Sellers Dorsey Digest

Federal Updates

DOGE Initiative to Cut Up to 10,000 HHS Positions

• On March 27, a reduction-in-force (RIF) notice was sent to the United States Department of Health and Human Services (HHS) workers’ unions that 8,000 to 10,000 positions would soon be eliminated, in addition to the 10,000 individuals who left voluntarily. The notice states that the RIF predominately targets administrative positions such as human resources, IT, finance and procurement sectors, as well as positions in high-cost regions or those that have been identified as being redundant across all federal agencies. HHS also announced a restructure of the organization with a likely May 27 effective date. A new division of HHS dubbed “Administration for a Healthy America” (AHA) will be created, consolidating certain existing departments under its umbrella, including the Assistant Secretary for Health (OASH), Health Resources and Services Administration (HRSA), Substance Abuse and Mental Health Services Administration (SAMHSA), Agency for Toxic Substances and Disease Registry (ATSDR), and National Institute for Occupational Safety and Health (NIOSH). Agency statements also note the plan to consolidate 10 regional HHS offices to 5 and a total of 28 divisions to 15. Under Secretary Kennedy’s objectives, HHS plans to refocus its priorities to end the chronic illness epidemic by focusing on eliminating environmental toxins and providing safe and healthy food and clean water to all Americans (HHS, March 27; HHS, March 27; Inside Health Policy, March 27).

Senate Republicans Working to Advance New Budget Resolution

• Senate Republicans are working to pass a budget plan this week that will be a departure from the resolution the chamber passed on February 20, setting forth a process where the House and Senate have instructed committees to achieve a minimum savings of different amounts. This change in process comes as lawmakers on both sides of the aisle have expressed concern about potential Medicaid cuts. To achieve their goals, Senate Republicans will look to the Parliamentarian to receive authority to use the current policy baseline. This would allow lawmakers to include the current tax cuts in baseline calculations and subsequently reduce the amount of spending cuts necessary to cover the cost of extending 2017 tax cuts. House Republican Leadership is said to be seeking approval within their caucus to advance the Senate plan to avoid further delays in the reconciliation timeline, promising that the chambers will enter negotiations led by House and Senate Republican leadership after the fact (Modern Healthcare, March 27; Politico, March 30; Politico Pro, April 1).

Remote Patient Monitoring Under Fire: Increased Audits Spark Industry Concerns

• Remote patient monitoring (RPM) companies are under increased government scrutiny. Over the past two years, audits conducted by Medicare Administrative Contractors (MACs) and the Department of Justice (DOJ) have uncovered billing issues such as denials and potential cases of fraud. The increased surveillance started in 2023 when the Office of Inspector General (OIG) began looking more closely at RPM, questioning how it was being used and billing practices. By 2024, a report flagged inconsistencies in Medicare claims, triggering more audits and several criminal prosecutions. Acknowledging that some companies may have engaged in improper billing practices, representatives of RPM companies suggest that while preventing fraud is necessary, excessive or misinformed audits may discourage innovation in remote healthcare. It is unclear whether the Trump Administration will continue to focus on RPM companies going forward. (Fierce Healthcare, March 28).

Medicaid and CHIP Enrollment Update (November 2024)

• On March 28, 2025, the Centers for Medicare & Medicaid Services (CMS) released the latest Medicaid and Children’s Health Insurance Program (CHIP) enrollment figures, showing national and state-specific data on eligibility operations and enrollment.

Key Highlights:

• • Total Enrollment: 79 million individuals (71.8 million in Medicaid, 7.3 million in CHIP).
  • Enrollment Trends:
    • Down 340,000 individuals (0.4%) from October 2024.
    • Medicaid enrollment decreased by 7.1 million (9%) since November 2023.
    • CHIP enrollment increased by 27,000 (0.4%) since November 2023.
    • Since February 2020, Medicaid enrollment rose by 7.6 million (12%), CHIP by 390,000 (6%).

Application & Processing:

• • Applications Received: 2.7 million in November 2024, up 14% from November 2023.
  • Processing Time:
    • 70% of modified adjusted gross income (MAGI) applications processed in ≤7 days.
    • 6% took more than 45 days.

