Sellers Dorsey Digest

Federal Updates

News

RFK Jr. Meets with Food Companies and Has Begun to Consider FDA Process Changes

• On March 10, HHS Secretary Robert F. Kennedy Jr. reportedly met with senior executives at major food companies to discuss the Department of Health and Human Services (HHS) and FDA’s goal of “promoting radical transparency to make sure all Americans know what is in their food.” Reported to be in attendance were representatives from PepsiCo and General Mills. RFK Jr. has asked the current FDA commissioner to revise the food additive standard to block companies from labeling additives as “Generally Recognized as Safe” (GRAS) without prior FDA approval. HHS is currently looking into legislation to mitigate GRAS completely after the FDA announced that it may consider requiring companies to notify the agency if they plan to use such ingredients as well as report safety data. Many states have introduced their own regulations for such in the past. Consumer advocates have voiced concerns that this long-standing loophole has caused potentially dangerous additives to enter the food supply. As it stands, the FDA’s current GRAS notification program is voluntary, and companies have the choice to opt-into sharing data (Inside Health Policy, March 10).

Hearings for Dr. Oz to Take Place this Week

• On March 14, the Senate Finance Committee plans to hold the nomination hearing for Dr. Mehemet Oz to take the position of CMS Administrator. President Trump’s Administration will task Oz with cutting waste and fraud within CMS and tackling chronic diseases, as well as improving rural healthcare (Inside Health Policy, March 7).

HHS Layoffs Spark Confusion and Concern

• HHS terminated 2,908 employees, of whom 591 were subsequently reinstated, as part of a reduction initiative under the Trump Administration’s Department of Government Efficiency (DOGE), led by Elon Musk. During a call with House staff, officials made the announcement but avoided details about who made final decisions, only noting that they were made by “the leaders in place.” The agency also said that 8,846 probationary employees remain in consideration for potential layoffs. HHS would not specify which divisions of CMS were most affected. Rehires varied by agency, with the CDC rehiring 212 employees, the FDA rehiring 234 employees, and CMS rehiring 68 employees, and a handful of employees being rehired in other agencies. HHS is also offering early retirement packages for the next 10 days. Meanwhile, Senate Finance Committee Democrats have called for more details on how these staffing cuts are impacting CMS programs, such as Medicaid and Medicare, and the implementation of new drug pricing regulations (Inside Health Policy, March 7; Fierce Healthcare, March 10).

CMS Asks Hospitals to Update Gender-Affirming Care Policies

• On March 5, CMS sent an alert to hospitals announcing their intention to begin updating their policies regarding gender-affirming care, aligning with the Trump Administration’s position. The alert includes language that points to possible reprimands if hospitals do not update their policies and instead continue to deliver gender-affirming care to children and adolescents. This announcement follows the president’s executive order (EO) that calls for the federal government to stop funding and promoting gender-affirming care services for individuals under the age of 19, including hormone replacement treatment. The EO has received significant pushback since its release in January and has been temporarily blocked by a federal judge (Fierce Healthcare, March 6; AP, February 13).

Federal Legislation

Continuing Resolution from House Speaker Mike Johnson Extends Some Healthcare Policies

• House Speaker Mike Johnson released his continuing resolution (CR) over the weekend, which would fund the federal government through the end of the fiscal year, September 30, and extend some healthcare programs that are set to expire at the end of March, like Medicare telehealth flexibilities, community health center funding, and pay adjustments for low-volume hospitals. Notably absent from the continuing resolution is an adjustment for the 2.83% Medicare physician pay cut that went into effect on January 1. After passing the House rules committee on Monday night, the House passed the CR Tuesday in a 217-213 vote. The resolution now heads to the Senate and will need to pass before March 14 to avoid a partial government shutdown on March 14 (Fierce Healthcare, March 10; The Hill, March 11; Politico Pro, March 11).

Democratic Senators Reintroduce Bipartisan Healthcare Spending Bill

• On March 6, Senators Bernie Sanders and Ron Wyden reintroduced the bipartisan healthcare spending bill from December 2024 that nearly passed Congress before being halted by opposition from Elon Musk and President-elect Donald Trump. The bill includes a two-year extension of Medicare telehealth flexibilities, reforms for pharmacy benefit managers, physician payment relief from CMS pay cuts, and more. According to Inside Health Policy sources, Senate Democrats are determining if they can pass the bill with unanimous consent. If not taken up in the CR, some policies could be incorporated into the reconciliation package (Inside Health Policy, March 6).

