Sellers Dorsey Digest

Federal Updates

News

House Republicans Advance Budget Plan with Potential for Significant Cuts to Medicaid

• On Tuesday, February 25, House Republicans approved a budget framework which furthers President Trump’s political agenda, including funding for border security and tax and energy provisions. The 217-215 vote was split along party lines, with only one Republican member voting against the bill alongside Democrats. The House’s plan directs the Energy and Commerce Committee, which oversees Medicaid, to make $880B in budget cuts. Advocates are concerned that the committee may consider making large reductions to Medicaid. The budget framework will now move to the committees for additional decision making around what types of programs to cut. Once the House finishes work on its budget framework the Senate and House must reconcile the two proposals in a conference committee. The Senate’s budget framework directs its committee that oversees Medicaid, Senate Finance, to cut $1B, significantly less than the House proposal (Politico, February 25).

President Trump Signs EO Giving DOGE Regulatory Policy Decision Making Capacity

• On February 19, President Trump issued an executive order (EO) to require the head of various federal agencies to coordinate review of regulations with the Department of Government Efficiency’s (DOGE) team lead along with the Administrator of the Office of Information and Regulatory Affairs and the Attorney General to identify and rescind regulations that are unlawful, unduly burdensome, or that do not align with the administration’s priorities. This EO does not affect regulations relating to the executive branch, immigration-related functions, national security, foreign affairs, or homeland security and military (Inside Health Policy, February 20; White House, February 19).

Some FDA Employees May Have Terminations Rescinded

• According to sources close to the situation, the FDA began to rescind some termination notices for fired staff late last week. Though impacted workers anticipated receiving more information and access to their computers at the beginning of this week, supervisors seem unaware of the reinstatement process. The medical device trade association AdvaMed urged the Trump Administration to reverse terminations for some workers who were funded through Medical Device User Fee Amendment (MDUFA) agreements instead of taxpayer dollars. According to Fierce Healthcare, up to 180 employees were in MDUFA-funded roles. Litigation challenging the firings is ongoing, with several coalitions and groups bringing challenges against the Administration (Fierce Healthcare, February 22).

Senators, Advocacy Groups Raise Questions and Concerns Ahead of Dr. Mehmet Oz’s Confirmation Hearings

• The confirmation hearings for Dr. Mehmet Oz are expected to be scheduled soon following the filing of his ethics disclosures last week. According to the documents, he intends to divest from insurers, providers, and drugmakers if confirmed to lead the Centers for Medicare & Medicaid Services. Democratic Senators have raised concerns about his qualifications ahead of the confirmation process and have several questions for the nominee. The HIV+Hepatitis Policy Institute is urging lawmakers to question Dr. Oz on his intent to enforce ACA preventive service mandates, like the requirement to provide coverage for all forms of pre-exposure prophylaxis (PrEP)drugs without cost-sharing. Other areas of concern for the Institute include the enforcement of ACA regulations preventing discrimination from private insurance companies through the use of formulary tiering and coverage as well as preventing the limitation of Medicare Part D’s six protected classes (Inside Health Policy, February 21; Fierce Healthcare, February 19).

Shortages of Ozempic and Wegovy Declared Over by FDA

• The FDA has determined that the shortages of Ozempic and Wegovy are over as of February 21, 2025. The popular drugs used to treat diabetes and obesity have been on the FDA’s drug shortage list since August 2022. Notably, the agency resolved the tirezepatide injection shortage, known as Mounjaro and Zepbound, on October 2, 2024, and shortly after found that Ozempic and Wegovy also had available supply. However, the FDA waited nearly four months to update its drug shortage list to provide time for providers to transition patients’ prescriptions to these drugs (The Hill, February 21).

Trump Administration Pushes for Implementation of the Biden Administration’s Drug Price Negotiation Program

• On February 19, Novartis Pharmaceuticals filed an appeal against the Department of Health and Human Services seeking to overturn the federal drug price negotiation program enacted under the Inflation Reduction Act, which would require drug companies to sign agreements by February 28. The Trump Administration has agreed with its predecessor on the legality of the program and urged the court to maintain its previous ruling. Opponents of the drug negotiation program have alleged that it limits innovation due to drug companies not having a choice in their participation (Fierce Healthcare, February 24).

Judge Maintains Restraining Order on the National Institute of Health’s Funding Cap While Considering Injunction

• A Massachusetts judge has decided to keep in place a temporary restraining order (TRO) while considering whether to issue a preliminary injunction against the Trump administration’s move to cap indirect cost funding at 15% for grants issued through the National Institute of Health (NIH). The lawsuit, brought by 22 state attorneys general, argues that the cap goes beyond NIH’s legal authority and would negatively impact research, public health, and state economies. Critics, including research institutions and Senate Appropriations Chair Susan Collins, have heavily criticized the policy as arbitrary and harmful. The federal government’s attorney insists that the change wouldn’t cut funding but would only affect how it’s allocated. However, state attorneys general argue that Congress has passed laws specifically preventing the executive branch from capping these costs, making the move unlawful. For now, the TRO applies only to the 22 states involved in the lawsuit (Inside Health Policy, February 21).

