The California Senate has approved SB 41, a bill now under consideration in the Assembly, that would impose new licensing, transparency, and pricing regulations on pharmacy benefit managers (PBMs). Proponents argue the legislation would curb anti-competitive practices, enhance transparency, and ensure fairer pricing in the administration of prescription drug benefits by health insurers and health care service plans. Opponents of the legislation argue that, among other things, the bill would result in significant premium increases and that banning so-called performance-based contracts would not lower costs to patients.

Continue Reading California Senate Passes Bill Regulating Pharmacy Benefit Managers

After 28 hours of deliberation including a marathon Rules Committee meeting that saw more than 500 proposed Democratic amendments, the House of Representatives, early in the morning of May 22, passed the One Big Beautiful Bill Act (H.R. 1) (the Reconciliation bill).

The bill in its final form is certainly big, clocking in at over 1000 pages long and including a 42 page “manager’s amendment” with detailed editing instructions for changes that were needed to pass the bill both through the Rules Committee and through the full House. But is it beautiful? That, as the say, is in the eye of the beholder.

Continue Reading Breaking down the Health Care Impacts of the One Big [Reconciliation] Bill

On May 12, 2025, the Trump Administration released Executive Order 14297, entitled “Delivering Most-Favored-Nation Drug Pricing to American Patients” (the Order).  The Order seeks to make available to American consumers the “most-favored nation lowest price” to end “global freeloading.”

The Order and a related fact sheet released on the same day assert that the prices Americans pay for brand-name drugs are more than three times the prices other OECD nations pay, even after accounting for discounts that manufacturers provide in the U.S.  They state that this has resulted from “a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets, and subsidize that decrease through enormously high prices in the United States.” They further assert that “[t]he inflated prices in the United States fuel global innovation while foreign health systems get a free ride.”

The Order states that, within 30 days (i.e., by June 11, 2025), the Secretary of the Department of Health and Human Services (HHS) will “communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations.”  The Order and fact sheet indicate that if drug manufacturers fail to offer most-favored nation (MFN) pricing in the U.S., the administration will take a series of additional steps.

Continue Reading MFN Drug Pricing Executive Order: New HHS release adds details on prices manufacturers expected to offer

Last week, on May 15, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that, if adopted, will change the standards by which states obtain waivers for health care-related provider taxes used to finance Medicaid. The proposal is aimed at closing a regulatory “loophole” that CMS believes allows states to shift Medicaid financing burdens to the federal government without meeting the statutory intent of redistributive tax structures.

CMS will be accepting public comments on the proposed rule until July 14, 2025.

Continue Reading CMS Proposes Rule to Tighten Medicaid Provider Tax Requirements

On May 5, the Trump Administration issued a pair of executive orders that could signal big changes for the drug industry and health research efforts in the United States. The orders, in part, direct federal agencies to take actions by this fall to curtail certain pharmaceutical manufacturing and health research activities performed outside the United States. The orders are among the first of many that are anticipated to initiate federal restrictions on offshore health care and life sciences activities and incentivize domestic operations in the industry.

Executive Order 14293 Regulatory Relief To Promote Domestic Production of Critical Medicines (E.O. 14293) restores an effort that was started during the first Trump administration and continued under the Biden administration to attempt to assist companies to bring pharmaceutical manufacturing capacity back to the United States. As with E.O. 14292, this order directs federal agencies to take the next 90 to 180 days to review and offer changes to regulations and subregulatory guidance to help increase American manufacturing capacity for pharmaceuticals.

Executive Order 14292, Improving the Safety and Security of Biological Research (E.O. 14292) seeks to regulate and eliminate “gain of function research” which has been identified by some as the genesis of the novel coronavirus responsible for COVID-19. On top of suspending federal funding for gain-of-function research both in and outside of the United States, the order broadly suspends funding for “other life-science research” that is occurring in countries of concern or foreign countries where there is not adequate oversight. The order also directs federal agencies to revise the framework for oversight and managing risks in biological research.