Federal Regulation/Guidance

CMS Releases Proposed Rule on ACA Marketplace Health Insurance Enrollment

• On March 10, CMS released a proposed rule ahead of publication in the Federal Register on Affordable Care Act (ACA) Health Insurance Marketplace enrollment, titled, “2025 Marketplace Integrity and Affordability Proposed Rule (CMS-9884-P).” The rule aims to address improper enrollments by preventing individuals from being enrolled in Marketplace coverage without knowledge or consent, ensure stable and affordable insurance markets, and increase oversight into financial assistance for ACA plans. The proposed rule ends the availability of the monthly special enrollment period (SEP) for individuals with household incomes below 150% of the FPL; requires all Marketplaces to reinstitute pre-enrollment verifications for SEPs and require further verifications of income when there is no tax data available for verification; and shortens the annual Open Enrollment Period for individual market coverage offered through the ACA Marketplaces by ending it on December 15, when previously it ended on January 15. Other provisions include requiring Marketplaces to re-enroll an individual into their same plan but reduce the advance premium tax credit by $5 if the enrollee does not proactively verify their ongoing eligibility for a fully subsidized healthcare plan. The enrollee must pay a $5 monthly premium until they confirm or update their eligibility determination. Other proposals align with the Trump Administration’s priorities, like preventing sex-trait modifications from being covered as an essential health benefit and reverting to a previous definition of “lawfully present” which excludes individuals with status under Deferred Action for Childhood Arrivals from enrolling in Marketplace coverage (CMS.gov, March 10).

CMS Announces Assistance for States Struggling to Demonstrate Compliance with Interoperability and Prior Authorization Final Rule Deadline

• On March 11, CMS released further information regarding the Interoperability and Prior Authorization Final Rule Deadline. The rule (CMS-0057-F) was published in the Federal Register on February 8, 2024, and requires that beginning January 1, 2026, state Medicaid and CHIP FFS programs must send prior authorization decisions within 72 hours for urgent requests and seven calendar days for non-urgent requests. The rule also requires that providers must receive information on why requests were denied. In the recent announcement, CMS indicated that it would assist states in implementing these policies and extend the deadline for extenuating circumstances. States should email their Medicaid state lead and/or CHIP project officer before April 1, 2025, to identify and explain challenges that make achieving the January 1, 2026, deadline unavoidable. States should then present a target date for implementation. More information is available from the materials provided from the November 2024 Medicaid and CHIP all-state call (Medicaid.gov, March 11).

CMS Extends Deadline for Planning Grants to Improve Continuity of Care for Incarcerated Individuals

• CMS has prolonged the deadline for planning grants to enhance continuity of care for Medicaid and CHIP-eligible persons in jails and prisons. A total of $106.5M is accessible to state Medicaid and CHIP agencies to assist in easing difficulties in delivering care to individuals in prison and jail. The application deadline has been extended to April 18, 2025, and a live informational webinar will be held on March 27, 2025. The application process is still open for states not granted in round one. States that missed out on the first round of funding can still apply (Medicaid.gov, March 11).

Federal Studies and Reports

CBO Releases Report Detailing Projected Spending Available Under House Energy and Commerce Committee’s Jurisdiction

• On Wednesday March 5, the Congressional Budget Office (CBO) released a report that details projected mandatory spending under the Energy and Commerce (E&C) Committee’s jurisdiction. The total mandatory spending under the E&C Committee is expected to be $8.8T over the next 10 years, with Medicaid making up $8.2T or 93%, of the total. Spending outside of Medicaid and CHIP accounts for $381B in the E&C Committee. Moreover, the CBO report details that more than half of the $381B is already paid for, limiting the amount of cost savings to a maximum of $135B outside of Medicaid and CHIP. President Trump and Republican leaders in Congress maintain that spending cuts from Medicaid and CHIP would come from efforts to reduce “fraud, waste, and abuse,” as well as the expansion of work requirements for certain populations receiving benefits (Inside Health Policy, March 7: The Hill, March 5).

