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Monday, September 28 · 31 stories
- Legal
DOJ Revises Justice Manual on FCA Guidance Use, Qui Tam Dismissals
In a client alert, Bass, Berry & Sims reports that the Department of Justice has revised its Justice Manual to limit reliance on sub-regulatory guidance to establish legal duties in False Claims Act cases and to expand DOJ's use of dismissal authority over qui tam suits. The firm notes that guidance documents such as CMS manuals and Local Coverage Determinations remain usable as evidence of scienter, notice, industry standards, and medical necessity, even though they cannot themselves create the underlying legal obligation. Healthcare providers and Medicaid managed care organizations facing FCA exposure are most affected, since many billing and coverage disputes turn on sub-regulatory guidance. The firm does not specify an effective date for the revisions in the excerpt provided.
- Legal · GA
OIG Reviews Georgia Medicaid Fraud Control Unit's 2024 Operations
HHS OIG conducted its periodic onsite inspection of Georgia's Medicaid Fraud Control Unit, evaluating the unit's caseload, staffing, training, and compliance with federal performance standards for 2024. Medicaid Fraud Control Units investigate and prosecute provider fraud and patient abuse or neglect in Medicaid-funded facilities, and OIG's inspections assess whether states are meeting federal operational and reporting requirements. The report covers findings and any recommendations for Georgia's unit as of the 2024 review period. State Medicaid agencies and program integrity stakeholders use these reports to benchmark fraud unit performance and identify operational gaps.
- Legal
Brief Details Medicaid Fraud Control Units' Caseload and Outcomes
A policy brief explains how Medicaid Fraud Control Units (MFCUs) function within state program integrity efforts, drawing on caseload and case outcome data to describe their operations and current challenges. MFCUs investigate and prosecute provider fraud and patient abuse or neglect in Medicaid-funded facilities, working alongside state Medicaid agencies and federal oversight bodies. The brief does not describe a new rule or event but compiles background and data on unit performance and the issues they currently face. State Medicaid agencies, providers, and compliance officials rely on understanding MFCU activity to gauge fraud enforcement risk and program integrity priorities.
- State Policy · OH
Ohio Medicaid Proposes Overhaul of Behavioral Health Coverage Rules
The Ohio Department of Medicaid has circulated proposed rulemaking covering 11 rules, six to be amended and five rescinded and replaced, that would significantly restructure Medicaid-covered behavioral health services statewide. The changes would affect nearly every community behavioral health provider in Ohio, altering coverage requirements and service standards. The client alert from Shumaker, Loop & Kendrick outlines the scope of the proposal but does not specify a comment deadline or effective date. Providers should review the proposed rules closely given the breadth of the restructuring and its potential impact on billing, documentation, and service delivery.
- Federal Policy
Senate Democrats Question Kennedy Ethics Compliance on Vaccine Lawsuit Divestment
Senate Democrats are questioning whether HHS Secretary Robert F. Kennedy Jr. potentially violated his ethics agreement by allegedly concealing an arrangement to collect money from a settlement with a vaccine manufacturer. Kennedy pledged to divest from the lawsuit during his confirmation process last year. The senators' inquiry raises concerns about potential conflicts of interest at the federal agency overseeing Medicaid and other health programs. The matter is significant for Medicaid stakeholders because Kennedy's leadership of HHS includes oversight of CMS, which administers the Medicaid program and sets immunization policy affecting coverage requirements for state programs and managed care plans.
- State Policy · OR
Oregon Warns Consumers Against Limited-Benefit Self-Funded Plans Ahead of Open Enrollment
Oregon's Department of Consumer and Business Services issued a consumer warning about self-funded limited partner plans that promise low premiums but typically cover only preventive care, leaving enrollees exposed to large medical bills. The warning comes as open enrollment for individual coverage begins November 1, with ACA-compliant premiums rising nearly 22% and subsidies shrinking. Regulators identified specific warning signs and companies marketing these non-ACA-compliant plans, which often misrepresent consumers as "limited partners" or "employees" to avoid consumer protection rules. The advisory matters for Medicaid stakeholders because cost-pressured consumers dropping or avoiding Marketplace coverage due to premium increases may cycle into Medicaid eligibility or present as uncompensated care for safety-net providers.
