Sellers Dorsey Digest

Federal Updates

News

Proposed HHS Secretary, Robert F. Kennedy, Jr., Aims to End Chronic Disease Epidemic and Implement Additional Benefits for Medicare and Medicaid

• Should he be confirmed as Health and Human Services (HHS) Secretary, Robert F. Kennedy, Jr. has pledged to reduce rates of chronic disease, offer additional benefits to Medicare and Medicaid beneficiaries, and protect Americans from harmful chemicals, pharmaceutical products, and food additives. The organization he founded, Children’s Health Defense, estimates that by age 20, approximately 54% of children and youth in America are chronically ill with depression, obesity, suicidal thoughts, developmental disorders, anxiety, ADHD, asthma, food allergies, autism, and cancer. Some of the additional benefits Kennedy supports have previously been proposed, including Medicare and Medicaid coverage for medically tailored meals and the use of section 1115 demonstration waivers to provide nutrition education and supports. Kennedy has indicated support to further these initiatives, including the provision of gym memberships and food (Inside Health Policy, November 14).

Potential for PBM Reform in the Lame-Duck Session

• Over the last two years, Congress has struggled to pass legislation targeting pharmacy benefit managers (PBM). Now, lawmakers are back for the lame-duck session where there is a chance that PBM reforms could be passed before the 119th Congress convenes in 2025. Observers remain optimistic that bipartisan support for PBM reform will enable legislation to pass in the year-end appropriations and extensions of health-related bills. Although legislation may be stalled until the new year, PBM reform could potentially fund telehealth and home care extensions in Medicare. According to experts, potential areas of focus for PBM regulations include increasing transparency and “delinking” PBM revenue from drug rebates. However, the Pharmaceutical Care Management Association (PCMA) opposes reforms, arguing that these would weaken negotiating power against drugmakers. To avoid a government shutdown, Congress must pass federal funding by December 20 (Modern Healthcare, November 15).

Dr. Mehmet Oz Nominated as Head of CMS

• President-elect Donald Trump has nominated Dr. Mehmet Oz to head CMS. Dr. Oz is a notable TV host as well as a professor emeritus of cardiothoracic surgery at Columbia University. He previously served on the Presidential Council on Sports, Fitness and Nutrition during the president-elect’s first term in office. Dr. Oz has been highly supportive of Medicare Advantage over the years. In 2020, he co-wrote an article in Forbes making the case for “Medicare Advantage for All,” to improve chronic illness, increase the use of value-based payment models, and reduce health disparities. If confirmed as Director of CMS, other policies that Dr. Oz will likely support include permanent telehealth flexibilities; wearable health technology and remote monitoring; and artificial intelligence tools, sometimes called “augmented intelligence,” to support doctors in making medical decisions (Inside Health Policy, November 19; Inside Health Policy, November 19).

Federal Regulation and Guidance

CMS Releases SMD #24-004 On Extending Medicaid Coverage for SUD

• On November 19, the Centers for Medicare & Medicaid Services (CMS) released State Medicaid Director (SMID) Letter #24-004, providing guidance on various provisions of the Consolidated Appropriations Act of 2024 (CCA, 2024) related to Medicaid coverage of Substance Use Disorders (SUD). Section 201 made medications for opioid use disorder (MOUD) a permanent Medicaid benefit; Section 204 made permanent and amended the state plan option at section 1915(I) of the Social Security Act to allow medical assistance for certain individuals who are patients in eligible Institutions for Mental Diseases (IMDs); and Section 211 made permanent a managed care provision related to Medical Loss Ratio (MLR) remittances.
  • With changes to Section 201, states will continue to have the option to request an exemption from the MOUD benefit requirement due to a documented provider shortage, as described in SHO #20-005, which is subject to re-certification every five years. There are several changes in Section 204 of the CAA, 2024 related to MOUD coverage and access to IMDs for which CMS has provided new guidance: Maintenance of Effort (MOE) funding requirements, effective March 9, 2025; requirements for placement criteria and utilization management to ensure enrollees receive the appropriate level of care, effective October 1, 2025; establishing a new review process for eligible IMDs, effective October 1, 2025; and a new requirement for states no later than 12 months after the approval of a SPA to assess the availability of SUD treatment for beneficiaries at each level of care, including the availability of medication-assisted treatment. States that have a SPA approved as of September 30, 2023, must begin the availability assessment by March 9, 2025, and have it completed within a year. CMS also noted that Section 211 removed the limited timeframe for states to keep a larger percentage of MLR remittances collected specific to the expansion population (CMS, November 19).

