Issue #246
Sellers Dorsey Digest
July 24, 2025
Federal News
CBO Releases Final Official Score and Coverage Loss Estimates for the OBBBA
On July 21, the Congressional Budget Office released its official score of the final version of the One Big Beautiful Bill Act. The CBO forecasts that the new law will increase the federal deficit by $3.4T and result in 10 million people losing healthcare coverage. Previously, the CBO estimated that the bill would cause 11.8 million to become uninsured and stated that it would provide more information on differences soon. The office noted that the removal of the undocumented immigrant policy from the bill contributed to the lower uninsured figure. The bill saves more than $1T through federal spending cuts, largely from Medicaid. Other cost savings come from cuts to federal agricultural spending and significant revisions to SNAP, which increase states’ financial responsibilities. The 2017 Tax Cuts and Jobs Act extensions make up the bulk of the deficit increase, with estimated decreases in federal revenue up to $4.5T when considering new tax policies added to the bill. As requested by Senate Republicans, the CBO also released an analysis of the bill that does not account for the cost of extending the 2017 tax cuts. Using this method, the Act increases the federal deficit by $366B (Politico, July 21).
Recent CMS Findings Show 2.8 Million Dually Enrolled in Federal Health Programs
On July 17, CMS announced it will collaborate with states to reduce duplicate enrollment within government health programs. The agency worked with software engineers to review enrollment data and found that, in 2024, about 1.6 million Americans were dually enrolled in Medicaid/CHIP and a subsidized Affordable Care Act (ACA) Exchange plan and about 1.2 million Americans were enrolled in Medicaid/CHIP in two or more states. The agency believes that cutting down on dual enrollment could save $14B annually. Pre-pandemic, federal regulations required Periodic Data Matching (PDM) at least twice a year, but the system was temporarily suspended to ensure that enrollees had continuous coverage during the public health emergency. Through the OBBBA, HHS will be required to collect addresses of Medicaid enrollees in 2027 and by 2029 have a system in place to effectively prevent duplicative enrollment.
CMS has introduced three initiatives to tackle duplicate enrollment:
- CMS will provide states with a list of individuals enrolled in two or more Medicaid/CHIP programs, and states will re-evaluate eligibility.
- CMS has already notified individuals who are dually enrolled in Medicaid/CHIP and a subsidized federally facilitated exchange (FFE) and the individual will be tasked with either disenrolling from Medicaid/CHIP if they aren’t eligible, ending their subsidized FFE plan, or if the information is incorrect, they must notify the exchange and submit the needed documentation.
- CMS will provide subsidized state-based exchange (SBE) plans with a list of individuals who are dually enrolled in a SBE and Medicaid/CHIP and recheck eligibility.
CMS plans to work with states to ensure that enrollees do not unnecessarily lose coverage. The agency is expected to release both guidance and lists of dually enrolled individuals to states in August. States will be expected to recheck eligibility by late fall (CMS, July 17; Inside Health Policy, July 18).
20 States Sue Over Changes to ACA Marketplace Access
20 Democratic state attorneys general and Pennsylvania Governor Josh Shapiro are suing the Trump administration over a new federal rule they say will make it harder for people to access Affordable Care Act (ACA) marketplace coverage. The lawsuit alleges that the rule, which shortens enrollment periods, increases eligibility verification, and eliminates certain special sign-up windows, could cause up to 1.8 million people to lose coverage and lead to higher healthcare costs for states due to increased uninsured care and Medicaid spending. The rule also bans federal funding for gender-affirming care under ACA plans and adds stricter requirements for verifying income and eligibility. States say the regulation violates the Administrative Procedure Act by rushing the public comment process and imposing burdensome changes on states. In response, the Department of Health and Human Services (HHS) claims the rule will prevent fraud, lower premiums by around 5%, and make the system more stable and sustainable. The Centers for Medicare & Medicaid Services (CMS) have also released data supporting the changes, citing improper enrollments and promising tighter checks on duplicate coverage across Medicaid, Children’s Health Insurance Program (CHIP), and ACA plans. States aim to delay the rule set to take effect this upcoming August (Fierce Healthcare, July 17; HealthCare Dive, July 21).
20 State AGs Sue to Block Trump Administration’s Ban on Undocumented Immigrants Accessing Certain Federal Programs
Following the HHS’ announcement earlier this month to ban undocumented immigrants from accessing an expanded list of federally funded programs, on July 21, 20 attorneys general have filed suit against the Trump Administration to block the federal government’s reinterpretation and ability to remove access to essential social services, health, and education programs. The Department of Health and Human Services’ (HHS) previous interpretation of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) had allowed undocumented individuals to access certain federally funded public benefit programs. HHS has now revised what qualifies as a Federal Public Benefit and has extended the list to include benefits such as certified community behavioral health clinics, Head Start, the Title IV-E Prevention Services program, and Title IV-E Educational and Training Voucher program. In the complaint, the AGs speak to the impact of pulling access to historically accessible benefits such as preventative care, housing assistance, and food programs. AGs additionally argue that the ban is unconstitutional and violates the Spending Clause as Congress has not given fair notice to states, nor time to accept these changes (HHS, July 10; Gothamist, July 21; Mass, July 21; Reuters, July 21).