State Updates

News

Facing Losses, Blue Cross Blue Shield of Rhode Island Reduces Workforce, Administrative Expenses

• Last week, Blue Cross Blue Shield of Rhode Island (BCBSRI) reported a net loss of $115M in 2024 following a 20% increase in healthcare costs from the previous 18 months. Seeking to reduce its administrative expenses by approximately $20M annually, the company is laying off 30 employees, consolidating vendor contracts, and implementing other administrative cost-cutting measures. While healthcare prices and utilization increased overall for BCBSRI, pharmacy costs for members increased by 14% in 2024 and outpatient healthcare grew by more than 10% compared to the previous year. In conjunction with administrative cost savings, the company plans to implement policies to improve complex care management and pharmacy costs for members (GoLocalProv, March 6).

Ohio Suburb Proposes Health Program Grant to Help Low Income Individuals and Families Purchase Health Coverage

• On March 3, city council members in Grove City, Ohio, introduced legislation to create a pilot program called Grove City CARES, one of the first municipal health program grants in the U.S. The pilot program would aid households earning less than $30K annually with purchasing health coverage by awarding individuals up to $400 and families up to $600 annually. If passed, Grove City will allocate $75K to this program but is reportedly looking for additional contributions from employers in the community. A second reading and vote is scheduled for March 17 (The Columbus Dispatch, March 7).

Iowa Lawmakers Advance Bills Requiring Work for Medicaid Eligibility

• Iowa lawmakers are advancing House Study Bill 248 and SF 363, which would require certain Medicaid recipients to work a set number of hours per month to maintain eligibility. The bills direct the Iowa Department of Health and Human Services to request a federal waiver to implement the requirement under the Iowa Health and Wellness Plan. As of January, nearly 182,000 Iowans were enrolled in the plan, out of approximately 700,000 total Medicaid participants in the state (MSN, March 6).

States Ease Licensing for Foreign-Trained Doctors to Address Physician Shortage

• Several states have recently eased the process for foreign-trained doctors to get licensed in the U.S., a move aimed at helping ease the physician shortage, particularly in rural communities. Previously, physicians who completed their residency outside the U.S. were required to repeat the process in the U.S. to obtain a medical license. In 2023, at least nine states— Florida, Iowa, Idaho, Illinois, Louisiana, Massachusetts, Tennessee, Virginia, and Wisconsin—started waiving this requirement for some foreign-trained doctors, with other states considering the same. Approximately 26% of physicians in the U.S. were born outside the country, and many must go through lengthy processes to obtain licensure in the U.S. Supporters of these new processes argue that physicians shouldn’t have to redo a residency if they have already been trained abroad, and that these changes could help address the shortage in rural areas. Still, there are concerns over the potential impact on patient safety, with critics questioning whether the changes will be effective in solving the problem. Some new laws include conditions such as requiring foreign-trained doctors to work in rural areas after receiving a restricted license, which will eventually lead to full licensure after several years. While some believe these changes could improve rural healthcare access, others argue that more comprehensive solutions are necessary to meet the needs of underserved areas (Modern Healthcare, March 7).

SPA and Waiver Approvals

Waivers

• 1115(a)
  • Ohio
    • On February 28, Ohio submitted a request for a new 5-year Section 1115 demonstration to require new pre-enrollment eligibility limitations for the adult Medicaid expansion population, adults with incomes from 0 to 133% of the Federal Poverty Level (FPL). Ohio is seeking authority to require that at enrollment and each subsequent eligibility determination an individual must satisfy at least one of the following criteria: be employed; be enrolled in school or occupational training program; have intensive physical healthcare needs or serious mental illness; or be at least 55 years of age. The state aims to implement the enrollment and eligibility requirements statewide starting on January 1, 2026. The federal public comment period is open from March 7 through April 7.

