Regulatory Developments

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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

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

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…

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…

On October 21, 2024, the U.S. Department of Health and Human Services, Labor Department, and the Treasury Department (collectively “the Departments”) jointly released a proposed rule that would require insurers to expand coverage of and eliminate cost sharing on certain preventative services, including over-the-counter (“OTC”) contraceptive items and certain Food and Drug Administration (“FDA”) approved prescription birth control medications. The rule would require private health plans to provide new disclosures to beneficiaries regarding coverage of these services with no cost-sharing obligations.

According to the fact sheet issued by the White House, the rule if finalized would expand free birth control coverage for 52 million American women of reproductive age who are covered by private health insurance and would reduce barriers to coverage of contraceptive services, including OTC contraceptives.

However, there is some complexity to the finalization of this rule. The incoming Trump administration could follow the recommendations of Project 2025 and rescind this rule in whole or in part. Additionally, if the rule is finalized, it currently falls within the Congressional Review Act look-back period and that could result in a Republican-controlled Congress disapproving the rule in its entirety next year.Continue Reading Proposed Rule Could Enhance Contraceptive Coverage If It Survives New Administration

In its recently released 2025 proposed Medicare Physician Fee Schedule (“MPFS”), the Centers for Medicare & Medicaid Services (“CMS”) proposed two important modifications to the Medicare 60-day overpayment refund rule—a new “identified overpayment” standard and codification of a 6-month timeframe to investigate and quantify an overpayment.

A product of the Affordable Care Act, the 60-day rule requires a person to report and return Part A and B overpayments within 60 days of identification. In 2016, CMS clarified that an overpayment is “identified” when a person, “through the exercise of reasonable diligence,” should have identified and quantified an overpayment. In the preamble to the 2016 rule, CMS established that “reasonable diligence” is demonstrated through a timely, good faith investigation, which is, at most, 6 months from the receipt of credible information of a potential overpayment.Continue Reading CMS Revisits Medicare Overpayment Standards in 2025 Physician Fee Schedule

The Centers for Medicare & Medicaid Services (“CMS”) and the Office of the National Coordinator for Health Information Technology (“ONC”) have released a final rule establishing “disincentives” (i.e., penalties) for health care providers that participate in certain Medicare payment programs who have engaged in information blocking, as determined by the HHS Office of Inspector General (“OIG”).

The rule continues to signal the federal government’s commitment to encouraging permitted access to and exchange of electronic health information. The rule summarizes elements of the June 2023 OIG final rule, which established penalties for information blocking for certified health IT developers, health information networks, and health information exchanges. The rule also details the procedures that OIG will follow when investigating potential health care provider information blocking claims. There is a wide range of health care providers subject to the rule including, hospitals, physicians, nursing facilities, group practices, pharmacies, and certain eligible professionals participating in Medicare and Medicaid programs, among others, and disincentives are not limited to HIPAA-regulated entities or to healthcare providers who use ONC-certified health IT.Continue Reading HHS Finalizes Rule on Health Care Provider Information Blocking Penalties

As Reed Smith has previously covered, an issue before the Supreme Court that could be decided this week could bring a seismic shift in the balance of power between agencies and courts, upend regulatory certainty, and open new opportunities for regulated industries, including health care. 

The Supreme Court’s pending decision in a pair of…

Colorado recently passed a law creating consumer protections for interactions with artificial intelligence systems. The law specifically identifies high-risk systems, including in those that impact health care. The law requires risk mitigation, documentation and robust governance.

Monique N. Bhargava has written an in-depth article on the law and what it means for AI regulation in…

On May 14, 2024, FDA hosted a webinar to provide an overview of its final rule “Medical Devices; Laboratory Developed Tests” as well as FDA’s phaseout of its general enforcement discretion approach to laboratory developed tests (LDTs).   

The October 2023 proposed rule sought to phase out enforcement discretion for LDTs more broadly. However, FDA seems to have considered some of the concerns commenters raised about access to LDTs and the cost of compliance. The final rule retains varying degrees of enforcement discretion for specific types of LDTs.Continue Reading FDA LDT Rule Begins Enforcement Discretion Phaseout, But Some Discretion Remains

The Centers for Medicare & Medicaid Services (CMS) has finally published the minimum staffing rule for Long Term Care facilities in the Federal Register, which starts the clock for compliance with some provisions of the rule.