CHAI Urges Federal Collaboration as AI Tools Aim to Ease Medicaid Rule Changes
The Coalition for Health AI (CHAI) is assembling a team to determine how artificial intelligence (AI) can help with the rollout of new Medicaid work requirements introduced by the recently passed budget reconciliation bill, the One Big Beautiful Bill Act (OBBBA, or the Act). The Act requires most able-bodied Medicaid expansion enrollees to meet work requirements to keep Medicaid coverage. CHAI’s team plans to build AI tools that make it easier for people to apply for Medicaid and for states to verify eligibility. More than 150 groups, including public health leaders and tech companies, have already shown interest. CHAI believes AI can ease administrative burdens and improve accuracy while still relying on human oversight. The group urges federal collaboration to help recipients and agencies adjust effectively (Fierce Healthcare, July 21).
Senator Hawley Introduces Bill to Reverse OBBBA’s Medicaid Financing Provisions
On July 15, Senator Josh Hawley introduced a new bill, S.2279, titled “Protect Medicaid and Rural Hospitals Act,” which would repeal certain sections of the budget reconciliation bill and bolster payments to rural providers. Hawley’s bill would repeal portions of the newly enacted law related to Medicaid provider taxes and state directed payments, two funding and payment mechanisms that are set to be severely capped in the coming years. The new bill would also double the Rural Health Transformation Program fund to $100B by extending the $10B per year payments for an additional five years. Hawley voted for the budget reconciliation bill earlier this month, and his new bill currently sits in the Senate Committee on Finance (Fierce Healthcare, June 16; The Hill, June 18).
CMS Indicates It Will No Longer Approve 1115 Waivers that Include Continuous Eligibility and/or Workforce Initiatives
The Centers for Medicare & Medicaid Services (CMS) announced a policy shift related to waivers that include continuous eligibility and workforce initiatives it says will strengthen its oversight of Medicaid and the Children’s Health Insurance Program (CHIP). CMS says the changes aim to keep these programs focused on those who truly qualify and to use funds more responsibly.
Key changes include:
- CMS will no longer approve or extend Section 1115 waivers that allow extended enrollment in Medicaid or CHIP beyond statutory limits. These waivers had permitted multiyear continuous coverage even when individuals became ineligible. Going forward, states must follow statutory minimums, including 12 months of continuous eligibility for children and postpartum women.
- CMS will also no longer approve or extend Section 1115 waivers that include workforce development initiatives. Existing programs will continue through their approved end dates (CMS, July 17; Heath Payer Specialist, July 18).
State Updates
Alaska Law Mandates More Timely Responses to Prior Authorization Requests
Alaska’s Senate Bill 133, which became law on June 14, requires health insurers to provide more timely responses to prior authorization requests for certain treatments and services. Beginning January 1, 2026, insurers must notify patients within 72 hours for normal requests and within 24 hours for expedited requests. Additionally, insurers have up to two weeks to obtain more information on a prior authorization request that lacks sufficient information for a decision. However, the law still allows insurers to require patients to take generic versions of prescriptions and mandate “step therapy” protocols as a utilization management tool. The bill unanimously passed both chambers of the state legislature and was supported by several medical organizations in the state as well as some more moderate support from Premera Blue Cross Blue Shield of Alaska, the largest health insurer in the state (Alaska Beacon, July 18).
Connecticut Seeks Approval for Local Manufacturers to Produce GLP-1s
Connecticut is looking to lower the cost of GLP-1s, potentially through the use of local manufacturing companies. Governor Lamont signed Senate Bill 10 on June 24, creating new requirements intended to increase access to healthcare, including prescription drugs. Additionally, House Bill 7192 was signed into law on July 8 and creates a bipartisan drug task force and authorizes the Commissioner of Social Services to enter a contract with any manufacturer of generic drugs for Medicaid beneficiaries. Most GLP-1’s are produced outside of the country and Connecticut is seeking approval from the Trump Administration to work with local generic drug manufacturers in hopes of reducing the cost for residents (Fox 61, July 21).
