Sellers Dorsey Digest

Federal Updates

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February 2025 Public Meeting – MACPAC

• Draft Policy Recommendations to Improve Transitions of Care for Children and Youth with Special Health Care Needs
  • MACPAC staff presented four policy recommendations to address challenges that exist for transitioning Children and Youth with Special Health Care Needs (CYSHCN) from pediatric to adult care. The recommendations include: Congress should require states to develop and publicly document a transition of care strategy, as well as the development and implementation of individualized transition of care plans; the Department of Health and Human Services (HHS) should issue guidance to states about existing authorities; HHS should require states to collect and report data to Centers for Medicare & Medicaid Services (CMS); and HHS should require inter-agency agreements between state Medicaid and Title V agencies and specify individual agency roles and responsibilities to support transitions of care.
• Hospital Non-DSH Supplemental Payment and Directed Payment Targeting Analyses
  • MACPAC staff summarized findings from a literature review on non-DSH supplemental payment goals, targeting criteria, payment methods submitted to CMS, and hospital targeting characteristics from directed payment preprints. MACPAC staff found that states varied widely both in their usage and targeting of non-DSH supplemental payments and directed payments. Staff will continue to monitor non-DSH supplemental payments and directed payments and aid in the construction of an updated payment index that can be used to assess total base and supplemental payments to be streamlined across states and relative to external benchmarks.
• Overview of the Self-Directed Model
  • MACPAC’s session on the Self-Directed Model for home and community-based services (HCBS) provided an overview of the model, including its essential elements and some background. The session covered the roles of various stakeholders, such as the state, support entities, fiscal management services, managed care organizations, beneficiaries or their legal representatives, and HCBS workers. It ended with a commissioner-led discussion of the self-directed HCBS model and its key players.
• Interview Findings on Self-Direction Program Design and Administration
  • This session reviewed the findings of stakeholder interviews, including with state and federal employees, an Area Agency on Aging (AAA), managed care organizations, and financial management services (FMS) agencies. The session discussed various ways that states can design and implement a self-directed program, highlighting areas where states have flexibility in choosing the HCBS authority, populations served, services offered, and the role of family caregivers. The findings from the Commission identified the importance of collaboration across state agencies and other entities that interface with beneficiaries like FMS agencies, AAAs, or advocacy groups.
• Improving Access to Medications for Opioid Use Disorder: Themes from Stakeholder Interviews
  • In 2022, Medicaid and CHIP covered 1.9 million beneficiaries with opioid use disorder, accounting for 38% of youth and non-elderly adults with the disease. MACPAC staff presented information on how Medicaid beneficiaries have access to and utilize medications for opioid use disorder (MOUD). Staff conducted stakeholder interviews, which identified themes across federal policies and funding, stigma and misinformation about MOUD, provider availability and workforce challenges, and utilization management tools. The Commissioners recommended the topic for a chapter in the June Report to Congress and additional work to examine the use of prior authorization in MOUD.
• Panel: Substance Use Disorder Section 1115 Demonstration Waivers
  • MACPAC hosted a panel discussion on Substance Use Disorder (SUD) Section 1115 demonstration waivers, focusing on the challenges of providing adequate coverage of residential treatment services in Medicaid due to federal restrictions on federal Medicaid funding for services in institutions for mental disease (IMDs). To address these gaps, CMS has encouraged states to pursue Section 1115 demonstration waivers. Medicaid directors from New Hampshire and West Virginia shared insights on their demonstration goals and experiences, while a former CMS official discussed the monitoring and evaluation requirements and areas where more data is needed to assess the effectiveness of these programs.
• Automation in the Prior Authorization Process
  • MACPAC staff summarized the findings of their review of the use of automation within the prior authorization process. The study aimed to clarify how MCOs utilize automation, to review federal policies, and conduct stakeholder interviews with seven diverse states. Staff also highlighted both potential benefits, such as cost-effective care and faster processing times, as well as potential challenges like limited transparency and inadequate clinical oversight.
• Healthcare Access for Children in Foster Care
  • MACPAC staff presented information on how Medicaid meets the health needs of the foster care population. Staff researched federal requirements and delivery methods across states for this unique population. Notably, staff identified that the number of foster care children in specialized managed care plans is increasing. Staff shared policy issues that impact healthcare delivery and access to foster care children like coordination requirements, data sharing, EPSDT requirements, and the utilization of psychotropic medications.
• Appropriate Access to Residential Services for Children and Youth with Behavioral Health Needs: Interview Findings
  • MACPAC’s staff highlighted findings from interviews with state and federal officials, as well as national experts, advocates, and providers, regarding access to residential treatment services. The discussions revealed several key themes, including the difficulties with data collection and sharing, the processes for patient admission and discharge, how coverage and payment methods impact access, and the challenges related to provider capacity. These insights point to important areas where improvements can be made to better serve individuals in need of residential treatment (MACPAC, February 28).

