Weekly Health Care Policy Update – February 28, 2025

March 7, 2025

In this update: 

  • Administration Updates
    • White House Issues RFI on AI Action Plan
    • President Trump Issues EO Emphasizing Price Transparency
  • Legislative Updates
    • House Passes Budget Resolution
    • Senate Judiciary Committee Requests Information on UnitedHealth’s MA Billing Practices
  • Federal Agencies
    • HHS Issues Policy Statement Rescinding Notice and Comment Requirements for Contracts, Grants, and Loans
    • FDA Cancels Meeting to Select Flu Shot Strains
    • NIH Study Sections to Restart Some Grant Reviews
  • Other Updates
    • SCOTUS Refuses Cases Challenging Anti-Abortion Demonstration Zones
    • Federal Judge Extends Injunction on NIH Indirect Costs Cap
    • Judge Blocks EO on Diversity, Equity, and Inclusion
  • New York State Updates
    • DOH Issues Proposed Regulations to Update Certificate of Need (CON) Process
    • DOH Adopts Final Regulations on Behavioral Health Network Adequacy and Access
    • OPWDD Adopts Final Rule Updating Pathway to Employment Regulations
    • DOH to Host 1115 MRT Waiver Annual Public Forum

Administration Update

White House Issues RFI on AI Action Plan 
On February 25th, President Trump announced a Request for Information (RFI) on the Development of an Artificial Intelligence (AI) Action Plan. The Action Plan will “define the priority policy actions needed to sustain and enhance America’s AI dominance, and to ensure that unnecessarily burdensome requirements do not hamper private sector AI innovation.” The RFI is seeking input from industry groups, private sector organizations, and non-federal government entities on topics including, but not limited to, hardware and chips, data centers, energy consumption and efficiency, model development, open source development, application and use, explainability and assurance of AI model outputs, cybersecurity, data privacy and security, risks, regulation and governance, technical and safety standards, national security and defense, research and development, education and workforce, innovation and competition, intellectual property, procurement, international collaboration, and export controls. 

The RFI is available here and will remain open until March 15th.

President Trump Issues EO Emphasizing Price Transparency 
On February 25th, President Trump issued an executive order (EO) directing the Departments of the Treasury, Labor, and Health and Human Services (HHS) intended to “fulfill […] the promise of radical price transparency” in health care. The 2019 rule directed hospitals to publish payer-negotiated prices online in a machine-readable standard charges file. Slow adoption prompted action by the Biden Administration to increase penalties for noncompliant hospitals and add new mandatory data points. According to the American Hospital Association (AHA), approximately seven in ten hospitals are compliant with current price transparency rules. However, a November 2024 report by Patient Rights Advocate claimed that only 21% of hospitals were in “full” compliance.

Trump’s new EO directs HHS to: 

  • Ensure that hospitals and insurers “disclose the actual prices of items and services, not estimates”;
  • Issue updated guidance or proposed regulatory action ensuring pricing information is standardized and easily comparable across hospitals and health plans; and
  • Issue guidance to ensure compliance with these requirements.

The full text of the EO is available here.

Legislative Update

House Passes Budget Resolution
On February 25th, the House passed its fiscal year (FY) 2025 budget resolution on a mostly party line vote (217-215), with one Republican, Rep. Thomas Massie (R-KY), joining all Democrats in opposing the resolution. Key differences between the House- and Senate-passed measures must now be resolved, including a key piece of the House resolution directing the Energy and Commerce Committee, which has jurisdiction over Medicare and Medicare, to reduce federal spending by $880 billion. Republicans urged support for the resolution by noting that the legislative text does not specify exactly how the Committee should reduce federal spending and that Medicaid is not mentioned in the resolution.
 
Ongoing negotiations between Senate and House Republican leadership and the White House aim to find a consensus budget resolution that can pass both chambers of Congress. Complicating matters are several deadlines facing Congress in the coming weeks, including a somewhat artificial March 7th deadline for committees to report budget reconciliation legislation (which requires passage of the budget resolution first) and a March 14thexpiration of federal government funding.
 
Negotiators may be moving towards a Continuing Resolution (CR), a short-term funding patch, as discussions on a larger bill proceed. A CR will require at least seven Democratic votes in the Senate and likely some level of House Democratic support as well.
 
Senate Judiciary Committee Requests Information on UnitedHealth’s MA Billing Practices
On February 25th, Senate Judiciary Committee Chair Chuck Grassley (R-IA) sent a letter to UnitedHealth Group (UHG) CEO Andrew Witty regarding the company’s Medicare billing practices. The letter details reports of obscure high-revenue fraudulent diagnoses, waste, and abuse, resulting in an alleged $8.7 billion in excess payments in 2021 alone. Grassley requested training manuals, guidance documents, compliance program details, audit results and other documents from UHG, along with questions concerning software, AI, and medical record reviews. This letter signals some congressional willingness to pick up on investigations initiated by the Biden Administration into Medicare Advantage fraud.
 