New York Addresses Impact of OBBBA
New York Governor Kathy Hochul held a cabinet meeting to discuss the potential effects of the OBBBA, which state officials say could reduce funding for healthcare and nutrition programs. According to the Hochul administration, the bill may lead to an estimated $13B annual cut to New York’s healthcare system, potentially affecting health insurance coverage for about 1.5 million residents and creating financial strain on hospitals and providers. Beginning in 2026, the Act would also require states to contribute funding to the Supplemental Nutrition Assistance Program (SNAP) for the first time, which could cost New York and local governments up to $1.4B annually. Additional provisions could reduce or eliminate SNAP benefits for more than 300,000 households through stricter eligibility and work requirements. The Act may also affect access for certain immigrants with legal status and cut $29M in funding for SNAP-Ed, a nutrition education program. Governor Hochul has directed state agencies to assess the Act’s potential impacts and identify strategies to help maintain services (NY Gov, July 17).
SPAs and Waivers
SPAs
- Services
- Mississippi (MS-25-0009, effective May 1, 2025): Allows the Division of Medicaid (MOD) to withdraw prior authorization language and adds clarification regarding inpatient referrals for physician specialist and visit limits for inpatient hospital physicians.
- Wisconsin (WI-25-0012, effective April 1, 2025): Exempts bone marrow, stem cell, and sickle cell disease (SC) gene therapy transplant recipients from mandatory HMO enrollment.
- Eligibility
- Mississippi (MS-24-0010, effective July 1, 2024): Extends presumptive eligibility to pregnant women for ambulatory prenatal care services under Medicaid for up to 60 days.
State Directed Payment Preprints
- New Mexico (Effective July 1, 2025): Renews a value-based purchasing and uniform percent increase arrangement established by the state to increase nursing facility per diem rates by the market basket index (MBI) factor and to provide quality incentive payments for nursing facilities that meet performance requirements on specified quality metrics for the rating period covering July 1, 2025, through December 31, 2025, incorporated into the capitation rates through a risk-based adjustment.
- Tennessee (Effective January 1, 2025): Amends 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.
- Nebraska (Effective July 1, 2024): Establishes a uniform increase for non-state owned or operated hospitals established by the state for inpatient and outpatient hospital services for the rating period, January 1, through December 31, 2024, incorporated into the capitation rates through a separate payment term.
- Arizona (Effective October 1, 2024): Renews a uniform increase by the state for primary care, behavioral health outpatient, and justice involved clinic services for the rating period October 1, 2024, through September 30, 2025, incorporated into the capitation rates through a separate payment term.
- New Hampshire (Effective July 1, 2025): Amends a Minimum Fee Schedule established by the state for durable medical equipment for the rating period covering July 1, 2025, through June 30, 2026, incorporated in the capitation rates through a risk-based rate adjustment.
- Maryland (Effective January 1, 2025): Renews a uniform percentage increase and value-based payment established by the state for professional services at an academic medical center, primary care services, specialty physician services, and qualifying practitioner services for the rating period covering January 1, 2025, through December 31, 2025 incorporated in the capitation rates through a separate payment term.
- Massachusetts (Effective January 1, 2025): Renews a Maximum Fee Schedule for MassHealth contracted acute hospitals (except for specialty cancer hospitals and freestanding pediatric hospitals for an inpatient discharge with a MassHealth DRG Weight of 3 or greater) for the rating period covering January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Missouri (Effective July 1, 2025): Renews a uniform dollar increase for government-owned or operated ground ambulance providers for the rating period covering July 1, 2025, through June 30, 2026, incorporated in the capitation rates through a separate payment term.
- Missouri (Effective July 1, 2024): Establishes a maximum fee schedule for inpatient and outpatient hospital services established by the state for the rating period covering July 1, 2024, through June 30, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Louisiana (Effective January 1, 2024): Renews a fee schedule and value-based payment arrangement for behavioral health and home and community-based services providers for the rating period covering January 1, 2024, through December 31, 2024.
- Maryland (Effective January 1, 2025): Establishes a population-based payment for primacy care services for the rating period covering January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Maryland (Effective January 1, 2025): Establishes a minimum Fee Schedule for primary care services 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 January 1, 2025): Renews a value-based purchasing and uniform percent increase arrangement established by the state to increase nursing facility per diem rates by the market basket index (MBI) factor and to provide quality incentive payments for nursing facilities that meet performance requirements on specified quality metrics for the rating period covering January 1, 2025, through June 30, 2025, incorporated into the capitation rates through a risk-based adjustment.
- New Mexico (Effective January 1, 2025): Renews a uniform dollar increase for inpatient and outpatient hospital services and performance-based quality payments established by the state for the State Teaching Hospital that provides guaranteed access to care for Native Americans for the rating period covering January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- New Mexico (Effective January 1, 2025): Renews a uniform increase and value-based payment arrangement established by the state to implement the Healthcare Delivery Access Act, 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.
