Issue #240
Sellers Dorsey Digest
June 12, 2025
Federal News
News
White House Issues Memo on Medicaid Payments
- The White House published a memo on Friday, June 6 directing HHS Secretary Robert F. Kennedy, Jr. (RFK Jr.) to ensure that Medicaid payment rates are not higher than Medicare, which could cap state Medicaid payments to providers under State Directed Payments (SDPs) to the Medicare rate. CMS also sent a proposed regulation on June 9 titled, “Medicaid Managed Care-State Directed Payments” to the Office of Information and Regulatory Affairs for review; the regulatory language is not yet available. The White House memo is not-binding and is not a regulation, but could be a precursor to future regulations. The memo remains vague on whether this would impact other payment rates in the Medicaid program like fee-for-service schedules. This comes as the Senate considers budget reconciliation bill provisions that would cap new SDPs at the total published Medicare rate, or 110% of Medicare for non-expansion states, but allow existing SDPs and those submitted before bill enactment to be grandfathered at current payment amounts. The Senate is anticipated to vote on the budget reconciliation bill in the coming weeks. If passed, the budget reconciliation bill provisions related to SDPs would supersede the White House Memo (Inside Health Policy, June 6).
Senate Confirms HHS Deputy Secretary Nominee
- On Thursday, June 5, the Senate confirmed former Silicon Valley executive Jim O’Neill as Deputy Secretary of HHS with a 52-43 vote. Previously, O’Neill worked under the George W. Bush Administration in various HHS roles and became principal associate deputy secretary of HHS. Upon his departure from the government, he served in various roles in the biotechnology sector, most recently working as the CEO of a foundation focused on research into regenerative medicine solutions for age-related diseases. In his new role as Deputy Secretary, O’Neill will oversee daily operations of subagencies like the FDA and CMS and the development of federal health regulations (Inside Health Policy, June 5).
HHS Secretary Moves to Replace All Current ACIP Committee Members
- HHS Secretary RFK Jr. announced his move to retire all 17 members of the current Advisory Committee on Immunization Practices (ACIP) in what he described as an effort to improve public trust and avoid conflicts of interest. Replacement members have not yet been announced. ACIP is tasked with advising the CDC on the effectiveness and clinical need of vaccinations and their subsequent coverage. ACIP members are appointed under the Public Health Services Act and can be removed and replaced under the discretion of the HHS Secretary, but legal experts say that the decision can be challenged in court. In his op-ed, the HHS Secretary included a 2000 report that discussed investigations into both ACIP and the FDA’s Related Biological Products Advisory Committee, pointing to a possible member replacement in that committee as well (Inside Health Policy, June 9; Wall Street Journal, June 9).
Federal Legislation
House Passes the SUPPORT for Patients and Communities Reauthorization Act of 2025
- On June 4, the U.S. House passed the SUPPORT for Patients and Communities Reauthorization Act of 2025 (HR 2483) in a 366-57 vote, which would reauthorize grant funding for critical programs that address substance use disorders and mental and behavioral health, and increase support for first responders and support staff training. The bill also establishes requirements for HHS, including revisions to the Controlled Substances Act, protections for the National Suicide Prevention Lifeline program from cybersecurity threats, and the establishment of an interagency work group for fentanyl contamination of illegal drugs. The bill currently awaits approval by the Senate (National Association of Counties, June 5).
Senators Weigh Medicare Advantage Reforms to Offset OBBBA Costs
- Senators are considering changes to Medicare Advantage to help offset the One Big Beautiful Bill Act’s (OBBBA) cost. Led by Senator Bill Cassidy of Louisiana, discussions have focused on potential savings through reforms such as raising the Medicare eligibility age and reducing payments to insurers like UnitedHealthcare and Humana. Although these proposals could save up to $275B over a decade, according to Senator Roger Marshall, they remain controversial. Senators Josh Hawley and Rand Paul have voiced strong opposition, warning that even limited changes to Medicare could damage public trust. Others, including Susan Collins and Ron Johnson, are more open to addressing waste and abuse within the program. UnitedHealth and Humana both have expressed support for reforms aimed at improving transparency and limiting excessive billing practices (Health Payer Specialist, June 6; Modern Healthcare, June 5).