The announcement is available here.

Federal Agencies

HHS Issues Policy Statement Rescinding Notice and Comment Requirements for Contracts, Grants, and Loans
On February 28th, HHS submitted a policy statement to the Federal Register that would rescind the Richardson Waiver, which required HHS to use notice and comment rulemaking rules and regulations for matters relating to public property, loans, grants, benefits, or contracts.
 
In 1971, HHS adopted a policy that waived the APA exemptions and requires the Department to use notice and comment for rules and regulations relating to public property, loans, grants, Effective immediately, this notice officially rescinds the waiver that required the use of notice and comment for areas that are exempt under the APA. The notice states that HHS “will continue to follow notice and comment rulemaking procedures in all instances in which it is required to do so by the statutory text of the APA.”
 
This will allow HHS the discretion to apply notice and comment procedures to matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, along with the good cause exemption. Overall, this permits HHS Secretary Kennedy more unilateral power on contracts, grants, and loans under HHS’s purview.          
 
The statement is available here.
 
FDA Cancels Meeting to Select Flu Shot Strains
On February 26th, the Food and Drug Administration (FDA) sent an email to members of the Vaccines and Related Biological Products Advisory Committee to cancel a March meeting that would have selected strains to be included in next season’s influenza vaccine. The email did not offer a reason for the cancellation and the FDA offered no additional comment. The meeting is convened each spring to collect expert recommendations on which specific strains drugmakers should include in their manufacturing process. Drugmakers produced roughly 148 million doses for the 2024-2025 season.
 
NIH Study Sections to Restart Some Grant Reviews
On February 24th, National Institutes of Health (NIH) employees in the Office of the Director were informed that some Federal Register notices for study sections will resume. Study sections review most major academic research grants, fellowships, and small business grants, as overseen by the Center for Scientific Review. There are over 175 separate study sections, and it remains unclear which sections will resume activity. Notably, though, the notices of advisory council meetings, which make the final recommendation, appear to be suspended until further notice. Preventing advisory council meetings is likely a violation of federal judges’ orders in the last few weeks. To date, an estimated $1.5 billion in new funding has been stalled.

Other Updates

SCOTUS Refuses Cases Challenging Anti-Abortion Demonstration Zones
On February 24th, the Supreme Court announced its refusal to hear a set of cases concerning free speech rights near abortion clinics. The pair of cases were brought by anti-abortion activists against city ordinances establishing demonstration-free buffer zones around abortion clinics. The plaintiffs argued that their First Amendment rights were threatened by these ordinances. The majority of justices found that the rules were in line with precedent set by Hill v. Colorado (2000). Justices Thomas and Alito dissented, claiming that the aforementioned case was wrongfully decided, noting an interest in revisiting the precedent.
 
Federal Judge Extends Injunction on NIH Indirect Costs Cap
On February 21st, a federal judge extended the temporary restraining order blocking the Trump Administration from capping indirect costs in National Institutes of Health (NIH) grants. The extension was granted until U.S. District Attorney Angel Kelley issues a final decision. The proposed 15% cap (from 30-70%) on indirect costs could affect $4 billion in funding to universities and other research institutions. Since the policy was announced, stakeholders have been sounding the alarm over the potential fallout of this policy. On February 20th, 45 mayors, cities, and counties filed an amicus brief detailing the consequences for jobs, innovation, and population health.
 
The amicus brief is available here.  
 
Judge Blocks EO on Diversity, Equity, and Inclusion
On February 21st, U.S. District Judge Adam Abelson blocked President Trump’s executive order (EO) barring funding for “equity-related” grants or contracts, citing a likely violation of constitutional protections, in a lawsuit brought by the City of Baltimore and higher education groups. The judge’s preliminary injunction dictates that the Administration may not place such requirements on its grant awards or contracts moving forward, though it does allow for the Attorney General to investigate and report on diversity, equity, and inclusion (DEI) practices. The EO prompted many health care entities to reconsider or pause DEI-related work since it was unclear whether Medicare program participants fell within the designation of “federal contractors.”

New York State Updates

DOH Issues Proposed Regulations to Update Certificate of Need (CON) Process
On February 26th, the New York State (NYS) Department of Health (DOH) issued proposed regulations that would update the Certificate of Need (CON) process, which governs the construction, renovation, and other service changes within health care facilities. Governor Hochul’s 2024 State of the State directed DOH to make updates to the CON process, including increasing the financial thresholds that require projects to undergo more detailed reviews and streamlining the application and approval processes.

