HMA Weekly Roundup

Alaska

Alaska Awards MMIS Contract to Conduent. Conduent announced on January 15, 2025, that it was awarded a $92 million contract with Alaska to continue to operate and manage the state’s Medicaid Management Information System (MMIS) and modernize the system. Conduent has partnered with the state to deliver Medicaid Enterprise Systems technology solutions since 2007.

Florida

Florida Files New Lawsuit Over Premiums Provision in Federal 12-Month CHIP Eligibility Requirement. Bloomberg Law reported on January 8, 2025, that the Florida Agency for Health Care Administration (AHCA) has filed a lawsuit against the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services over a provision included in federal regulations finalized in November 2024. The Medicaid and CHIP Eligibility rule requires states to continue coverage for children enrolled in the Children’s Health Insurance Program (CHIP) even when participants fail to pay premiums, which are required in the state’s CHIP program. AHCA claims the enrollment mandate exceeds CMS authority. Florida previously filed a lawsuit over the provision and has delayed implementation of the expansion of its CHIP program, called KidCare, due to the requirements in the final rule.

Hawaii

Hawaii Receives Federal Approval for Section 1115 QUEST Integration Demonstration Extension for HRSN, Reentry Services, Foster Youth. The Centers for Medicare & Medicaid Services announced on January 8, 2024, that it has approved Hawaii’s five-year extension to its Section 1115 Hawaii QUEST Integration demonstration, effective through December 31, 2029. New state authorities include health related social needs (HRSN) services related to nutrition; funding for HRSN infrastructure; a contingency management pilot for individuals with a stimulant use or opioid use disorder; non-medical transportation to and from HRSN and home and community-based services; coverage for former foster youth up to age 26; and coverage to certain incarcerated individuals, for up to 90 days prior to release in jails, prisons, and youth correctional facilities.

Iowa

Iowa to Seek Medicaid Work Requirements Demonstration. The Des Moines Register announced on January 14, 2025, that during the 2025 annual Condition of the State address, Iowa Governor Kim Reynolds said Iowa will pursue a Section 1115 demonstration for Medicaid work requirements for able-bodied adults. In addition, Reynolds proposed implementing higher Medicaid reimbursements for more complicated pregnancies and increased rates for nurse midwives. The Governor is also in favor of providing Medicaid coverage for doulas.

Kentucky

Kentucky Provider Tax Improving Hospital Margins. Kentucky Lantern reported on January 14, 2025, that the Hospital Rate Improvement Program (HRIP) has been improving hospital margins, according to the Kentucky Hospital Association. The association stated to the House Health Services Committee that without the program, state hospitals would be operating at a negative 6 percent margin. HRIP, which is a value-based program, provides an additional $2.2 billion in funding annually to Kentucky’s hospitals through a provider tax.

Maryland

Maryland Receives Approval for Section 1115 Demonstration Reentry Services Amendment. The Centers for Medicare & Medicaid Services (CMS) announced on January 13, 2025, that it has approved Maryland’s HealthChoice Section 1115 demonstration amendment to provide reentry services. The amendment authorizes the state to provide pre-release Medicaid coverage to eligible incarcerated individuals who are diagnosed with substance use disorder, serious mental illness, or both, up to 90 days before release from state-managed prisons and jails. The amendment also authorizes Maryland to expand the number of participant spaces in the Assistance in Community Integration Services pilot program. The HealthChoice demonstration is authorized through December 31, 2026.

Massachusetts

Massachusetts Governor Signs Law to Increase Private Equity Oversight. Modern Healthcare reported on January 8, 2024, that Massachusetts Governor Maura Healey signed legislation to require private equity investors, real estate investment trusts, and management service organizations to submit certain financial report and increased non-compliance fines. The law will also broaden the authority of the Massachusetts Health Policy Commission and allow the regulator to seek testimony from financial sponsors at its annual cost trends hearing. The law does not grant the state authority to completely block a private equity transaction.

Michigan

Michigan Issues Competitive Grant Funding Opportunity for Statewide Crisis Intervention Services. The Michigan Department of Health and Human Services (MDHHS) issued on January 15, 2024, a competitive Grant Funding Opportunity (GFO) worth a total of $1.8 million for crisis response initiatives that would establish or expand community-based mobile crisis intervention services statewide. MDHHS anticipates issuing up to seven awards to any applicable local public entity, including federally recognized tribal governments and local health departments. Awardees may receive up to $225,000 during the initial grant period from April 1, 2025, to September 30, 2025. A continuation of awards will be available for October 1, 2025, to September 30, 2027, with up to $775,000 per applicant. Grant applications must be submitted by February 11. The grants are part of an effort to expand behavioral health services in the state.