Both of these executive orders could signal massive changes to the production and importation of drugs as well as the research process behind those drugs. As a result, pharmaceutical manufacturers, research institutions, and health care institutions that dispense, distribute, or otherwise rely on these offshore activities should carefully watch upcoming actions by the various elements of the Department of Health and Human Services (HHS) as well as the Environmental Protection Agency (EPA) for guidance on how these changes will be implemented.

Continue Reading Trump Executive Orders seek to encourage reshoring of pharmaceutical manufacturing and research

In February 1971, at the tail end of Richard Nixon’s first term, his Secretary of Health, Education and Welfare, Elliot Richardson, approved a directive that was printed in the Federal Register as a Statement of Policy on “Public Participation in Rulemaking”.

The statement asserted that the Department of Health Education and Welfare (the precursor to the current Department of Health and Human Services [HHS]) would NOT exempt from full notice and comment rulemaking any rules relating to public property, loans, grants, benefits or contracts. The Department made this decision even though it was permitted to exempt these rules by the text of the Administrative Procedure Act (APA). Additionally, the policy statement urged the agency to only sparingly use a “good cause” exemption from notice and comment that was also included in the text of the APA.

Continue Reading Elimination of the Richardson Waiver Means Changes . . . But To What End?

In a significant ruling among the first to analyze the application of information blocking regulations, the U.S. Court of Appeals for the Fourth Circuit affirmed a preliminary injunction against an EHR company in favor of a diagnostic analytics services company. The injunction grants the analytics company access to patient data, enabling the company to provide its analytics services to nursing facility customers who use the EHR vendor’s services.

The case, Real Time Medical Systems, Inc. v. PointClickCare Technologies, Inc., No. 24-1773 (4th Cir. 3/12/25), arises out of claims by Real Time Medical Systems, Inc. (“Real Time”) that PointClickCare Technologies, Inc. (“PCC”) implemented a technical protocol that cut-off Real Time’s appropriate access to its customers’ electronic health information (“EHI”) and that PCC did not implement this protocol for legitimate security or performance reasons as PCC claimed, but rather to interfere with Real Time’s business so that PCC could capture Real Time’s market share with its own competing analytics products.

Continue Reading Information blocking victory in favor of access to health data

Reed Smith has announced the dates and topics for it’s 11th annual health care conference from March 17-21, 2024. The conference will be conducted entirely virtually this year with CLE webinars offered throughout the week on important and timely topics for the health care industry.

The schedule of the sessions is below, all of the webinars are free and have each been presumptively approved for CLE credit in California, Connecticut, Illinois, New Jersey, New York, Pennsylvania, Texas, and West Virginia. Applications for CLE credit will also be filed in Colorado, Delaware, Florida, Georgia, Ohio, and Virginia.

Webinars can also be watched on-demand, but viewers who do so will only be able to obtain CLE credit in California, Connecticut, Illinois, New Jersey, New York, Pennsylvania, Texas and West Virginia. They will also have to alert Reed Smith to their viewing of the program to obtain credit.

To register for any or all of the webinars, please click here.

Here is the schedule of webinars for the week: (all times are in EST)

Continue Reading Reed Smith’s 11th Annual (Virtual) Health Care Conference Coming March 17-21

California lawmakers are once again considering legislation targeting private equity’s influence in health care. Senate Bill 351 (SB 351), introduced on February 12, 2025, seeks to limit the influence of management service organizations (MSOs) and dental service organizations (DSOs) backed by private equity (PE) groups and hedge funds over medical and dental practices.

SB 351 adopts certain provisions of last year’s vetoed Assembly Bill 3129 (AB 3129), which would have required PE groups and hedge funds to obtain California Attorney General (AG) approval before entering into certain health care transactions. In September 2024, Governor Gavin Newsom vetoed that bill, citing redundancy with the California Office of Health Care Affordability’s (OHCA) existing oversight of health care transactions. Our discussion of OHCA’s health care transaction notice requirements is available in an earlier Reed Smith in-depth piece.