Renewal & Disenrollment:

• • Renewal Outcomes:
    • 73% had coverage renewed (-2% from October).
    • 56% were automatically renewed (+2%).
    • 16% disenrolled (+0.2%), 11% for procedural reasons (+1%).

Marketplace & Basic Health Program (BHP) Enrollment:

• • Total coverage across Medicaid, CHIP, BHP, and Marketplaces: 102.8 million individuals.
  • Medicaid & CHIP dropped by 15.1 million since March 2023, while Marketplace enrollment grew by 6.7 million.

The report reflects post-pandemic eligibility redeterminations following the end of continuous enrollment on March 31, 2023, leading to coverage losses as states resumed routine renewals (Medicaid.gov, March 28).

Federal Legislation

Physician Organizations Urge Legislators to Support Reauthorization of Foreign Medical Graduate Program

• On March 26, 45 provider organizations sent a letter to the Senate and House in support of the Conrad State 30 and Physician Access Reauthorization Act (709 and H.R. 1585), which would strengthen and expand the program. The Conrad 30 Waiver Program allows J-1 Foreign Medical Graduates (FMGs) to bypass visa requirements and allow them to immediately begin practicing in the United States, provided that they work in a medically underserved community for at least three years. In the letter, the provider groups reiterated how the waiver program has aided in alleviating the burden of workforce shortages, especially in rural areas. In the past 30 years, the Conrad State 30 Program has placed over 20 thousand physicians into communities that lack proper access to healthcare and has been shown to be successful in retaining the physicians in those areas beyond the three-year commitment period (AHA, March 26; AHA, March 26, Fierce Healthcare, March 28).

Federal Litigation

Democratic State Attorneys General File Suit Against Trump Administration Over the Withdrawal of COVID-19 Grant Funding

• Democratic officials from 23 states and the District of Columbia are suing the Trump Administration for cancelling $11B in COVID-19 grant funding intended to support public health efforts. The lawsuit, filed on April 1, alleges that HHS Secretary RFK Jr. exceeded his authority by unexpectedly terminating grants across the country that were earmarked for disease tracking, vaccine administration, new technology, and more. Federal officials cited the end of the COVID-19 pandemic as the reason the funding must be rescinded as well as the agency’s new focus on ending the chronic disease epidemic. The California Attorney General argues that Congress authorized the grant funding as a way to protect against future pandemics, prohibiting HHS from revoking the money. The lawsuit involves all Democratic state attorneys general, as well as the governors of Kentucky and Pennsylvania. California AG Rob Bonta is seeking an injunction to prevent the funds from being withdrawn, although it is unknown when, or if, an injunction will be granted (Politico Pro, April 1).

State Updates

NEWS

New York Receives TRO, Pausing Consolidation of CDPAP Program

• In New York, a federal judge issued a temporary restraining order (TRO) against the state’s Department of Health, delaying the consolidation of the consumer-directed personal assistance program (CDPAP). The program allows Medicaid members who are eligible for home care services to choose and hire their own personal caregiver, which can include a friend or family member. The TRO lasts for three days, with Judge Block’s decision expected on Friday, April 4. A group of consumers and independent living centers representing their patients filed the suit last week, seeking a six-month delay on fiscal intermediary consolidation. New York was set to reduce the number of fiscal intermediaries, agencies that perform administrative tasks for program participants like filing taxes or managing timesheets, from 600 to one on April 1. Public Partnerships, LLC holds the new single fiscal intermediary contract but the plaintiffs allege that the transition may cause service disruptions and administrative challenges that would harm CDPAP participants. According to Governor Hochul’s office, consumers and workers can continue to register under the new fiscal intermediary even with the TRO in place. The transition would affect over 280 thousand consumers and 220 thousand workers in the CDPAP (PoliticoPro, March 31; NYDOH, April 1).