Minnesota

Minnesota to Release Section 1115 Medicaid Reentry Demonstration, Seeks Evaluation Plan Design Contractor. The Minnesota Department of Human Services released on January 10, 2025, a request for proposals (RFP) seeking a vendor to design a monitoring protocol and conduct evaluations for a new Section 1115 Medicaid Reentry Demonstration. The state directed the Minnesota Department of Human Services to submit an application to the Centers for Medicare & Medicaid Services (CMS) to implement a medical assistance demonstration project to provide health care and coordination services that connect to community-based services for individuals confined in state, local, or Tribal correctional facilities prior to community reentry. The selected contractor will need to provide an examination of pre-release carceral and community providers, provide insight and design planning for data collection and analysis, conduct the corresponding independent evaluation, and develop the mid-point assessment and interim and summative evaluation reports as required by CMS. Proposals are due February 20, with awards anticipated on April 2. The contract is expected to run from May 1, 2025 through April 30, 2030, with an optional contract extension up to a total of five years.

New Mexico

New Mexico to Increase Medicaid Rates for HCBS for Individuals with IDD. KRQE reported on January 9, 2025, that New Mexico received federal approval to increase Medicaid rates for services provided to individuals with intellectual and developmental disabilities (IDD), beginning in mid-January. The rate increases will apply to home and community based services (HCBS) programs including the Developmental Disabilities Waiver; Mi Via Waiver; and the Medically Fragile Waiver. Rate increases for the Developmental Disabilities and Medically Fragile Waivers will be retroactive to July 1, 2024, and the Mi Via Waiver increases will be retroactive to October 1, 2024.

New York

New York Governor to Prioritize Mental Health, Prescription Drug Costs. Crain’s New York reported on January 14, 2025, that New York Governor Kathy Hochul has proposed the state does more to address mental illness and prescription drug costs, as outlined in the 2025 State of the State Address. Hochul’s proposals include passing laws to allow for more involuntary commitments for severe mental illness, as well as expanding support for the state’s healthcare safety net by aiding financially struggling medical facilities and hospitals with funding through an expanded version of the Safety-net Transformation Program. Additionally, the governor aims to participate in the U.S. Food and Drug Administration’s program allowing states to import lower-cost drugs from Canada, introduce legislation requiring greater transparency from pharmacy benefit managers, direct the state Department of Health to evaluate access to prescription weight-loss drugs among Medicaid enrollees with cardiovascular health problems, and distribute $25 million from the Reproductive Freedom and Equity Grant Fund. New York is also implementing two workforce programs under a Section 1115 demonstration to expand the health, behavioral, and social care workforce.

New York Judge Authorizes State to Continue Implementation of Single Statewide Fiscal Intermediary for CDPAP. Bloomberg Law reported on January 14, 2025, that New York is able to move forward with its implementation of the single statewide fiscal intermediary (FI) for the $9 billion Consumer Directed Personal Assistance Program (CDPAP) after a judge ruled in favor of the state in a lawsuit that sought to block the move. The New York Department of Health will transition to a single FI April 1, 2025.

New York Judge Temporarily Blocks Fiscal Intermediary from Relaying CDPAP Consumer Data. Spectrum News reported on January 8, 2025, that a New York state Supreme Court judge has issued a temporary order to block one fiscal intermediary from sending patient data records for people in the Consumer Directed Personal Assistance Program (CDPAP) to a third party. This comes after the state Department of Health ordered nearly 700 fiscal intermediaries to send consumer data related to CDPAP by January 15, 2025, as the agency informs program users about the change to a single statewide fiscal intermediary. The temporary block only affects one fiscal intermediary and the Health Department is on track to transition to the single fiscal intermediary on April 1, according to Governor Kathy Hochul’s office.

New York to Crack Down on NEMT Medicaid Fraud. Crain’s New York Business reported on January 8, 2025, that New York is cracking down on potential Medicaid fraud in non-emergency medical transport (NEMT) after an investigation claimed that 54 transportation companies falsely billed Medicaid. All of the companies were issued cease-and-desist orders and 15 of them were ordered to repay stolen funds. New York Attorney General Leticia James cited lack of NEMT oversight for the increasing fraud.