Continue Reading California to Reconsider Restrictions on Private Equity Influence in Medicine and Dentistry

At the Federal Bar Association’s (FBA) Annual Qui Tam Conference on February 20, 2025, Department of Justice (DOJ) representatives Michael Granston (Deputy Assistant Attorney General for Commercial Litigation) and Jamie Yavelberg (Director of the Fraud Section in the Civil Division) discussed enforcement priorities for the False Claims Act (FCA), including Medicare Advantage, cybersecurity, and pandemic fraud, and emphasized the continuing focus on FCA enforcement. Despite the Trump administration hitting “pause” on FCPA enforcement, FCA enforcement is here to stay.

We lay out the impacts of their comments at the conference and what it means for enforcement priorities by the DOJ in this Reed Smith Client Alert.

The California Attorney General’s Office (AG) unsurprisingly takes an expansive view of how the development, sale, and use of artificial intelligence technology (AI) in healthcare could lead to potential violations of existing California laws. In a recent legal advisory the AG highlights specific areas healthcare organizations should focus on as they develop, train, improve, and deploy AI in connection with patients, plan members, and their data.

In particular, the advisory identifies AI risk hot spots that may trigger certain state consumer protection, anti-discrimination, and privacy/autonomy laws, as described further below.

Continue Reading California AG Explains How Laws May Apply to AI in Healthcare

On January 17, 2025, the Drug Enforcement Administration (DEA) announced a proposed rule to establish a special registration framework for prescribing controlled substance medications via telemedicine in the post-COVID era (the 2025 Proposed Rule).  The DEA  had, in an earlier proposed rule from March 2023 (the 2023 Proposed Rule), rejected the same framework as too burdensome for both prospective telemedicine providers and patients.

In its simplest form, the 2025 Proposed Rule seeks to impose separate special registrations with highlighted regulations on both clinician and platform practitioners who prescribe or dispense Schedule II-V narcotic and non-narcotic controlled substances via telemedicine without an in-person medical evaluation.  The rule is complex, more restrictive than the telemedicine flexibilities allowed during the COVID-19 era, and, more importantly, presents a significant departure from the regulations put forth in the 2023 Proposed Rule.

Considering the uncertainty surrounding the priorities and perspectives of the Trump administration regarding telemedicine prescribing of controlled substances, it remains unclear whether the 2025 Proposed Rule will be finalized as-is or if a different overhaul is forthcoming.

Continue Reading What Does DEA’s Proposed Special Registration Framework for Tele-prescribing Controlled Substances Mean?

The U.S. Department of Health and Human Services (“HHS”), through its Office for Civil Rights (“OCR”), recently issued a “Dear Colleague” letter, Ensuring Nondiscrimination Through the Use of Artificial Intelligence (“AI”) and Other Emerging Technologies, which emphasizes the importance of fairness and equity in AI use in patient care decision support tools (e.g., clinical algorithms and predictive analytics) in connection with certain health programs and activities. While not the law, HHS continues to provide its views about using AI in health care.  See our prior post about another HHS publication that organizations can use as guidance. Specifically, the letter emphasizes the importance of complying with the federal nondiscrimination requirements of Section 1557 of the Affordable Care Act (“Section 1557”).

OCR’s letter confirms that it will enforce Section 1557’s nondiscrimination protections to the use of AI (effective from July 5, 2024) and it will require organizations that participate in certain regulated programs and activities to identify and mitigate risks of unlawful discrimination when using AI (effective on May 1, 2025). We highlight OCR’s guidance on these two enforcement objectives related to Section 1557 below.