- Federal Policy
CMS Proposes Reduced Payment for Same-Day Evaluation and Procedure Services
CMS has proposed a rule to reduce Medicare payment for evaluation and management services performed on the same day as a procedure, paying full price for the more expensive service and a reduced rate for the second to account for shared costs. The change would affect how providers bill Medicare Part B for same-day services, such as when a dermatologist evaluates a patient and immediately performs a removal procedure during the same visit. The proposal aims to eliminate duplicative billing and reduce out-of-pocket costs for Medicare beneficiaries, who currently pay copayments based on the full rate for both services. The rule would lower costs for patients and taxpayers by preventing Medicare from paying twice for overlapping service components.
- State Policy
SHVS Toolkit Illustrates State Medicaid Work Requirement Evaluation and Compliance Process
State Health and Value Strategies published a toolkit demonstrating how states apply work reporting requirements in Medicaid, including the stepwise process for determining member exemptions, verifying qualifying activities, and managing noncompliance. The toolkit walks through evaluation hierarchies, mandatory and short-term hardship exceptions, and data verification procedures using member scenarios. It provides operational guidance for states implementing or managing work requirement programs under federal approval.
- Federal Policy
SAMHSA Awards $247.9 Million in Behavioral Health Grants
The Substance Abuse and Mental Health Services Administration announced September 25 that it awarded $247.9 million in grants to expand access to addiction treatment, mental health services, and recovery support. The funds will support school-based mental health services, trauma treatment for children and families, overdose reversal efforts by first responders and communities, and employment support for people in recovery. The awards take effect immediately for grantees nationwide. For state Medicaid agencies and managed care organizations, these federal grants represent new resources that may complement or coordinate with Medicaid-funded behavioral health services, particularly for populations eligible for both programs.
- Federal Policy
CMS Strengthens Federal ACA Marketplace Anti-Fraud Efforts
In its Health Care Week in Review, Alston & Bird reports that CMS has strengthened anti-fraud efforts for the federal ACA marketplace. The changes affect health plans participating in the federal exchange and brokers or agents facilitating enrollment. The timing and specific measures were not detailed in the available summary. The action reflects CMS's continued focus on program integrity in marketplace operations, with potential compliance implications for participating insurers and enrollment entities.
- State Policy · VT
Vermont Orders UVM Medical Center to Submit Medical Education Funding Plan by December
Vermont's Green Mountain Care Board approved UVM Medical Center's 2027 budget with conditions requiring the hospital to form a public working group and submit a plan by December 15, 2026 for how it funds medical education. The order follows a July analysis finding the medical center spent $161 million on medical education in 2025, with $82 million paid by commercial insurers — a cost projected to reach $88 million in 2026. The working group must examine the role, expenses, and benefits of the Larner College of Medicine and residency programs, with the care board voting on approval by January 15, 2027. UVM Health leaders say they will focus on filling workforce gaps in primary care, mental health, and anesthesiology.
- Managed Care
Utilization Management Emerges as Key Challenge for Healthcare AI Adoption
Healthcare AI developers face significant technical and operational barriers in applying artificial intelligence to utilization management and prior authorization processes. The challenge lies in predicting reimbursement outcomes before denials occur, requiring AI systems to navigate complex medical necessity criteria, payer-specific coverage policies, and claims adjudication logic that varies across health plans and service categories. For Medicaid managed care organizations, this affects the feasibility of AI-driven automation in authorization workflows, claims processing, and appeals management. The difficulty stems from the need to replicate payer decision-making logic across thousands of procedure-diagnosis combinations and benefit design variations.
- Industry
Bipartisan Federal Legislation Targets PBM Vertical Integration
Two states have enacted laws barring pharmacy benefit managers from owning retail pharmacies, addressing vertical integration models like CVS Health's. A federal bill with bipartisan sponsors would extend this prohibition nationwide. The proposal unites Republicans traditionally opposed to market intervention with Democrats more comfortable with regulatory oversight. For Medicaid managed care plans and carved-out PBM arrangements, any federal restriction on vertical integration would fundamentally reshape pharmacy network structures and vendor contracting options.