DEA Announces Telemedicine Prescription Flexibility Extensions

• On November 15, the Drug Enforcement Administration (DEA) announced that it will be extending telemedicine flexibilities for controlled medications for the third time. The temporary rule will be effective from January 1, 2025, through December 31, 2025. The extension was supported by telehealth advocacy groups as it ensures uninterrupted patient care. The executive director at the Center of Telehealth and e-Health Law, noted the possible factors that could impact actions to make these flexibilities permanent during the one-year extension period, including the the time it takes to staff federal agencies such as DEA and HHS under the new Trump Administration . It is also possible that the new Administration could opt to accelerate a permanent extension of telehealth flexibilities (Inside Health Policy, November 15; Federal Register, November 19).

State Updates

News

Virginia is Looking at $632M Medicaid Program Budget Shortfall

• The Department of Medical Assistance Services (DMAS) submitted its 2024 Medicaid Forecast, as required by the 2024 Appropriations bill. DMAS’ forecast identified that Virginia’s Medicaid program is facing a budget deficit of approximately $632M over the next two years, with a $337M gap for FY2025 and a $295M gap for FY2026 (Real Radio 824, November 8).

New York Waiting on Medicaid Approvals Before the Administration Change

• New York is currently waiting on CMS’ decision on two proposals, one regarding a tax that would fund Medicaid reimbursement rates for healthcare institutions and the other to expand eligibility for the state’s Medicaid buy-in program for disabled working people. The buy-in program currently serves 12,500 working disabled individuals who are otherwise ineligible for Medicaid. If the program is approved, it would allow New York to increase the federal poverty level (FPL) income standard by 1000 percent from 250% of the FPL to 2,250% of the FPL, and increase the resource limit from $30,000 to $300,000 along with the removal of the 65-year age limit. If approved, the State estimates the buy-in program would increase by about 2,000 enrollees and spending would increase by about $57M, annually (Politico, November 18).

Nevada’s Proposed Medicaid Managed Care Expansion Faces Rural Challenges

• Beginning in 2026, Nevada’s Medicaid program is expanding managed care to rural areas, adding approximately 75,000 new enrollees to the state’s existing 590,000 managed care participants. The move poses significant challenges for managed care plans due to the requirement to serve some of the most isolated communities in the country with significant provider shortages and requirements for the plans to contract with two providers of each provider type per county or pay for out-of-pocket network care in nearby states. To ensure continuity of coverage, the managed care organizations bidding on the contracts will be required to offer silver and gold level plans on the State’s individual marketplace (Health Payer Specialist, November 18).

Florida Puts $2B Children’s Medicaid Program Up for Bid

• Florida’s Department of Health has recently announced the bidding process for the Children’s Medical Services Health Plan. The program contract will be worth more than $2B annually. The current contract is held by a single health plan and is set to expire January 31, 2025. With a deadline of December 12, 2024, the state has issued a request for proposal (RFP) and is hoping to finish the procurement process by March 26, 2025 (Health Payer Specialist, November 18).