Continue Reading HHS Recent Guidance on AI Use in Health Care

On January 15, the Department of Justice (DOJ) reported that False Claims Act (FCA) recoveries for civil cases in fiscal year 2024 totaled approximately $2.9 billion, representing about a $200 million increase from 2023. And these numbers do not account for two major settlements that were reached shortly after the close of the fiscal year that would have added an additional $830 million to the total. Of the total recovered by DOJ in 2024, approximately $1.67 billion (58%) related to matters involving the health care sector. Although a lower percentage of these recoveries related to health care than prior years, the health care sector remains the primary industry under scrutiny.  

For the second year in a row, the total number of qui tam lawsuits increased, demonstrating continued fraud enforcement by the agency and an active environment for private whistleblowers. The 979 qui tam cases filed in 2024 is a new record, blowing past the prior record of 757 cases in 2013 and far exceeding last year’s total of 713. And while the number of government-initiated cases dropped from last year’s record pace, the 423 non qui tam cases filed in 2024 is an order of magnitude higher than any other year since 1986.

This increase in FCA activity comes at a time of uncertainty for the law. As Reed Smith covered last fall, a federal judge in Florida ruled that the qui tam provisions of the FCA violated the Appointments Clause of the Constitution by investing core executive powers into unappointed whistleblowers. That decision followed reasoning in a Supreme Court dissent and is on appeal to the U.S. Court of Appeals for the Eleventh Circuit. Incoming Attorney General Pam Bondi assured senators during her confirmation hearing that she would defend the constitutionality of the provisions.

Continue Reading DOJ exceeds $2.9 billion in FCA recoveries in 2024 and reports a record number of qui tams

In its first advisory opinion of the year, the Department of Health and Human Services Office of Inspector General (OIG) issued a favorable advisory opinion on January 15, 2025 that addressed an arrangement by a pharmaceutical manufacturer to offer certain patients free access to a pharmaceutical product that has limited coverage by Federal health care programs.

The opinion, offers guidance to pharmaceutical companies and administering providers about the mechanics of free or discount programs for their products or services that present low risk of fraud and abuse. The opinion aligns with the OIG’s recent assessment of a supplier’s loyalty program issued in December 2024.

Continue Reading OIG Issues Favorable Opinion on Free Access to Pharmaceutical Products

In an era where cyberattacks on the health care industry have become alarmingly frequent and catastrophic, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) has taken a bold step forward. The recently issued Notice of Proposed Rulemaking (NPRM) is OCR’s direct response to the escalation of cyber threats and harm paired with perceived pervasive noncompliance with the HIPAA Security Rule across the health care sector. The NPRM introduces many detailed security requirements that far surpass all previous legal mandates from OCR and may set the highest bar in the United States for securing electronic data.

The proposed amendments are not merely incremental updates; they represent a seismic shift in the regulatory landscape. If these changes are finalized as drafted, compliance for many HIPAA-regulated organizations will be a resource-intensive endeavor and may be operationally impossible in such an interconnected industry with a wide range in the sophistication level of stakeholders. In this client alert, we detail what HIPAA-regulated organizations can expect if the rule is finalized later this year.

Reed Smith will continue to follow developments related to the HIPAA Security Rule. If you have any questions about this rule or would like to submit a comment on it, please do not hesitate to reach out to the authors of this post or to your health care attorneys at Reed Smith.

The Department of Health and Human Services Office of Inspector General (OIG) recently issued an advisory opinion related to a proposed arrangement offering discounts to dental providers. This favorable advisory opinion, issued on December 9, 2024, offers fresh guidance and reminders to dental professionals and dental services organizations (DSOs) about how to structure discount programs.

The request for the advisory opinion was submitted by a dental supplies distributor that owns a separate entity (the “Dental Division”) which provides supplies, equipment, and business support services to customers, including dentists, dental specialists, dental laboratories, and DSOs. The requestor currently maintains a customer loyalty program whereby customers earn points on purchases of Dental Division items and services. Customers are eligible for benefits that are established through various tiers, with benefits increasing in value as the customer purchases more items or services.