- State Policy · IN
Indiana Projects $5.3 Billion in Reserves by June 2027
Indiana closed fiscal year 2026 with nearly $4 billion in reserves and projects $5.3 billion in reserves by June 30, 2027 — 22% of revenues — as monthly collections have exceeded forecasts for ten consecutive months. Not all reserves are available for new spending: the total includes dedicated funds for Medicaid contingency ($274.7 million), state tuition ($739.6 million), and the Rainy Day Fund ($1.12 billion), and over $1.1 billion may be needed to reimburse the highway fund for the summer gas tax holiday. If reserves exceed 12.5% of appropriations in 2027, state law triggers an automatic taxpayer refund. The state's FY 2026-2027 budget cut real spending by 7% after April 2025 revenue forecasts fell short; legislators may revisit those cuts if the December 2026 forecast shows continued growth.
- State Policy · OH
Ohio Infant Mortality Rate Falls to 6.6 per 1,000 Births, Black Infants Still Die at 2.5 Times White Rate
Ohio's infant mortality rate dropped to 6.6 deaths per 1,000 live births, the lowest in a decade, but remains above the national average of 5.36. Black infants die at a rate of 12.6 per 1,000 births — more than 2.5 times the white infant rate of 5.1 — and providers report systemic disrespect and racism in care delivery. The state's latest biennial budget allocated $18 million annually for infant vitality programs, down from the House's proposed $20 million, and $5 million for maternal health programs, down from the governor's $7.5 million request. Advocates cite recent federal Medicaid funding cuts — estimated to cost Ohio $33 million over 10 years — as contributing to rural maternity ward closures and reduced access for Medicaid-eligible pregnant individuals.
- Federal Policy · TX
CMS Awards $51 Million for Rural Texas Nutrition and Chronic Disease Prevention Programs
CMS announced a $51 million federal funding award for nutrition and chronic disease prevention programs targeting rural Texas communities. The award aims to address health disparities in rural areas through improved access to nutrition services and chronic disease management. The programs will affect Medicaid beneficiaries in rural Texas counties through expanded community-based health interventions. This funding matters for state Medicaid agencies and managed care organizations operating in rural Texas markets, as it may create new care coordination requirements and community partnership opportunities to address preventable chronic conditions among Medicaid populations.
- Industry
Centene Reports Multiple Executive Departures Following $6.7 Billion Loss
Centene has experienced widespread leadership turnover in 2026, spanning state health plan executives to C-suite roles, following a $6.7 billion loss in 2025. The loss was primarily driven by a non-cash goodwill impairment related to HR 1 and the company's declining market value, alongside a 91.9% medical loss ratio. The departures signal organizational instability at one of the nation's largest Medicaid managed care organizations. Centene serves Medicaid beneficiaries across more than 30 states, making leadership continuity significant for state agency oversight and member care continuity.
- State Policy · OR
Oregon Providers Sue to Block Rule Prioritizing Criminal Defendants for Mental Health Beds
Oregon mental health providers and hospitals challenged a 2025 state rule requiring residential facilities to prioritize criminal defendants from the Oregon State Hospital over civil and voluntary patients, regardless of clinical need. The Oregon Health Authority adopted the rule to comply with a federal court order requiring the state to admit criminal defendants from jail to the state hospital within one week, with contempt fines exceeding $4 million. Providers argue the rule discriminates against non-forensic patients, commandeers private facilities to fulfill state obligations, and undermines clinical decision-making. The merged case was heard by the Oregon Court of Appeals on September 22, 2026, with no decision timeline announced.
- State Policy · CO
Colorado Considers Cutting Peer Support Services After 286% Cost Increase
Colorado lawmakers are targeting cuts to Medicaid-funded peer support services for addiction recovery after program spending increased 286% since the state authorized payment for peer counseling in 2021 through bipartisan legislation. The rapid cost growth has prompted state officials to examine whether to scale back or restructure the benefit. The timing of any benefit changes has not been announced. This matters for managed care organizations and behavioral health providers delivering substance use disorder services through Colorado Medicaid, as peer support has become a standard component of recovery-oriented care models.
- Federal Policy
CMS Launches Quality Partnership With 37 States to Shift Medicaid Measures Toward Health Outcomes
CMS announced a new quality measurement partnership with 37 states to refocus Medicaid quality metrics on health outcomes rather than process measures. The initiative launches immediately and will develop and test outcome-based measures over the next 18 to 24 months. The shift affects how state Medicaid agencies and managed care plans will be evaluated for quality performance, requiring changes to quality strategies, managed care contracts, and potentially capitation rate methodologies. States participating in the partnership will pilot new outcome measures before broader adoption across the Medicaid program.