BCBSA Releases Report Detailing Potential Cost Savings at the Federal Level

• The Blue Cross Blue Shield Association (BCBSA) released a new report on Tuesday, February 25, detailing ways that the federal government could save nearly $1T in healthcare costs over the next ten years. The report identifies ten key proposals that include site-neutral payments in Medicare, preventing excessive healthcare consolidation, requiring two-sided risk arrangements in Medicare, eliminating the tax-deductibility of spending on direct-to-consumer drug advertising, and shortening the exclusivity period for biologics. According to the report, site-neutral payments could save up to $484B over ten years, one of the most impactful policies included by BCBSA. Strengthening antitrust enforcement could result in $78B in savings over ten years, preventing inappropriate hospital mergers. The American Hospital Association has previously lobbied against some of these proposals. However, as public opposition rises against using Medicaid to find the $880B in cuts required from the House Energy and Commerce Committee, BCBSA hopes that lawmakers could reference their report to find alternative policies that result in cost savings (Inside Health Policy, February 26).

Employers Concerned Over Potential Medicaid Cuts in Budget

• Employers are raising concerns about the financial impact of Medicaid funding cuts as part of budget reconciliation. Employers note that significant cuts to Medicaid could result in higher costs for commercial insurers and employers, as healthcare expenses typically rise when Medicaid funding decreases. The Purchaser Business Group on Health, which represents large corporations, fears that the cuts will lead to increased cost-shifting, burdening private insurers. The American Hospital Association (AHA) also opposes potential Medicaid cuts, warning that hospitals could face closures or consolidation, further driving up costs (Modern Healthcare, February 28).

Federal Regulation and Guidance

HHS Rescinds Richardson Waiver, Reducing Public Input on Medicaid and Health Policies

• On March 3, 2025, the Department of Health and Human Services (HHS) issued a policy suspending the “Richardson Waiver,” a policy that dates to 1971 that imposed notice-and-comment requirements for rulemaking on grants, benefits, and contracts, even where such rulemaking was exemptible under the Administrative Procedure Act (APA). The policy, signed by HHS Secretary Robert F. Kennedy Jr., revives exemptions under the Administrative Procedure Act and expands the use of the “good cause” exception, allowing HHS to bypass public input when rulemaking is deemed impractical or unnecessary. This change could greatly limit transparency into changes that affect tens of millions of beneficiaries. Critics say that restricting public input could harm the vulnerable groups who depend on Medicaid and other federally funded programs. Supporters say it makes the policy process more efficient and flexible (Inside Health Policy, February 28; Fierce Healthcare, March 3; Federal Register, March 3).

CMS Rescinds Previous HRSN Guidance

• On March 4, 2025, CMS announced that it is rescinding previous informational bulletins (CIBs) from November 2023 and December 2024 that provide guidance on offering Health-Related Social Needs (HRSN) services to Medicaid beneficiaries. Moving forward, the agency will consider states’ applications to cover HRSN services on a case-by-case basis and determine if they meet federal requirements without referencing the HRSN CIBs or HRSN Framework. This announcement does not invalidate existing approvals (Medicaid.gov, March 4).

State Updates

News

Ohio Governor Submits Proposal for Medicaid Work Requirement Reinstatement

• On February 28, Governor Mike DeWine (R-OH) announced that the Ohio Department of Medicaid (ODM) had submitted a proposal to CMS seeking federal approval for the state to reinstate its work requirements for Medicaid expansion enrollees. To receive benefits, enrollees must be at least 55, be employed, be a student or enrolled in a job training program, or have a serious mental or physical illness. Governor DeWine believes these requirements will promote employment, education, self-sufficiency, and financial independence. Additionally, state legislators filed HB 133, which would allow small businesses with 2-50 employees to receive tax credits if they offer individual health coverage reimbursements of at least $400 per employee enrolled in an Individual Coverage HRA (ICHRA) (Governor Ohio, February 28; Health Payer Specialist, March 3).

Montana Legislature Passes Bill to Continue Medicaid Expansion

• In Montana, HB 245, which continues to authorize the state’s Medicaid expansion, has passed the state legislature and moves to Governor Greg Gianforte’s desk to be signed into law. The governor has previously signaled his support for Medicaid expansion in the state, which covers more than 76,000 residents, largely in rural areas. HB 245 was sponsored by Republican Representative Ed Buttrey and includes the authority to institute work requirements for certain populations. Additionally, the final bill removes the need to continually renew the expansion program. Notably, moderate Democrats and Republicans worked together to pass the bill, despite more conservative efforts to either phase out (SB 62) or significantly modify Medicaid expansion (SB 199) (Montana Free Press, February 27; Associated Press, February 27).

Carle Health to Close Health Insurance Plans

• Carle Health, an Illinois-based hospital system with more than 600 employees, announced that it will close most of its Health Alliance insurance plans by the end of this year. This includes FirstCarolinaCare, its sister company. The organization cited troubles remaining financially viable in the changing healthcare landscape as the reason for closing the health plans. Carle Health has more than 240,000 members, and Health Alliance and FirstCarolinaCare will continue to process claims through the end of 2025. However, Carle Health plans to continue to offer Medicare Advantage plans (IPM News, February 25).

