Sellers Dorsey Digest

Federal Updates

News

RFK Jr. Expresses Opposition to March-In Rights for Drug Pricing

• Robert F. Kennedy Jr., President Trump’s nominee for HHS Secretary, confirmed his opposition to using march-in rights under the Bayh-Dole Act to lower drug prices in his written statements. In response to additional questions from senators following his hearing, RFK Jr. rejected the Biden Administration’s draft framework of march-in rights that had been published but not yet finalized. More than 100 industry groups urged the Trump Administration to withdraw the draft framework in December, citing concerns over innovation and price controls. On February 4, the Senate Finance Committee advanced his nomination to the full Senate (Health Payer Specialist, January 31; Wall Street Journal, February 4).

Musk’s DOGE Team Obtains Access to Federal Treasury System

• The US Treasury payment system will now be accessible by the Department of Government Efficiency (DOGE). According to Politico, Treasury Secretary Scott Bessent has stated DOGE has “read-only” access to review the system’s efficiency, without direct authority to make any significant changes. The Treasury payment system, which is run by the Bureau of Fiscal Service, handles about 88% of the nation’s federal payments, including those relating to Medicare, veteran benefits, and social security. Senate Democrats have called for an investigation into why DOGE was granted access to the treasury system and for what purpose (Wall Street Journal, February 1; Health Payer Specialist, February 3; Politico, February 4).

Hospitals Weighing Options as they Prepare for Medicare’s TEAM Process in 2026

• With the implementation of CMS’ Transforming Episode Accountability Model (TEAM) starting in 2026, hospitals participating in the demonstration are beginning to look to new partnerships with post-acute providers to help them mitigate potential lost reimbursements. The TEAM demonstration aims to both reduce spending and streamline care implementing payments for 30-day care episodes for procedures such as lower-extremity joint replacements and coronary artery bypass grafts. If hospitals fail to meet regional benchmarks, they could stand to lose money for costs that exceed the episodic payment. Many hospitals have already begun the process of looking for post-acute collaborators to prepare for the change. Such care providers should have established expertise in managing care without supplemental incentives from the hospitals, run effectively amid the current workforce shortages, and be able to communicate effectively with direct care workers to ensure patient recovery (Modern Healthcare, February 3, 2025).

Federal Legislation

Bipartisan Bill Seeks to Reverse Medicare Physician Pay Cuts

• Lawmakers have introduced the Medicare Patient Access and Practice Stabilization Act of 2025 to help offset a 2.83% Medicare physician pay cut that took effect in January. The bill proposes a 6.62% increase beginning April 1, 2025, to offset the cut and adjust for inflation. American Medical Association (AMA) and Medical Group Management Association (MGMA) are among supporters of the bill and warn that declining physician reimbursements along with rising costs threaten office closures, reduced care in rural and underserved areas, and increased burnout among doctors. Since 2001, Medicare physician reimbursements have dropped by 33%. Although uncertain, bipartisan lawmakers are hoping to pass the bill by March 14, the deadline for a continuing resolution or funding bill to prevent a government shutdown. Advocates would like to see the bill included in such a package, as the bill’s effective date is currently March 14 (Fierce Healthcare, January 31; Modern Healthcare, January 31).

Federal Regulation and Guidance

CMS Notice Published in Federal Register Days After OMB Rescinds Funding Freeze Directive Ignites Concern Around 1115 Waiver Compliance and Information Collection

• On January 30, CMS published a notice titled Agency Information Collection Activities: Submission for OMB Review in the Federal Register, indicating that the Trump administration plans to assess whether states’ 1115 waivers, many of which were approved in the final weeks of the Biden administration, align with regulatory and statutory requirements. This move could demonstrate that the new administration may take a tough approach toward state efforts to use Medicaid funds for expenses unrelated to healthcare. According to the notice, CMS seeks to expand its existing authority to gather information on states’ adherence to the regulatory and statutory requirements of their 1115 waivers but does not identify what information CMS wants states to provide. Stakeholders have 30 days from the date of publishing to respond with comments (Federal Register, January 30; Inside Health Policy, January 31).