CBO: Reconciliation Bill Cuts Health Spending and Raises Deficit
- The Congressional Budget Office (CBO) released its latest score of the budget reconciliation bill, “One Big Beautiful Bill Act,” as passed by the House in late May. CBO estimates the bill would reduce federal healthcare spending by over $1T and increase the uninsured population by 10.9 million people, totaling 16 million when including prior projected losses, over ten years. Separately, CBO and the Joint Committee on Taxation (JCT) estimate the bill, including tax provisions, new spending, and cuts, would increase the federal deficit by more than $2.4T between 2025 and 2034. Main causes of the deficit increase include tax policy changes adding $3.7T in costs over the decade, along with increased defense and border security spending. To offset these, the bill enacts significant cuts to health, education, and social safety net programs, including approximately $900B in cuts to Medicaid and ACA Marketplaces. The bill is projected to raise debt servicing costs by $551B over 10 years, pushing the federal debt held by the public from 117.1% to 123.8% of GDP by 2034. The bill’s healthcare policies would significantly cut coverage and spending, similar to the 2017 ACA repeal efforts (Brookings, June 4; The Conference Board, June 5).
Federal Regulation/Guidance
CMS Rescinds Guidance on Sexual Orientation and Gender Identity Questions for Medicaid and CHIP Applications
- On June 5, CMS issued an informational bulletin (CIB) notifying states that it has rescinded a previous informational bulletin from November 9, 2023. The rescinded CIB was titled Guidance on Adding Sexual Orientation and Gender Identity Questions to State Medicaid and CHIP Applications for Health Coverage. CMS stated that it no longer intends to collect this information as a part of T-MSIS data submissions (Medicaid.gov, June 5).
Federal Studies and Reports
New Policy Brief Points to Skyrocketing Uncompensated Costs for Essential Hospitals due to Budget Reconciliation Bill
- According to a policy brief by America’s Essential Hospitals (AEH), the latest version of the budget reconciliation bill has the potential to increase hospital’s annual uncompensated costs by at least $42.4B by 2034, $21.7B from Medicaid shortfall payments and $20.6M from caring for uninsured individuals. The analysis is primarily based on projections published by the Congressional Budget Office (CBO). AEH writes that essential hospitals such as disproportionate share hospitals (DSH) and safety-net hospitals may face disproportionate harm, as approximately three-quarters of their patient population are currently enrolled in Medicaid or Medicare, or are uninsured (Fierce Healthcare, June 5; AEH, June 5).
State News
News
Maryland Insurance Administration Issues Proposed Premium Increases for Marketplace Health Plans
- The Maryland Insurance Administration has announced proposed increases to premiums on the state-based Marketplace exchange. The increases are spurred by payers on the exchange, with companies requesting an average increase of 17% for individual premiums and 5.5% for businesses with small group plans. According to the Insurance Administration, this is a result of the uncertainty surrounding federal funding for the Affordable Care Act tax credits which are set to expire at the end of the year. The potential reauthorization for premium tax credits would be approximately 5% to 7%, instead of 8% to 18.7%. The Maryland Insurance Administration is currently working with the Maryland Health Benefit Exchange to design a state subsidy program to mitigate the potential impact of reduced federal tax credits. The Insurance Administration will hold a virtual public hearing on the premium increases at the end of July (CBS News, June 6).
Iowa Passes Work Requirements Law
- On June 6, Iowa Governor Kim Reynolds signed SF 615 into law, which would implement work requirements for 171,000 Iowans on Medicaid, if it is approved by the federal government. The legislation would require non-exempt individuals, ages 19 to 64, on the Iowa Health and Wellness Plan (IHAWP) to: (1) work at least 80 hours per month, (2) earn equivalent based on the state’s $7.25/hour minimum wage, or (3) be enrolled in education or job training courses. Exemptions for the work requirements program include those who are having a high-risk pregnancy, receiving unemployment benefits, participating in a substance use disorder treatment for up to 6 months, caretakers of a child under 6 years old, or are determined as disabled, medically frail or medically exempt. The law includes a clause that would end the IHAWP if the federal government were to repeal its approval for work requirements. Additionally, the work requirements will be extended to public assistance programs such as the Supplemental Nutrition Assistance Program (SNAP). Based on preliminary estimates of the impact of the Governor’s original proposal, which would have required additional work hours, by year 5, monthly enrollment for this population would decrease from 170,000 to 130,000 due to work requirements implementation (De Moines Register, June 6).
SPAs
SPAs
- Administrative
- Louisiana (LA-25-0009, effective August 6, 2025): Extends the Recovery Audit Contractor (RAC) exemption until August 5, 2027.
- Montana (MT-25-0005, effective April 1, 2025): Extends the Recovery Audit Contractor (RAC) exemption until April 30, 2027.
- Payment
- Connecticut (CT-25-0007, effective January 1, 2025): Updates the Community First Choice (CFC) program to align with the Collective Bargaining agreement (CBA) for personal care attendant services by increasing the hourly wage.