Maryland Medicaid MCO Sanctioned Over Quality Concerns

• Priority Partners has been sanctioned by Maryland after having its accreditation suspended by the NCQA on February 28. The Medicaid managed care organization, which has more than 300,000 members, is owned by Johns Hopkins Health Plans and the Maryland Community Health System. While the sanction does not alter coverage or benefits, beneficiaries can switch to a different Medicaid plan starting March 17. A spokesperson from the MCO stated that they are working closely with regulators to address quality-related concerns (Becker’s Payer Issues, March 3).

Minnesota Governor Unveils Plan to Make Healthcare More Affordable

• Governor Tim Walz proposed a plan to make healthcare more affordable for Minnesota residents, particularly those who buy insurance through the marketplace. Governor Walz’s plan aims to reduce premiums by shifting the burden of “reinsurance” from taxpayers to insurance companies, which currently help cover high-cost claims. The move would free up state funds to protect against potential Medicaid cuts. However, the Minnesota Council of Health Plans warned that nonprofit insurers could be disproportionately affected, and Republican Senator Gary Dahms criticized the proposal, arguing it would lead to higher premiums due to increased taxes and additional mandates (Kare 11, February 27).

SPA and Waiver Approvals

• From February 27 to March 5, there were no waivers submitted or approved, and no SPAs approved.

Private Sector Updates

News

India-Based Pharmaceutical Pays $7M Settlement to Three US Based Providers

• Glenmark Pharmaceuticals, an India-based company, is to pay a $7M settlement to Humana, Centene and Kaiser Foundation Health Plan, due to a lawsuit over their cholesterol drugs Zetia and Vytorin. The lawsuit alleges that Glenmark Pharmaceuticals and its US subsidiary had formed an anti-competitive agreement in 2010 with Schering and MSP Singapore in order to settle a patent infringement lawsuit over the active ingredient in Zetia. Previously in 2023, Humana, Centene, and Kaiser had opted out of the initial settlement Glenmark had made with plaintiffs. In a comment, Glenmark Pharmaceuticals has denied the allegations made against them (Health Payer Specialist, February 26).

Hospitals Across the Country Face Department Closures, Reduced Services

• Across the country, more than a dozen healthcare organizations have shuttered departments or stopped services in an attempt to maintain solvency or manage workforce shortages. These include providers in Ohio, Texas, California, Utah, Alabama, Pennsylvania, Connecticut, Illinois, Colorado, Maine, Iowa, New York, and South Dakota. Seven of the fourteen closures end obstetrics and gynecology services as well as pediatric care. Other hospitals are ending inpatient services and transitioning to outpatient-only care (Becker’s Payer Issues, February 27).

Salesforce Launches AI Solution to Reduce Healthcare Administrative Workload

• Salesforce is launching an artificial intelligence (AI) tool designed to help healthcare providers manage administrative tasks like prior authorization, appointment scheduling, and insurance verification. This new tool, called Agentforce for Health, aims to reduce the administrative burden on healthcare staff, especially those involved in follow-up care. Set to be available in June, some features are already being tested at Rush University Medical Center. In addition to improving patient access, Salesforce is also developing AI tools for clinical research, including one that matches patients with clinical trials (Modern Healthcare, February 28).

Strong Growth for Medicare Special Needs Plans

• Medicare Special Needs Plan (SNP) enrollments saw an unexpected rise in 2025, growing by 10.1% from the previous year with more than 7.3 million people enrolled. This surge came as a bright spot in an otherwise slowing Medicare Advantage market. UnitedHealthcare, the leader in the sector, gained the highest number of new enrollees in Dual Eligible Special Needs Plans (D-SNPs), which are for individuals eligible for both Medicare and Medicaid. Meanwhile, Humana saw a significant drop in this area. While overall Medicare Advantage growth slowed, SNPs remain a key focus for insurers, with companies like UnitedHealthcare and Elevance Health investing heavily in benefits and expanding into new markets. However, some insurers, including Centene and Devoted Health, faced losses in this space. Despite challenges, nonprofit VNS Health saw rapid growth in D-SNP memberships, 81% growth rate, after acquiring struggling plans in the upstate New York market (Modern Healthcare, March 3).

Sellers Dorsey Updates

NEWS

Meet Our Team: Q&A with Rachel Marsh, J.D., M.S.W.

• Sellers Dorsey Associate Director of Child and Family Well-Being, Rachel Marsh, has dedicated her entire career to serving children and families. Along the way, she’s learned that quality healthcare is key to improving outcomes for this population. Recently, we sat down with Rachel to ask about her career, the lessons she’s learned, and where she sees the biggest opportunities for the future of child and family well-being.
  Read the Q&A