Oregon

Oregon Extends Medicaid Coverage for Young Adults with Special Health Care Needs. The Oregon Health Authority (OHA) announced on January 8, 2025, that it has expanded Oregon Health Plan (OHP) benefits, vision and dental benefits, and the new health-related social need housing and climate benefits to certain individuals ages 19 and 20 through a new eligibility category called Young Adults with Special Health Care Needs (YSHCN). To qualify for YSHCN benefits, an individual must be 19 or 20, have a qualifying health need, and have an individual or family income up to 205 percent of the federal poverty level. OHA estimates that 4,000 people will newly qualify for OHP coverage and 15,000 current OHP members will qualify for enhanced benefits through the new eligibility category.

Oregon Medicaid Enrollees Face Dental, SUD Provider Shortages. The Oregon Health Authority announced on January 14, 2025, that more than half of Oregon dentists do not accept Medicaid, with approximately 12 percent of Oregonian dentists providing nearly all of the Medicaid treatment while 30 percent of the population is on Medicaid, according to a report by Oregon State University. The report found that in the Medicaid Management Information System, there are about 83,000 enrolled Medicaid providers, and of those 25,076 are mental health providers and 2,341 are substance use disorder (SUD) providers. Wages for most direct care workers are lower than for other entry-level jobs, but employers’ ability to raise their pay is limited by low Medicaid reimbursement levels.

South Dakota

South Dakota Governor Proposes Budget Cuts to State Social Services, Human Services Departments. South Dakota Searchlight reported on January 13, 2025, that South Dakota Governor Kristi Noem has proposed budget cuts to both the state Department of Human Services and the Department of Social Services for utilization adjustments, totaling $42 million during the current fiscal year and $38 million for the upcoming fiscal year. Noem aims to right-size the budgets to match utilization of programs in both departments, citing their budget reversions, totaling $77 million over 2023 and 2024. The governor also proposed a combined $25 million reduction for current fiscal year Medicaid enrollments, citing slower-than-expected enrollment after the state expanded Medicaid eligibility.

Utah

Utah Receives Federal Approval for Section 1115 Medicaid Demonstration Amendment for HRSN, Expanded Dental. The Centers for Medicare & Medicaid Services (CMS) announced on January 8, 2024, that it has approved Utah’s amendment to its section 1115 Utah Medicaid Reform demonstration. The amendment will allow the state to provide health-related social needs (HRSN) services and infrastructure support; non-medical transportation to and from HRSN services; expanded eligibility for adult dental services; and fertility preservation services for individuals up to age 50 that have been diagnosed with cancer.

National

CMS Issues CY 2026 Marketplace Benefit, Payment Parameters Final Rule. The Centers for Medicare & Medicaid Services (CMS) issued on January 13, 2025, a final 2026 Payment Notice which sets standards for the Health Insurance Marketplaces, including for issuers and brokers, and safeguards consumers from unauthorized changes to their health care coverage, effective January 15, 2025. The final rule also includes 2026 user fee rates for issuers, changes to calculations for the Basic Health Program, and annual public reporting of summary-level information from the Affordable Care Act (ACA) Quality Improvement Strategy which will begin January 1, 2026. A second Final Rule published withdraws a notice of proposed rulemaking regarding coverage of certain preventive services under the ACA.

CMS Awards Planning Grants to Address Care Continuity for Justice-involved Individuals. The Centers for Medicare & Medicaid Services (CMS) announced on January 13, 2025, that 12 states and territories were awarded funding in the first round of planning grants that will allow state Medicaid and Children’s Health Insurance Program (CHIP) agencies to address operational barriers and care continuity for Medicaid and CHIP-eligible people who are inmates at a public institution, including jails, prisons, and youth detention facilities. Awardees, which will receive up to $5 million over a four-year period, include Alaska, District of Columbia, Kentucky, Maine, Massachusetts, Nevada, New Mexico, North Dakota, Puerto Rico, South Dakota, Utah, and Virginia. Applications for the second round of funding closes on March 17, 2025.