State Legislature Overturns Kentucky Governor Beshear’s Vetoes of Medicaid Work Requirements and Other Medicaid Policies

• On March 26, Kentucky Governor Andy Beshear vetoed House Bill 695. His veto was subsequently overturned by the Republican-supermajority legislature the next day. The newly enacted law makes many changes to Medicaid in the state by requiring legislative approval for any administrative changes to the Medicaid program that require federal approval, establishes work requirements, and reinstates some prior authorization requirements for behavioral health benefits. In his veto statement, Governor Beshear reiterated that the state may experience a loss in healthcare coverage for many adults and would be in conflict with some of Kentucky’s federally approved programs that are already in effect. The work requirement included in HB 695 implements a mandatory community engagement waiver program for able-bodied adults without dependents who have been enrolled in the Medicaid program for over 12 months. Evidence of providing childcare, enrollment in higher education, a job, or community engagement can also be used to meet the requirements (KY Legislature, March 26; Kentucky Lantern, March 26; Lexington Herald, March 28).

Montana Governor Signs Bill to Remove Medicaid Expansion Sunset Date

• Montana Governor Greg Gianforte officially signed House Bill 245 on March 27, removing the anticipated 2025 sunset date of Medicaid expansion in the state. The bill provides continued healthcare coverage for over 75 thousand low-income adults covered under the program but also creates work requirements for enrollees. While Governor Gianforte supports Medicaid as a “safety net,” in a written statement provided by his office, he emphasized the importance of work requirements and policies that promote self-sufficiency. The bill, sponsored by Representative Ed Buttrey, received strong support from the Montana Chamber of Commerce, hospitals, tribal governments, and healthcare providers. Representative Buttery says that 10 years’ worth of data shows that the program is working well, strengthening rural healthcare and even saving the state money. However, some Republican lawmakers that opposed the bill argued that the Medicaid expansion program does not do enough to encourage enrollees to transition to higher-paying jobs and private insurance. Despite these concerns, a March public poll from Montana Free Press and Rutgers University’s Eagleton Center for Public Interest Polling shows 77% of polled Montana residents support the Medicaid expansion in Montana (Montana Free Press, March 28).

SPA and Waiver Approvals

Waivers

• 1115(a)
  • Idaho
    • On March 12, 2025, Idaho submitted a request to extend its 1115 demonstration titled, “Idaho Behavioral Health Transformation,” for another five years. The state seeks renewed authority to provide residential and inpatient treatment for individuals with substance use disorder (SUD) and/or serious mental illness (SMI). The state is requesting new expenditure authority for the Youth Empowerment Services (YES) group, a home and community-based section 1915(i) group, to extend eligibility for full Medicaid state plan benefits to youth under age 18 who are diagnosed with a Serious Emotional Disturbance (SED) and have a family income up to 300% FPL. The state is requesting that CMS not renew its use of legally responsible individuals to provide personal care services. The federal public comment period will be open from March 25 through April 25.

SPAs

• Administrative
  • Virginia (VA-24-0023, effective October 1, 2024): Removes provisions for informal and formal provider appeals.
• Services
  • Oregon (OR-25-0003, effective January 1, 2025): Updates the Tribal Consultation Policy.
  • Utah (UT-24-0024, effective January 1, 2025): Updates provider qualifications for Rehabilitative Services Practitioners.
• Payment
  • Hawaii (HI-24-0011, effective December 28, 2024): Updates the Child & Adolescent Mental Health Division (CAMHD) fee schedule and modifies the requirements and limits for the provision of peer support services under community mental health rehabilitative services.
  • Maine (ME-23-0012-A, effective January 1, 2023): Updates the payment rate for certain rehabilitative services.
  • Maine (ME-24-0005-B, effective January 1, 2024): Updates the payment rate for certain rehabilitative services.
  • Maine (ME-24-0033, effective January 1, 2025): Updates the payment rate for certain rehabilitative services.
  • New Hampshire (NH-24-0010, effective October 1, 2024): Authorizes the quarterly Medicaid Quality Improvement Plan (MQIP) supplemental payment pool methodology and payments for eligible licensed nursing homes, from October through December 30, 2024.
  • New Mexico (NM-23-0018-A, effective January 1, 2024): Adds coverage and payment for chiropractic services within the Alternative Benefit Plan (ABP) .
  • Northern Mariana Islands (MP-24-0004, effective October 1, 2024): Adds coverage and payment for of on-island and off-island medical and non-emergency transportation.