State Updates

News

New York Health Information Privacy Act (NYHIPA) Seeks to Protect Health Data Not Covered by HIPAA

• While Governor Hochul (D-NY) is said to be evaluating the NYHIPA bill that the state’s general assembly and Senate have passed, it is unknown if legislators have formally presented the bill to the Governor. If enacted, New York would become the fourth state (in addition to Connecticut, Nevada, Washington) to pass broad regulations for user health data that is not protected by HIPAA. The bill has gained support from many stakeholders that believe the bill would strengthen consumer privacy, but other groups, including telemedicine providers and operators of wellness apps, have expressed concern about “unworkable obligations and compliance requirements” in the current legislation and request amendments, including changes to the 24-hour valid authorization provision. If delivered during New York’s legislative session, the Governor will have ten days to sign or veto NYHIPA (Inside Health Policy, January 30).

Montana Legislature Proposes Several Bills Ahead of Potential Medicaid Expansion Sunset

• In Montana, the future of Medicaid expansion is uncertain, as the legislation enabling expansion is set to end this summer, while legislators have introduced competing bills during the current legislative session to extend or modify the expansion. Rep. Ed Buttrey has sponsored HB 245, which would continue the program if passed. Buttrey’s bill is one of at least four concerning Medicaid in the legislative session, including a bill that would direct expansion’s phase out (SB 62) and another to augment Medicaid expansion (HB 230). Buttrey’s bill allows the state to institute work requirements and would require continued approval from the legislature each session in case of budget constraints. In contrast, SB 199, introduced by Sen. Jeremy Trebas, would extend Medicaid expansion but mandate work requirements for the program, creating some concern about potential pauses on the program due to the need for federal authority to institute the policy (Daily Inter Lake, January 30).

Indiana Governor Appoints Gloria Sachdev to Address Healthcare Challenges in the State

• Newly elected Indiana Governor Mike Braun has appointed Gloria Sachdev as the Secretary of Health and Family Services, a new Cabinet position overseeing state healthcare agencies. Trained as a pharmacist, Dr. Sachdev previously led a coalition of Indiana businesses and catalyzed a national report on hospital pricing. Her advocacy has influenced Indiana lawmakers to pass bills targeting health policy issues and promote price transparency, helping to reduce the state’s hospital prices from the highest in the nation to ninth place. Her efforts largely focus on increasing competition in the healthcare sector and opposing mergers that could lead to monopolies and higher medical costs. In her new role, Dr. Sachdev will be responsible for improving the coordination of health and well-being services for residents and holistically addressing public health policy (KFF Health News, February 4; Braun Transition, December 12).

Connecticut Democrats Push for Potential Medicaid Reimbursement Reform

• Amid uncertainty for federal funding for Medicaid programs, democratic legislators in Connecticut have introduced a three-year plan that would put $250M toward increasing reimbursement rates of services being provided to the state’s low-income residents. The proposed budget would be used to bring provider payments up to at least 75% to 80% of the current benchmark, which would be the first across the board rate increase in Connecticut since 2007. This proposal has the potential to fill coverage gaps within populations that utilize home, dental, and behavioral health services. The bill will also establish a new system to review and update reimbursement rates on a two-to-three-year basis (CT Mirror, January 28; Connecticut Hospital Association, January 30).

Vermont’s Rural Hospitals Unite to Avoid Closure

• According to the consulting group Oliver Wyman, Vermont’s rural hospitals face the risk of closure. Five hospitals (Copley Hospital, Brattleboro Memorial Hospital, Cottage Hospital, Northwestern Medical Center, and Adirondack Health) have formed the New England Health Collaborative to help prevent closures. The New England Health Collaborative generated $5M in savings in their first year by sharing services, negotiating supply purchases, and pooling employee benefits. Although there are some critics that suggest the New England Health Collaborative is just temporary, the Collaborative remains hopeful, aiming to keep hospitals operational and accessible to patients, while planning for the addition of more hospitals in the future (Burlington-Plattsburgh WCAX, January 30).