President Trump Signs New EO Enforcing Hospital Price Transparency

• On February 25, President Trump signed an executive order which directs the Department of Health and Human Services and the Department of Treasury and Labor to more stringently enforce price transparency rules for hospitals. In 2019, Trump signed an executive order to require hospitals to disclose their negotiated rates which ultimately went into effect in 2021. However, many hospitals do not comply with the price transparency rules, according to HHS watchdog groups. In the February 25, 2025 Executive Order, the President directs the departments to propose updated guidance or issue new rules to ensure pricing standardization which enables more comparable data across hospitals and health plans (PoliticoPro, February 25).

State Updates

NEWS

Arizona Pushes for Bill Banning AI From Denying Health Insurance Claims

• On February 20, Arizona lawmakers moved to advance House Bill 2175 to the State Senate after a 58-0 vote to amend Title 20, Chapter 20, Article 1 of the Arizona Revised Statutes. The bill aims to ban artificial intelligence from being used to deny any claim or prior authorization, and instead requires a provider review it before issuing a denial. A similar bill was passed in California last year (The Hill, February 21).

NC State Health Plan to Raise Premiums, Citing Increasing Healthcare Costs

• The North Carolina state employee health plan is facing a $500M shortfall in 2026, driven by increasing healthcare and prescription drug costs. Premiums for state employees may increase anywhere from $20 to $50 per month, based on salary. The state health plan covers about 750,000 members, of which approximately one-third are K-12 public school employees. The North Carolina Association of Educators raised concerns about affordability and the potential of losing employees due to increased costs. According to the State Employees Association of North Carolina, many healthcare providers charge the state health plan more than established Medicare rates and argue this practice should be curbed, citing charges up to 800% of Medicare for some procedures. The board that manages the state health plan will seek public input this summer to finalize monthly prices (WUNC, February 7).

Alabama House Bill 177 Requires Parents to Enroll Children in Employer Health Coverage

• An Alabama House committee has approved House Bill 177, which would allow the state to legally pursue recovery of Medicaid payments made on behalf of children with available employer-sponsored healthcare coverage. Sponsored by Rep. Ben Robbins (R-Sylacauga), the bill would require custodial parents with access to job-based insurance to sign up their Medicaid-eligible children. Judges could also require noncustodial child-support-paying parents to do the same if they have employer-sponsored coverage that would be available to their child. Supporters of the bill say the bill is fair because parents who have the resources should shield their children from healthcare’s financial costs using insurance rather than Medicaid. Critics of the measure express concern that low-income parents often cannot afford employer-provided coverage, which can take a sizable amount out of their paycheck. The bill was passed with an amendment guaranteeing Medicaid’s compliance with state and federal statutes in pursuing available third-party healthcare coverage, in addition to the elimination of a provision that would have permitted the federal government to impose a lien on recovered funds. The bill has been sent to the full House for consideration (AL, February 21).

SPA and Waiver Approvals

SPA AND WAIVER APPROVALS

• From February 20 to February 26, there were no waivers submitted or approved, and no SPAs approved.

Private Sector Updates

News

UCLA Study Predicts National Hospital Bed Shortage for Adult Patients by 2032

• A study published in the Journal of the American Medical Association Network Open by researchers at the University of California, Los Angeles predicts that 85% of all hospital adult patient beds in the country will be occupied by 2032 and 85% of all adult and pediatric beds combined will be occupied by 2035. Researchers have found that continued staff shortages combined with an increasingly sick and aging population will result in these high hospital utilization rates. The study reviewed pre-COVID-19 and post-COVID-19 hospitalization data from the Centers for Disease Control and Prevention and population data from the Census Bureau. From 2009 to 2019, the average hospital occupancy was 63.9%. This figure jumped to 75.3% following the end of the COVID-19 pandemic from May 2023 to April 2024. Additionally, the average number of staffed hospital beds decreased, from 802,000 to 674,000 during the same timeframe. Some states are more at risk for hospital bed shortages and could see this occur sooner than 2032. However, the study suggests that increasing hospital staff by 10%, reducing hospitalizations by 10%, or some combination of the two could offset the predicted increase in age-associated hospitalizations (Modern Healthcare, February 20).

BCBS Michigan CEO Tricia Keith Eyes Medicare, Medicaid, and ACA Issues

• Tricia Keith, the new CEO of Blue Cross Blue Shield of Michigan, is watching the development of Medicare Advantage in the new administration. The new CEO is keeping a close eye on Medicaid, Affordable Care Act (ACA) subsidies, and rising drug prices. Keith is monitoring the expiration of enhanced ACA subsidies in 2025, which she says have made healthcare more affordable for many people. She also thinks the pharmaceutical industry needs more regulation, noting that rising drug prices have become a big issue as new medications enter the market (Health Payer Specialist, February 24).

Sellers Dorsey Updates

News

Webinar Recording of Child Welfare in California

• Didn’t have a chance to attend our webinar, A Decade of Reform: Child Welfare in California? We recorded it for your convenience. Gain valuable insights from top experts on the state’s success, as well as opportunities for innovation while diving deep into the role of technology, data sharing, and community-based approaches.

View the Webinar Recording

Transforming the Safety-Net System: A Playbook for Safety-Net Leaders Inspired by California’s Innovative Strategies

• California has a transformative vision to achieve better health outcomes for historically underserved communities and build a more resilient safety-net system. Our newest playbook provides actionable insights for safety-net leaders inspired by California’s innovative strategies. Learn how to effectively implement and connect complex state initiatives across health and social services to facilitate measurable progress and foster positive outcomes for those in need.

Download the Playbook