SPAs

• Administrative
  • Arkansas (AR-24-0018, effective February 1, 2025): Establishes a Recovery Audit Contractor (RAC) exemption for two years.
  • California (CA-24-0040, effective December 1, 2024): Updates assurances to align with the federally mandated quality reporting requirements outlined in the Child Core set and behavioral measures on the Adult Core Set.
  • Iowa (IA-24-0018, effective December 1, 2024): Updates assurances that the state will comply with annual reporting requirements for Health Home Core set measures.
  • Minnesota (MN-24-0038, effective December 31, 2024): Updates assurances to align with the federally mandated quality reporting requirements outlined in the Child Core set and behavioral measures on the Adult Core Set.
  • Wyoming (WY-24-0008, effective December 31, 2024): Updates assurances to align with the federally mandated quality reporting requirements outlined in the Child Core set and behavioral measures on the Adult Core Set.
• Eligibility
  • California (CA-24-0035, effective December 1, 2024): Revises eligibility criteria for the Health Insurance Premium Payment (HIPP) program.
  • Idaho (ID-23-0015, effective January 1, 2023): Updates eligibility standards for the Former Foster Care Children (FFCC) group, based on the “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act”.
  • Nevada (NV-25-0010, effective January 16, 2025): Revises the allowable personal needs allowance (PNA) amount for patients with Intellectual Disabilities (ICF/IID) living in Intermediate Care Facilities. Additionally, allows for annual cost of living adjustment (COLA) increases.
  • Washington (WA-24-0048, effective November 1, 2024): Increases the income limit for individuals in pregnancy and postpartum programs to be at or below 210% of the FPL.
• Services
  • Louisiana (LA-24-0027, effective November 12, 2024): Revises the opioid treatment program provisions to increase the types of eligible providers that can treat and prescribe medications for medication-assisted treatment (MAT).
  • Nevada (NV-24-0031, effective January 1, 2025): Authorizes Nevada to participate in a voluntary supplemental Value-Based Purchasing (VBP) arrangement with drug manufacturers.
  • Oklahoma (OK-24-0024, effective January 1, 2025): Adds coverage of community health services provided by community health workers (CHW) at a public health clinic.
  • Utah (UT-24-0022, effective November 1, 2024): Increases scope of covered services that can be provided by physician assistants to pregnant women.
  • Wisconsin (WI-23-0002-A, effective January 1, 2023): Adds other licensed practitioners as part of the Ground Emergency Medical Transportation (GEMT) Reimbursement Program, when providing treatment at the scene.
• Payment
  • California (CA-24-0054, effective January 1, 2025): Sets forth Medical Allocation Recovery guidelines for unallocated settlements, judgements or awards, to mitigate financial burden from litigation
  • Louisiana (LA-24-0021, effective December 20, 2024): Revises the copay tier payment schedule for the Pharmacy Benefits Management (PBM) program, to align with CMS’ recommended guidelines.

Private Sector Updates

News

Walgreens to be Acquired by NY-Based Private Equity Firm

• On March 6, Walgreens Boots Alliance (WBA) announced that it entered into a final acquisition agreement with Sycamore Partners for about $10B at $11.45 a share. Sycamore Partners is a New York-based private equity firm that specializes in retail, consumer and distribution and retail-related investments. As it stands, Sycamore does not plan to acquire WBA’s primary care assets, including VillageMD, and instead plans to sell them off. If the sale is successful, shareholders could expect an additional $3 per share. The total value of this agreement has the potential to reach upwards of $23.7B with the additional primary care sales and debt, if the acquisition is closed. Walgreens has been given a go-shop period of 35 days to look for a better deal. Following the deal, WBA will continue functioning under the Walgreens brand but will be privatized (Health Payer Specialist, March 7; Walgreens Boot Alliance, March 6).

CVS Health to Revise Stores in Response to Declining Sales

• In response to declining retail sales across national drug store chains, CVS Health has announced that it will open 12 stores with full-service pharmacies and limited retail offerings. In 2024, 80% of sales for the company came from the pharmacy division. CVS Health plans to close 270 locations in 2025, following 800 net closures since 2022. The company aims to have some of the new, scaled-down stores operating by the end of this year, focusing on areas that lack pharmacy and immunization access (Wall Street Journal, March 8).

Eli Lilly Expands Access to Zepbound Through Telehealth Partnerships

• Eli Lilly has partnered with telehealth providers LifeMD and Teladoc Health to offer its weight loss medication, Zepbound (tirzepatide), at a reduced cost to patients enrolled in virtual care weight loss programs. These programs include remote monitoring, access to dietitians and health coaches, and medication prescriptions. By working directly with Lilly’s self-pay pharmacy, GiftHealth, patients can access Zepbound for as little as $349 per month. This move aims to expand access to GLP-1 medications while addressing cost concerns faced by employers. Eli Lilly’s efforts are part of a broader strategy to make weight loss treatments more affordable and accessible through telehealth platforms (Fierce Healthcare, March 7).

Sellers Dorsey Updates

News

Keeping Hope Alive: How Sellers Dorsey Helped St. Christopher’s Hospital for Children

• Sellers Dorsey partnered with Drexel University to ensure they could successfully access the necessary resources to keep the doors open of St. Christopher’s Hospital for Children (St. Chris), a hospital serving one of the most medically underserved neighborhoods in the nation. Thanks to our partnership, St. Chris continues to provide critical care to vulnerable children and families.

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