Continue Reading OIG Issues Favorable Opinion on Dental Equipment Supplier’s Loyalty Program

A year after issuing its General Compliance Program Guidance, the Department of Health and Human Services Office of Inspector General (“OIG”) has published the first industry-specific compliance guidance with  “Industry Segment-Specific Compliance Guidance for Skilled Nursing Facilities and Nursing Facilities” (the “Nursing Facility ICPG”). 

Notably, it has been more than 16 years since the OIG last offered a comprehensive update in this space as the last major update was in 2008. This new update is intended to address the significant changes in the nursing facility industry since 2008, including changes in business practices and the way that nursing facilities receive reimbursement for services.

Overview of OIG’s Guidance

Unlike the broader General Compliance Program Guidance (“GCPG”), which applies to all individuals and entities in the health care industry, the Nursing Facility ICPG is specifically tailored to nursing facilities. The OIG has emphasized that both the Nursing Facility ICPG and the GCPG are voluntary and nonbinding andare separate from and meant to complement the Centers for Medicare & Medicaid Services (CMS) Compliance Program Requirements of Participation, which are mandatory for any facilities participating in those federal health care programs.

The Nursing Facility ICPG identifies and provides risk mitigation recommendations for four potential compliance risk areas for skilled nursing facilities (“SNFs”) and nursing facilities (“NFs”): (1) quality of care and quality of life; (2) Medicare and Medicaid billing requirements; (3) federal Anti-Kickback Statute (“AKS”) considerations; and (4) other risk areas, such as related-party transactions, the physician self-referral law, and Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).  We discuss each area below.

Continue Reading OIG Issues Voluntary Compliance Guidance for Nursing Facilities

The U.S. Department of Health and Human Services Office for Civil Rights (“OCR”) will start to enforce compliance later this month with new special protections for individuals’ reproductive health information as required by a recently finalized HIPAA Privacy Rule, as we noted in an earlier blog post. While the incoming Trump Administration may change enforcement priorities or even rescind that rule, a settlement from OCR that pre-dated implementation of that rule indicates that OCR already affords this information protection.

The settlement marks OCR’s first enforcement action and settlement against a health care provider centered around, and specific to, an impermissible disclosure of an individual’s reproductive health information under the existing Privacy Rule standards. In other words, regardless of whether the incoming administration rescinds or revises the new protections for reproductive health information, OCR has demonstrated that it considers reproductive health information as highly sensitive and will take enforcement action accordingly under the HIPAA Privacy Rule as it is today.

Organizations would be well advised to take the remaining time before the December 23 compliance date to update existing policies to define the scope of reproductive health care-related protected health information (PHI) within the organization and set forth standards and procedures for how the organization will implement compliance with the new requirements including, for example, how the organization will assess and respond to third-party requests for reproductive health care-related PHI, including situations in which an attestation is required.

Continue Reading OCR Sets Precedent with Settlement Over Impermissible Disclosure of Reproductive Health Information

In the final 2025 Medicare Physician Fee Schedule, which is set to be published in the Federal Register on December 9, the Centers for Medicare and Medicaid Services (CMS) included substantive changes to the regulations governing when a provider must report and return a Medicare overpayment in order to avoid liability under the False Claims Act (FCA).

In a recent client alert, we detail the changes to the overpayment regulations. These include bringing the definition of an overpayment into line with the FCA knowledge standard and codifying a suspension of the required 60 day refund period for initial findings of an overpayment obligation during an up to a six-month period of good-faith investigation that will allow Medicare Part A and Part B providers to examine their records and determine if they received any related overpayments that will also need to be addressed.

The rule, which takes effect on January 1, 2025, is within the window of rules that could be examined by the new Congress or rescinded by the incoming administration. However, we think that the nature of the changes and reasons for those changes would make that unlikely.

Reed Smith will continue to follow developments with regard to the False Claims Act and Medicare regulations. If you have any questions, please do not hesitate to reach out to the health care lawyers at Reed Smith.