- Michigan (MI-25-0005, effective May 1, 2025): Authorizes Non-Emergency Medical Transportation (NEMT) to utilize the IRS Standard Business Mileage rate and increase mileage reimbursement to $0.70 per mile.
- New Hampshire (NH-25-0003, effective January 1, 2025): Adjusts payment methodology for laboratory services, radiology services and durable medical equipment (DME).
- North Carolina (NC-25-0014, effective January 1, 2025): To align with clinical policy, amends hospital readmission review requirements from 30 days to 72 days.
State Directed Payment Preprints
- Delaware (Effective January 1, 2025): Establishes a quality incentive program for inpatient hospital services, outpatient hospital services, primary care services, and specialty physician services at Nemours Children’s Hospital for the rating period covering January 1, 2025 through December 31, 2027, incorporated in the capitation rates through a risk-based rate adjustment.
- Kansas (Effective January 1, 2025): Renews a uniform increase for professional services at an academic medical center provided by Qualified Licensed Professionals as established by the state for the rating period, January 1, 2025 through December 31, 2025, incorporated into the capitation rates through a separate payment term.
- New Hampshire (Effective September 1, 2024): Renews a uniform dollar increase for children’s inpatient and outpatient services with recognized children’s hospitals established by the state for rating periods covering September 1,2024 through June 30, 2025, incorporated in the capitation rates.
- Michigan (Effective January 1, 2025): Renews a uniform dollar increase established by the state for direct care workers providing personal care services to eligible enrollees for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- New Mexico (Effective July 1, 2025): Renews a uniform dollar increase established by the state for eligible public and government-owned emergency medical transport providers for the rating period covering July 1, 2024 through December 31, 2024, incorporated in the capitation rates through a separate payment term.
- South Carolina (Effective July 1, 2025): Renews a uniform increase established by the state for emergency medical transport services provided by public and government-owned or operated ambulance service providers for rating periods covering July 1, 2025 through June 30, 2026, incorporated in the capitation rates through a separate payment term.
- South Carolina (Effective July 1, 2025): Renews a uniform increase established by the state for emergency medical transport services provided by ground non-governmental ambulance services providers for rating periods covering July 1, 2025 through June 30, 2026, incorporated in the capitation rates.
- South Carolina (Effective July 1, 2025): Renews a uniform increase established by the state for dispensing fees for Independent Community Pharmacies for the rating period covering July 1, 2025 through June 30, 2026, incorporated in the capitation rates through a separate payment term.
- Illinois (Effective January 1, 2025): Renews a uniform increase established by the state for inpatient and outpatient services at hospitals participating in delivery system transformation programs approved by the state for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- Texas (Effective September 1, 2024): Amends the Quality Improvement Payment Program (QIPP) for the rating period covering September 1, 2024 through August 31, 2027, incorporated in the capitation rates through a risk-based rate adjustment.
- Illinois (Effective January 1, 2025): Establishes a uniform increase established by the state for inpatient labor and delivery services at Safety Net hospitals for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- Washington (Effective January 1, 2025): Renews a uniform percentage increase for hospitals owned and operated by or operated by a state university established by the state for inpatient and outpatient hospital services for the rating period, January 1, 2025 through December 31, 2025, incorporated into the capitation rates through a separate payment term.
- Illinois (Effective January 1, 2025): Renews a uniform increase for critical access hospitals established by the state for outpatient hospital services for the rating period, January 1, 2025 through December 31, 2025, incorporated into the capitation rates through a separate payment term.
- Illinois (Effective January 1, 2025): Renews a uniform dollar increase for nursing facilities based on quality weighted Medicaid days for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- South Carolina (Effective January 1, 2025): Establishes a uniform increase established by the state for emergency medical transport services provided by public and government-owned or operated ambulance service providers for rating periods covering July 1, 2024 through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Tennessee (Effective January 1, 2025): Renews a value-based payment and uniform percentage increase established by the state for professional services at an academic medical center for the rating period, January 1,2025 through December 31, 2025, incorporated into the capitation rates through a separate payment term.
- Hawaii (Effective January 1, 2025): Renews a pay for performance arrangement established by the state for public and private nursing facilities as defined in the preprint for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a separate payment term. Also renews a uniform dollar increase established by the state for nursing facility services within government-owned nursing facilities for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- Pennsylvania (Effective January 1, 2025): Renews a uniform increase for professional services furnished by eligible physician practices for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- Washington (Effective January 1, 2025): Establishes a uniform percentage increase established by the state for behavioral health outpatient services for Medicaid-enrolled managed care enrollees delivered by PACT teams (Program of Assertive Community Treatment) for the rating period covering January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Wisconsin (Effective January 1, 2025): Amends a uniform percentage increase established by the state for eligible home and community-based services for the rating period, January 1, 2024 through December 31, 2024, incorporated into the capitation rates through a separate payment term.