The proposed regulations would replace the existing regulations at 10 NYCRR Section 710.1, making changes to thresholds and policies within each of the review tiers, as follows:

Full Review

  • Increase the Full Review monetary threshold for projects by general hospitals from $30 million to the greater of:
    • $60 million; or
    • 10% of operating costs, capped at $150 million.
  • Increase the Full Review monetary threshold for projects by other facilities (e.g., nursing homes, diagnostic and treatment centers) from $15 million to:
    • $20 million; or
    • 10% of operating costs, capped at $30 million.
  • Require Full Review only for projects that add or convert more than 10% of existing beds to a higher level of care, regardless of cost.
  • Remove certain specific services from requiring Full Review, including Therapeutic Radiology, Cardiac Catheterization, Bone Marrow Transplantation, Burn Care, AIDS Centers, and Epilepsy Services.
  • Add Lung Transplantation as requiring Full Review.

Administrative and Limited Review

  • Increase Administrative and Limited Review thresholds from $15 million to $30 million for general hospitals.
  • Increase Administrative and Limited Review thresholds from $6 million to $8 million for other facilities.
  • Make any project funded primarily by state grants eligible for Administrative Review.
  • Remove projects involving emergency room space from requiring Administrative Review to reduce approval times and support providers in meeting heightened demand for such services.

Notice Only

  • Increase the threshold for non-clinical projects requiring notice only to DOH from $6 million to $12 million.
  • Allow any project that is otherwise eligible for Limited Review, but is architecturally self-certified by the applicant, to be eligible for notice only as long as it does not involve a change in beds or services that would otherwise require an update to the operating certificate.
  • Require notice only for the addition or renovation of exam rooms in facilities where such space already existing within or adjacent to previously certified space, regardless of project costs.

The proposed regulations are available here. Public comment may be submitted to regsqna@health.ny.gov through April 28th.

DOH Adopts Final Regulations on Behavioral Health Network Adequacy and Access
On February 26th, DOH adopted final regulations to establish network adequacy standards for behavioral health services for Medicaid Managed Care Organizations (MCOs). The Fiscal Year 2023-24 Enacted Budget required DOH, in consultation with the Department of Financial Services (DFS), the Office of Mental Health (OMH), and the Office of Addiction Services and Supports (OASAS) to develop regulations by the end of last year on this topic. DFS has adopted identical network adequacy regulations, which are applicable to regulated commercial insurance plans.

As with the DFS regulations, the DOH regulations require MCOs to ensure that its network has adequate capacity and availability to offer behavioral health services appointments within specified timeframes (i.e., within 10 business days for initial outpatient visits, and within 7 calendar days following a hospital discharge or emergency room visit). If the MCO is not able to locate a participating provider within 3 business days of receipt of an access complaint, the MCO must allow the member to receive services from an out-of-network provider and may not impose additional cost-sharing.
The regulations allow MCOs to meet appointment wait time requirements using telehealth appointments, unless the patient specifically requests an in-person appointment. The regulations also include provider directory requirements, reporting requirements, requirements for responding to complaints, and additional plan responsibilities regarding network adequacy and access.

The final regulations are available here and will be effective July 1st. 

OPWDD Adopts Final Rule Updating Pathway to Employment Regulations
On February 26th, the NYS Office for People with Developmental Disabilities (OPWDD) adopted a final rule that updates Pathway to Employment Regulations. Pathway to Employment is a time-limited, person-centered, comprehensive career and vocational planning and support service. The goal of the service is to help individuals in developing a vocational plan with an identified career path to obtain competitive integrated employment in the future.

The updated regulations: 

  • Expand the types of allowable services;
  • Set eligibility criteria for individuals to access services;
  • Set limits on services;
  • Describe when and through what modalities services may be delivered;
  • Require community-based vocational experiences for service recipients;
  • Streamline documentation requirements; and
  • Set requirements on provider billing and staff training.

The Notice of Adoption, including public comments on the proposed regulations and OPWDD corresponding responses, is available in the State Register here. The new regulations will be effective April 1st. 

DOH to Host 1115 MRT Waiver Annual Public Forum
On March 26th from 9am to 12pm, DOH will host a virtual public forum for New York’s existing 1115 waiver programs, during which the public may provide oral comments. The forum is focused on New York’s current 1115 Medicaid Redesign Team (MRT) waiver, which grants the State flexibility to restructure its Medicaid program. This includes the implementation of managed care, integration of behavioral health services, and initiatives to address the social determinants of health.

Registration to provide oral comments is available here. Individuals seeking to provide oral comment must register with “SP” in front of their name (e.g., SP Jane Doe) and must email 1115waiver@health.ny.gov by March 25th. Written comments may be submitted to the email address above with “1115 Public Forum Comment” in the subject line through April 5th.