SPA and Waiver Approvals

Waivers

• 1115(a)
  • Florida (Approved)
    • On January 31, CMS approved an amendment to Florida’s 1115 demonstration titled, “Florida Managed Medical Assistance (MMA).” The state receives authority to expand its Behavioral Health and Supportive Housing Assistance Pilot to two additional regions; provide voluntary populations who enroll into MMA or the dental managed care program a choice of MMA managed care plans and dental managed care plans; provide coverage of behavior analysis services through managed care instead of fee-for-service; provide coverage of non-emergency dental services provided in an ambulatory surgery center of hospital through dental managed care plans instead of MMA plans; and incorporate specialty products into comprehensive managed care plans. The demonstration is effective through June 30, 2030.
  • Minnesota (Pending)
    • On January 16, Minnesota submitted a request for a new five-year demonstration to provide reentry services to people leaving carceral settings and expand both pre-release care planning and Medicaid eligibility and enrollment supports for people returning to the community from incarceration. With this waiver, the state aims to reduce post-release mortality rates, decrease recidivism, and address health disparities impacting formerly incarcerated populations. The federal public comment period is open through March 2.

Private Sector Updates

News

Cigna Settles $2.9M Lawsuit Over COVID-19 Test Payments

• On January 29, Cigna reached a $2.9M settlement in a class action lawsuit affecting 28,000 insurance claims. Claimants can expect an average payout of approximately $104 per claim, not accounting for settlement expenses such as plaintiffs’ attorney fees. The lawsuit was filed by Daniel Hockenstein in May 2022, after he paid $250 to an out-of-network physician for a COVID-19 test, with Cigna reimbursing Hockenstein just over $51. Cigna claimed this was the discounted amount negotiated between the payer and the physician. Hockenstein’s suit argued that Cigna’s payment practice violated both the Employee Retirement Income Security Act (ERISA) and the CARES Act, the latter of which was passed by Congress in March 2020 to ensure such tests were free of charge to patients, whether or not they received the test from an in-network provider (Health Payer Specialist, February 3).

Nationwide Set to Acquire Allstate’s Group Health Unit

• Following their 2024 $2B deal with The Standard to sell their employer voluntary benefits business and $2.8B deal with Blackstone Group for most of its life insurance business in 2021, Allstate is now looking to sell off its group health unit to Nationwide. The $1.25B deal is expected to close later this year with a $450M return and will free up about $900M in capital. Going forward, Allstate plans to focus primarily on property and casualty (P&C) products like personal line coverage and identity protection (Health Payer Specialist, February 3).

Express Scripts Expands Efforts to Lower Drug Costs and Boost Transparency

• Express Scripts will be implementing new measures to increase transparency for members and lower the cost of prescription medication. Although 80% of Express Scripts members pay less than $100 annually for medications, the remaining 20%, especially those with high-deductible plans, often face higher costs. To help those members who fall into the 20% category, Express Scripts stated they will ensure patients are charged the negotiated drug rate and never pay more than what an employer would at that rate. Some additional steps include providing members with personalized cost summaries, offering standardized reports to plan sponsors, and expanding cost-saving initiatives like its insulin cap and ClearNetwork model. Express Scripts hopes to make these changes standard and engage policymakers as transparency and affordability remain key industry concerns (Fierce Healthcare, January 30).

Cigna Presents Initiatives to Enhance Enrollee Experience, Including Connecting Executive Pay to Member Satisfaction

• On the earnings call last week, Cigna announced its plans to introduce initiatives to better member experience, including improving access to care, simplifying navigation, increasing value for enrollees, and enhancing accountability and transparency. In addition to these goals, Cigna announced that executive compensation will now be linked to customer satisfaction. Starting in 2026, the company also plans to release a Consumer Transparency Report that provides clearer insights into its operations, including data on services and resolution statistics. Additional plans to support their members include the expansion of patient advocate teams, encouraging providers to submit prior authorizations through the online portal, and lowering out-of-pocket costs and providing transparency at the PBM level (Fierce Healthcare, February 3; Modern Healthcare, February 3).

Sellers Dorsey Updates

News

Meet Our Team: Q&A with CEO, Kevin Seabaugh

• Having worked in biotechnology, healthcare tech, and primary care, Sellers Dorsey CEO, Kevin Seabaugh, connects deeply to the Firm’s mission and vision to enhance healthcare access, quality, and outcomes for the nation’s most vulnerable communities. Explore what Kevin thinks are the biggest opportunities for healthcare in the next few years while diving deep into the importance of impact and transparency. Plus, get to know him on a more personal level with fun facts and stories.

Read Kevin’s Q&A