HHS Releases AI Strategic Plan. Fierce Healthcare reported on January 14, 2025, that the U.S. Department of Health and Human Services (HHS) has released an artificial intelligence (AI) strategic plan outlining the agency’s goals for adopting responsible AI use to improve overall health. The plan will focus on AI use in medical research and discovery, medical product development, healthcare delivery, human services delivery, public health, cybersecurity and critical infrastructure protection, and internal operations. Healthcare delivery goals include accelerating AI innovation and adoption, promoting trustworthy and ethical AI use, promoting external validation for quality assurance, and using AI to empower the healthcare workforce. The strategic plan also outlines potential risks of AI use in each category.

U.S. Supreme Court to Rule on ACA Preventive Care Coverage Dispute. Health Payer Specialist reported on January 13, 2024, that the U.S. Supreme Court is expected to rule on a dispute over preventative care coverage under the Affordable Care Act. The Biden administration appealed to the Supreme Court following a U.S. Fifth Circuit ruling which sided with a group of conservative businesses who rejected providing full insurance coverage for HIV medications on religious grounds. The U.S. Supreme Court is expected issue a final ruling in June.

PBMs Generate Billions of Dollars by Marking Up Specialty Drug Prices, FTC Report Finds. The Hill reported on January 14, 2025, that the three largest pharmacy benefit managers (PBMs), CVS Caremark Rx, Cigna’s Express Scripts, and United’s Optum Rx, earned $7.3 billion in revenue between 2017 and 2022 through vertical integration and marking up the prices of specialty prescription drugs by as much as 1,000 percent, according to a secondary interim report released by the Federal Trade Commission (FTC). The report found that 41 percent of these specialty drugs dispensed at pharmacies affiliated with one of the top three PBMs were marked up between 100 and 1,000 percent, and 22 percent were marked up by more than 1,000 percent. The price markups were found to be in excess of the National Average Drug Acquisition Cost. FTC’s analyses did not include Medicaid, instead focusing on commercial and Medicare Part D prescriptions, due to the regulatory framework for pharmacy reimbursement policies differing for Medicaid plans and varying by state.

CMS Proposes 4.33 Percent Medicare Advantage Pay Raise Beginning CY 2026. The Centers for Medicare & Medicaid Services (CMS) released on January 10, 2025, the Calendar Year (CY) 2026 Advance Notice for Medicare Advantage (MA) and Medicare Part D plans to update payment policies. The advance notice complements CMS’ November 2024 proposed rule for CY 2026 MA and Part D plans, and would increase MA payments by 4.33 percent on average, a $21 billion jump from 2025 to 2026. The proposed increase factors in growth rates of underlying costs, changes to MA star ratings, ongoing implementation of the new risk-adjustment model, and risk score trends. The notice also proposes technical updates to MA and Part D to ensure accurate payments to plans and proposes to complete the three-year implementation of the risk-adjustment model. Additionally, CMS concurrently released the draft CY 2026 Part D Redesign Program Instructions. CMS is accepting public comments on the notice through February 10, 2025.

House Budget Committee Discusses Potential Medicaid, ACA Budget Cuts. Politico reported on January 10, 2025, that Republican Congress members have begun discussing potential options to offset the federal budget, including potential cuts to Medicare, Medicaid, and the Affordable Care Act (ACA). A list originating from the House Budget Committee outlined $5.7 trillion in potential savings over 10 years, including repeals of certain health rules made under the Biden administration totaling $420 billion in savings, and $2.3 trillion in Medicaid cuts, which could come from equalizing Medicaid payments for able-bodied adults, lowering the minimum Federal Medical Assistance Percentage, and implementing Medicaid work requirements. Other savings options include “reimagining” the ACA to save up to $151 billion by ending insurance subsidies and limiting coverage eligibility based on citizenship status, and finding $479 billion in savings in the Medicare program.

Top Part D Drugs Have Nearly Doubled in Price Since Entering the Market. CNBC reported on January 9, 2025, that 25 Medicare Part D brand-name drugs with the highest spending in 2022 have nearly doubled in price since they entered the market, according to an AARP Public Policy Institute report. These drugs, which are not currently subject to Medicare price negotiation, have been on the market for an average of 11 years. These lifetime price increases often exceeded the corresponding rate of inflation.

MACPAC Releases Brief on Effects of Mental Health in Postpartum Medicaid Beneficiaries. The Medicaid and CHIP Payment and Access Commission (MACPAC) released in January 2025, an issue brief exploring differences in reported health status, access to care, service utilization, and overall health between postpartum Medicaid beneficiaries with and without mental health conditions, using data from the Postpartum Assessment of Health Survey. The brief also includes a comparison of individuals with mental health conditions by payer type.