- Massachusetts (Effective January 1, 2023): Establishes a minimum fee schedule for psychiatric services for enrollees under the age of 21 with Autism Spectrum Disorder or Intellectual or Developmental Disability (ASD/IDD) for the rating period covering January 1, 2023 through September 30, 2023, provided by the state’s Prepaid Inpatient Health Plan (PIHP), incorporated in the capitation rates through a risk-based rate adjustment.
- Nevada (Effective January 1, 2025): Renews a uniform percentage increase for inpatient and outpatient hospital services at non-state governmentally owned hospitals for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- South Carolina (Effective January 1, 2025): Establishes a uniform increase established by the state for emergency medical transport services provided by ground non-governmental ambulance services providers for rating periods covering July 1, 2024 through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Delaware (Effective January 1, 2025): Establishes a uniform percentage increase established by the state for personal care service claims for the rating period covering January 1, 2025 through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Illinois (Effective July 1, 2022): Amends a uniform dollar increase for nursing facilities based on quality weighted Medicaid days for the rating period covering January 1, 2022 through December 31, 2022, and incorporated in the capitation rates through a separate payment term.
- Pennsylvania (Effective January 1, 2025): Renews a value-based payment arrangement for opioid use disorder for private acute care hospitals for the rating period covering January 1, 2025 through December 31, 2027, incorporated in the capitation rates through a separate payment term.
- Mississippi (Effective July 1, 2024): Establishes the uniform dollar increase established by the state for inpatient hospital services, primary care services, and specialty physician services for the rating period, July 1, 2024 through June 30, 2025, incorporated into the capitation rates through a separate payment term.
- Pennsylvania (Effective January 1, 2025): Renews the value-based payment arrangement focused on potentially preventable admissions for private acute care hospitals for the rating periods covering January 1, 2025 through December 31, 2027, incorporated in the capitation rates through a separate payment term.
- Virginia (Effective July 1, 2025): Renews the minimum fee schedule established by the state for Durable Medical Equipment providers for the rating period covering July 1, 2025 through June 30, 2026, incorporated in the capitation rates through a risk-based rate adjustment.
- Pennsylvania (Effective January 1, 2025): Renews a value-based payment arrangement providing incentive payments to acute care general hospitals established by the state for the rating periods covering January 1, 2025through December 31, 2027, incorporated in the capitation rates through a separate payment term.
- New Hampshire (Effective September 1, 2024): Establishes a uniform dollar increase for inpatient discharges and outpatient visits to qualifying non-critical access hospitals for the rating period covering September 1, 2024 through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Missouri (Effective January 1, 2025): Establishes a uniform dollar increase for government-owned or operated ground ambulance providers for the rating period covering July 1, 2024, through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Tennessee (Effective January 1, 2025): Renews a uniform percentage increase established by the state for nursing facility services for the rating period, January 1, 2025 through December 31, 2025, incorporated into the capitation rates through a separate payment term.
- Missouri (Effective January 1, 2025): Establishes a uniform dollar increase for government-owned or operated ground ambulance providers for the rating period covering July 1, 2024, through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Tennessee (Effective January 1, 2025): Renews a uniform percentage increase established by the state for nursing facility services for the rating period, January 1, 2025 through December 31, 2025, incorporated into the capitation rates through a separate payment term.
- Illinois (Effective January 1, 2023): Amends a uniform dollar increase for nursing facilities based on quality weighted Medicaid days for the rating period covering January 1, 2023 through December 31, 2023, and incorporated in the capitation rates through a separate payment term.
- New Hampshire (Effective September 1, 2024): Renews a uniform dollar increase for inpatient discharges and outpatient visits to qualifying critical access hospitals for the rating period covering September 1, 2024 through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Nevada (Effective January 1, 2024): Amends the value-based payment established by the state for free standing nursing facilities for the rating period January 1, 2024 through December 31, 2024, incorporated in the capitation rates through a separate payment term.
- Pennsylvania (Effective January 1, 2024): Amends the Value-based payment arrangement for opioid use disorder for private acute care hospitals for the rating period covering January 1, 2024 through December 31, 2024, incorporated in the capitation rates through a separate payment term.
Sellers Dorsey Updates
News
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