SPA and Waiver Approvals

Waivers

• 1115(a)
  • Colorado
    • On November 14, CMS approved the state’s request for continuous eligibility for children in Medicaid and CHIP until the child’s third birthday and 12 months of continuous eligibility for individuals aged 19 up to age 65 who are leaving a state correction facility. This demonstration is approved through December 31, 2025.
  • Georgia
    • On November 15, CMS approved an amendment to Georgia’s 1115 demonstration, titled “Georgia Planning for Healthy Babies.” This amendment grants the state authority to continue to reimburse legally responsible individuals (LRIs) for providing medically necessary personal care services (PCS) as stipulated in section 1905(a) to individuals under age 21 enrolled in the Georgia Pediatric Program (GAPP). LRIs must meet certain provider requirements set by the state and other criteria established by the demonstration to receive payment. This demonstration is approved through December 31, 2029.
  • Hawaii
    • On November 14, CMS approved the state’s request to provide continuous eligibility for children until the child’s sixth birthday, and 24 months of continuous eligibility for children aged six up to age 19. This demonstration is approved through March 31, 2025.
  • Minnesota
    • On November 14, CMS approved the state’s request to provide continuous eligibility for children until the child’s sixth birthday, and 12 months of continuous eligibility for individuals aged 19 up to age 21. This demonstration is approved through December 31, 2028.
  • New York
    • On November 14, CMS granted the state expenditure authority to provide continuous eligibility for children in Medicaid and CHIP until the child’s sixth birthday. This demonstration is approved through March 31, 2027.
  • Pennsylvania
    • On November 14, CMS approved the state’s request for continuous eligibility for children up to the child’s sixth birthday, and 12 months of continuous eligibility for individuals aged 19 up to age 65 leaving incarceration, who meet certain high-risk criteria. This is approved as an amendment to the state’s “Medicaid Coverage for Former Foster Care Youth from a Different State and (SUD)” section 1115 waiver. This demonstration is approved through September 30, 2027.
  • Florida
    • On October 24, Florida submitted an amendment request for its 1115(a) demonstration. The amendment proposes the following: expand the Behavioral Health and Supportive Housing Assistance Pilot to two additional regions; provide voluntary populations who enroll in the Managed Medical Assistance (MMA) program a choice of managed care plans and auto-assignment if no choice is made; transfer coverage of non-emergency dental services provided in an ambulatory surgery center or hospital from MMA plans to dental managed care plans; and update the special terms and conditions to remove descriptions of obsolete performance improvement projects and to reflect that specialty plans are now specialty products incorporated into managed care plans rather than being standalone plans. The federal public comment period will be open from November 14 through December 14.

SPAs

• Administration SPAs
  • Massachusetts (MA-24-0034, effective August 1, 2024): Aligns estate hardship recovery policies with state law, by reducing policies to federal minimum requirements.
• Eligibility SPAs
  • Hawaii (HI-24-0013, effective October 1, 2024): Increases the state supplementary eligibility standards residents of certain residential and family care homes.
• Services SPAs
  • Texas (TX-24-0032, effective December 31, 2024): Provides assurance of the Health and Human Services Commission compliance with mandatory reporting of the CMS Child Core Set and behavioral health measures of the Adult Core Set.
• Payment SPAs
  • Alaska (AK-24-0008, effective July 1, 2024): Updates effective fee schedule dates and links and clarifies language relating to fee scheduled rates for Licensed Behavioral Analysts.
  • Minnesota (MN-23-0034, effective October 1, 2024): Increases pharmacy dispensing fees to $11.55 per prescription.
  • Missouri (MO-24-0018, effective August 1, 2024): Updates the payment methodology to add that payment for multiple source drugs will not exceed aggregate upper limits established by federal guidelines.
  • Missouri (MO-24-0024, effective July 1, 2024): Updates the payment methodology for Ophthalmologists to 85% of the 2024 Missouri Locality 01 Medicare Rates.
  • Nevada (NV-24-0014, effective January 1, 2024): Updates the inpatient payment methodologies by shifting cost-settled rates for critical access hospitals (CAHs) to cost-based rates, unbundling long-acting reversible contraceptives from general acute and CAH inpatient per diems, and allowing cost-settled rates for providers of swing-beds.