- New Mexico (Effective January 1, 2025): Renews a value-based payment and uniform increase established by the state for participating nursing facilities that demonstrate quality improvement for the rating period covering January 1, 2025, through June 30, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- West Virginia (Effective January 1, 2024): Renews a uniform increase for eligible Acute Care Hospitals established by the state for Inpatient, Outpatient, and Physician Services for the rating period covering July 1, 2024, through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Virginia (Effective January 1, 2024): Establishes a uniform percentage increase for physician services by physicians employed by or contracted with a private acute care hospital system with a level one trauma center located in the Tidewater Metropolitan Statistical Area (MSA) in 2020, for the rating period, July 1, 2024, through June 30, 2025, incorporated into the capitation rates through a separate payment term.
- Vermont (Effective January 1, 2025): Renews a value-based payment arrangement for Children’s Integrated Services (CIS) providers established by the state for the rating period January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Vermont (Effective January 1, 2025): Renews a value-based payment arrangement for community-based residential substance use treatment facilities for the rating period covering January 1, 2025, through December 31, 2025, incorporated into the capitation rates through a risk-based rate adjustment.
- Wisconsin (Effective January 1, 2025): Establishes a value-based payment arrangement for Children’s Integrated Services (CIS) providers established by the state for the rating period January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Puerto Rico (Effective October 1, 2024): Renews a population-based payment established by the state for primary care services for the rating period, October 1, 2024, through September 30, 2025, incorporated into the capitation rates through a risk-based rate adjustment.
- Virginia (Effective July 1, 2024): Establishes a uniform percentage increase for physician services by physicians employed by or contracted with a private acute care type 2 hospital system with at least one level 2 trauma center as of January 2022 located in Lord Fairfax Health District and Northwest Health Planning Region, for the rating period, July 1, 2024, through June 30, 2025, incorporated into the capitation rates through a separate payment term.
- New York (Effective April 1, 2024): Renews an enhanced minimum fee schedule for home and community-based services approved through the state’s 1115 waiver for the rating period, April 1, 2024, through March 31, 2025, incorporated into the capitation rates through a risk-based rate adjustment.
- California (Effective January 1, 2023): Establishes a long-term care delivery system reform, transitioning coverage from fee-for-service to managed care at fee-for-service per-diem rates, for the rating periods covering January 1, 2023, through December 31, 2025, incorporated into the capitation rates through a risk-based rate adjustment.
- Virginia (Effective July 1, 2024): Establishes a uniform percentage increase for physician services by physicians employed by or contracted with a private acute care type 2 hospital system with at least one level 2 trauma center as of January 2022 with at least 290 beds in cost report period 2020 located in the Eastern Health Planning Region, for the rating period, July 1, 2024, through June 30, 2025, incorporated into the capitation rates through a separate payment term.
- Virginia (Effective July 1, 2025): Renews a uniform increase for physician services provided by physicians who participate in Children’s Specialty Group, affiliated with Children’s Hospital of the King’s Daughters, for the rating period, July 1, 2025, through June 30, 2026, incorporated into the capitation rates through a separate payment term.
- New Mexico (Effective January 1, 2025): Renews a uniform dollar increase established by the state for eligible government-owned emergency medical transport providers for the rating period covering January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a separate payment term.
- Arizona (Effective October 1, 2023): Renews a uniform increase by the state for primary care, behavioral health outpatient, and justice involved clinic services for the rating period October 1, 2023, through September 30, 2024, incorporated into the capitation rates through a separate payment term.
- New Mexico (Effective January 1, 2025): Renews a uniform percentage increase established by the state for inpatient and outpatient services provided by practice plans under contract to community hospitals that serve a disproportionate share of Native American enrollees 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 December 31, 2025): Renews a value-based payment arrangement established by the state for eligible primary care and behavioral health providers contracted with the Egyptian Health Department for the rating periods covering January 1, 2025, through December 31, 2025, incorporated in the capitation rates through a risk-based rate adjustment.
- Tennessee (Effective January 1, 2025): Renews a value-based payment and uniform dollar increase established by the state for primary care services for the rating period, January 1, 2025, through December 31, 2025, incorporated into the capitation rates through a risk-based rate adjustment.
- Utah (Effective July 1, 2024): Renews a uniform increase established by the state for home and community-based services providers, behavioral health providers, and school-based services providers for the rating period covering July 1, 2024, through June 30, 2025, incorporated in the capitation rates through a separate payment term.
- Colorado (Effective July 1, 2024): Establishes a Minimum Fee Schedule for Community Mental Health Centers and Comprehensive Behavioral Health Providers for the rating period covering July 1, 2024, through June 30,2025, incorporated in the capitation rates through a risk-based rate adjustment.