Private Sector Updates

NEWS

Rising Demand and Challenges in Pediatric Home Healthcare

• The demand for pediatric home healthcare services for children and adolescents under age 18 is growing due to the increasing number of young patients with chronic conditions. Companies like Bayada Home Health Care, Aveanna Healthcare, and Alliance Homecare are stepping up by planning acquisitions and expanding into new states. However, potential cuts to Medicaid funding, which primarily pays for these services, could pose significant challenges. Around 20 million children in the United States under age 18 need extended medical care, making home healthcare a cost-effective alternative to hospital care. The rise in chronic conditions like asthma, diabetes, and cerebral palsy is driving this demand. Medicaid covers about three-quarters of pediatric home health visits, but potential federal funding cuts could impact service availability. Despite these concerns, companies are focusing on states with higher Medicaid reimbursements and expect strong resistance from parents if home care becomes less accessible (Modern Healthcare, April 2).

Microhospitals Emerge as Cost Effective Way to Increase Access to Care

• Across the country, microhospitals have been emerging as a way to increase access to healthcare while controlling costs. Microhospitals are fully licensed hospitals that operate 24/7 but typically only have around eight to 15 beds, not including emergency bays. These hospitals can offer acute care, emergency services, imaging and lab work, and minor surgery to those with less intensive needs. Microhospitals generally require less time and capital to begin and cost less to operate than traditional hospitals while maintaining the flexibility to tailor services to the needs of the community. Several new microhospitals are expected to open over the next couple of years, one in Delaware and five across Pennsylvania. Microhospitals can also be viable healthcare options across urban, suburban, and rural areas (Modern Healthcare, March 31).

Survey on Tariff Implications Showcase Concerns Across the Board

• In January, Black Book Market Research conducted a survey that uncovered concerns from the healthcare industry regarding disruptions in access, affordability, and operations that may come about due to tariffs on imported goods. Among the 200 survey participants were patients, manufacturers, physicians, and hospital executives. Key findings from the survey include:
  • a 10% increase on pharmaceutical costs due to tariffs on active pharmaceutical ingredients (APIs) from China.
  • 90% of surveyed hospital finance executives reported that they may have to charge patients or insurers higher service charges to offset increased costs.
  • 84% of payers expect higher claim costs on medical treatments and drugs.
  • 39% of healthcare IT executives expect increased costs for imported technology such as software licensing.
  • a 15% surge in costs for health systems and hospitals in the next six months (Becker’s Hospital Review, March 27; Access Newswire, February 2).

Hackers Steal Patient Data in Oracle Cyberattack

• Sometime after January 22, hackers broke into Oracle’s systems, stealing patient data to extort healthcare providers throughout the United States. The breach targeted older Cerner servers before Oracle had completed its cloud migration. Oracle notified affected clients, stating the attack likely stemmed from stolen customer credentials. The exact number of impacted patients and providers is still unknown, but the FBI is investigating. Oracle, which acquired Cerner for $28B in 2022, is working with organizations to assess the damage. The Department of Veterans Affairs confirmed its data was not affected (Modern Healthcare, March 31).

Sellers Dorsey Updates

NEWS

 In the News: Director of Healthcare Quality Shares Insights on Data and Public Health

• Sellers Dorsey Director of Healthcare Quality, Karla Richardson shared her insights with HealthIT Answers on how data analytics is shaping the future of healthcare and public health. She highlights how we can leverage big data, predictive analysis, and visualization to improve outcomes, allocate resources effectively, and address health disparities.
  Read the full article

Sellers Dorsey Welcomes New Senior Director, Kara Curtis

• Sellers Dorsey welcomes Kara Curtis to the Firm as a Senior Director. Kara will help lead our efforts to expand our consulting services to help providers improve their performance in value-based care, population health, and quality optimization and will play a key role in our ongoing mission of improving healthcare quality, access, and outcomes.
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