Private Sector Updates

News

Blue Cross Blue Shield of Massachusetts Announces Doula Pilot and Caregiver Support Program

• On November 13, Blue Cross Blue Shield of Massachusetts (BCBSMA) announced that it will be expanding its partnership with Maven Clinic and introduce a new doula pilot program and also expand caregiving support through a partnership with Cleo. The pilot program, Accompany Doula Care, aims to support racially and ethnically diverse members throughout the pregnancy and birthing process. The pilot will evaluate effectiveness across prenatal, childbirth, and postpartum stages to address health disparities. Additionally, BCBSMA employer members will have access to the family caregiving platform Cleo starting in January. This aims to provide support for caregiving across all ages, from infants to seniors (Fierce Healthcare, November 14).

Wisconsin Physician Services Insurance to Lay Off More Than 300 Employees

• Wisconsin Physician Services (WPS) Insurance announced that it will lay off more than 300 employees in the state. The layoffs are expected to begin on January 25. No reason was given for the decision, which accounts for about 12% of the insurer’s approximately 2,700 employees. This follows a disclosure from WPS in September that nearly 947,000 Medicare beneficiaries were affected by a data breach as well as dropping out of the Medicare Part D business in 2022. WPS manages Medicare and Tricare healthcare benefits for military members and their families, with a focus on Medigap plans, group plans, and some individual short- and long-term coverage. The company had $581.9M in direct written premiums last year across all states (Health Payer Specialist, November 18).

Eli Lilly Files Suit Against HHS Over 340B Program

• On November 14, Eli Lilly filed a lawsuit in the U.S. District Court of the District of Columbia against the HHS and its subagency, the Health Resources and Services Administration. Eli Lilly alleges that HHS cannot dictate how the company distributes 340B drug discounts. The pharmaceutical company claims that it should be allowed to vet data from 340B hospitals prior to offering rebates to avoid duplicate discounts for the same prescription. According to drug companies like Eli Lilly, the program has grown too large and includes ineligible hospitals while providers claim that these savings are necessary to offset the cost of services in high-need communities. Johnson & Johnson filed a similar lawsuit in the same court on November 12 (Modern Healthcare, November 15).

Home Care Industry Set for Acquisition Boom in 2025

• A surge in home care industry acquisitions is expected in 2025 due to lower interest rates and anticipated policy changes under the new Administration. Home care providers like Addus HomeCare, Aveanna Healthcare, and the Pennant Group plan to pursue deals that expand scale, enhance hospital referrals, and meet the Medicare Advantage requirements. Large home care interest in pursuing these deals comes from recent challenges that included labor shortages and rising costs. In a $350M deal, Addus HomeCare is set to acquire Gentiva’s home care business by the end of 2024. Other home care companies are taking the same lead as Addus HomeCare, telling analysts they plan to acquire home health, private duty nursing and hospice organizations in 2025. With acquisitions down by 25% in the first three quarters of 2024, some analysts expect less regulatory scrutiny could lead to strong buying power for home care companies in 2025 (Modern Healthcare, November 18).

Sellers Dorsey Updates

Transforming Child Welfare in California: Key Considerations for Child Welfare Agencies and Medicaid Managed Care Plans

• California has made tremendous strides in transforming its child welfare system over the past decade by prioritizing family connections for children who have experienced separation from their parents and reducing reliance on institutional care. Explore our recent blog as Marko Mijic and Katie Renner Olse explore key considerations for child welfare agencies and Medicaid managed care plans to ensure that every child has the opportunity to live a healthy and thriving life.
  Read Marko and Katie’s article here.

Honoring National Adoption Month: Raising Awareness and Providing Resources

• Sellers Dorsey is pleased to honor November as National Adoption Month, celebrating adoptive parents and recognizing families brought together through adoption from foster care. Whether it’s through technical assistance, solution development, or implementation, the Firm’s experts in child and family well-being help bridge the gap between healthcare and child welfare. Our latest blog explores how to improve practices and provide resources to children in foster care and their adoptive families. Together, we can pave the way for healing, stability, and bright futures.
  Click here to read the blog.