90 days prior to a Medicaid-eligible individual’s release from prison or jail. Louisiana aims to improve access to healthcare coverage and continuity of care as well as increase better health outcomes and help support individuals successfully transition into the community. The federal public comment period is open from October 11, 2024, through November 10, 2024.

SPAs

• Payment SPAs
  • Colorado (CO-24-0011, effective October 1, 2024): Adjusts the All Patient Refined-Diagnosis Related Group (APR-DRG) to align with Version 40, as well as future updates regarding new medical technology and hospital resource assignments.
  • Nevada (NV-24-0025, effective July 31, 2024): Incorporates payment for Behavioral Health Integration Services – specifically, Collaborative Care Model services – under the Physician and Other Licensed Practitioner category.
  • Virginia (VA-24-0017, effective July 1, 2024): Updates the payment methodology for Psychiatric Residential Treatment Facilities (PRTF) and hospital supplemental payments for freestanding children’s hospitals that have a Medicaid utilization rate greater than 50%.
  • Washington (WA-24-0025, effective July 1, 2024): Clarifies the language and payment methodology for Rehabilitative and Behavioral Health services.

Private Sector Updates

News

Microsoft and Epic Partner to Develop Tool to Address Nurse Fatigue

• Microsoft and Epic have partnered to design and implement a background AI solution that will enable nurses to effectively document care notes in a patient’s electronic health record (EHR). The tool aims to reduce the time nurses spend documenting care while autonomously composing nurse flowsheets for clinical evaluation. In addition to the nurse-specific product, Microsoft is also debuting an imaging-focused AI product and testing a healthcare-focused AI model that will assist patients with scheduling appointments (Modern Healthcare, October 10).

CVS Health to Close Infusion Business

• CVS Health’s Coram division is closing its infusion business and selling or shutting down 29 supporting pharmacies. Staff related to the infusion business will retain their jobs until the end of the year, though the exact number of staff affected was not disclosed. CVS acquired the infusion provider for $2.1 billion in 2013. Coram will still offer infusion services in Minnesota, Pennsylvania, and San Diego. CVS cited challenges in the specialized infusion medication market as reasons for the closures. This closure comes as CVS is considering options relating to health payer Aetna, following its $70 billion acquisition in 2018 (Health Payer Specialist, October 14).

Sellers Dorsey Updates

New Issue Brief: Impact of the New Medicaid Managed Care Rule

• The managed care delivery system has grown to be the primary model for delivering Medicaid services to approximately 75% of the Medicaid population. Our newest Issue Brief, created in collaboration with Population Health Alliance (PHA), summarizes key provisions from CMS’ 2024 final Medicaid managed care rule. Sellers Dorsey Managing Director, Leesa Allen, and Director, Brian Dees, alongside PHA contributors, assess potential impacts and opportunities for states, MCOs, providers, and solution partners to improve access to and quality of care for Medicaid enrollees.
  Click here to download the Issue Brief.