But what does the rule actually do? And what do facilities have to do in order to come into…

In a final rule published on April 26, the U.S. Department of Health and Human Services (“HHS”) amends the HIPAA Privacy Rule to bolster protections for individuals’ reproductive health information. This final rule comes almost exactly a year after HHS published its draft rule on the subject.

The rule is part of the Biden administration’s effort to address the Supreme Court’s 2022 decision in Dobbs v. Jackson Women’s Health Organization. Dobbs’ reversal of Roe v. Wade resulted in a patchwork of state laws governing abortion, some of which require or permit health care providers to release personal information about reproductive health care to state authorities for patients who sought an abortion.

The rule is scheduled to take effect on June 25, 2024 and most provisions will be enforceable as of December 23, 2024. Below, we summarize in more detail some of the notable changes to the HIPAA Privacy Rule. Continue Reading HHS Modifies HIPAA Privacy Rule to Shield Reproductive Health Information from Third Party Access

Making good on its promises to enhance oversight of Medicare Advantage (MA) and Medicare Part D plans, the Centers for Medicare and Medicaid Services (CMS) has submitted for public inspection its Contract Year 2025 Final Rule. The final rule, published in the Federal Register on April 23 and taking effect on June 3, 2024, codifies existing MA and Part D sub-regulatory guidance, adds a number of new policies for Contract Year 2025 and implements provisions of the Bipartisan Budget Act of 2018 (BBA) and the Consolidated Appropriations Act, 2023 (CAA 2023).

The rule contains many substantive changes to current MA and Part D requirements. The most impactful sections of the rule include: (1) changes to the Part D formulary, including substitutions of biosimilar biological products; (2) modification of agent and broker compensation requirements for MA plans; (3) codification of consent requirements within the MA regulations for the sharing of personal beneficiary data between third party marketing organizations (TPMOs); (4) standardization of the MA Risk Adjustment Data Validation Appeals Process; (5) changes to the Part D medication therapy management program eligibility criteria; (6) changes to contracting standards and limitations on dual-eligible special needs plans; and (7) changes to the network adequacy standards within MA to add a new facility-specialty type called “Outpatient Behavioral Health”.

Also notable is what CMS does not address in the rule – CMS declined to establish what qualifies as an identification of an overpayment that needs to be returned to avoid False Claims Act violations. That potential standard has been in the works since the Contract Year 2023 rule, but stakeholders have to keep waiting as CMS notes that it may be the subject of a future rulemaking.Continue Reading Are you listening, Medicare Advantage and Medicare Part D Plans? It’s CMS (Again)

The Department of Health and Human Services (HHS), Department of Labor, and Department of the Treasury (collectively, “the departments”) recently confirmed that they will hold firm to the March 14, 2024 extended deadlines for initiating both new and previously initiated batched disputes or single disputes involving air ambulance services in the No Surprises Act Independent…

On January 17, 2024, the Supreme Court of the United States heard oral argument in two cases—Relentless v. Dep’t of Commerce, and Loper Bright Enters. v. Raimondo—that could have far-reaching effects on administrative law jurisprudence and the authority of federal agencies in years to come.

At the core of both cases is the Supreme Court’s Chevron doctrine, which refers to how courts are to review an agency’s interpretation of a statute that it administers.  Under the test of Chevron v. Natural Resources Def. Council, if an agency’s construction of an ambiguous statute is deemed to be reasonable, a court defers to the agency’s construction—even if the court believes the agency’s construction was not the best reading of the statute. 

Over the last four decades, Chevron deference has faced criticism from those who argue that it is the role of courts, not federal agencies, to say what the law means.  Arguing on Wednesday in support of overturning Chevron, counsel for Loper Bright argued that the Court should instead simply ask one question: “What is the best reading of the statute?”Continue Reading Supreme Court Tackles Chevron And Could Change How Agencies Regulate The Health Care Industry

The Department of Health and Human Services (HHS) released a final rule today governing federal protections for health care workers exercising their right to nondiscrimination on the basis of conscience objections.

The rule, entitled, Safeguarding the Rights of Conscience as Protected by Federal Statutes, is scheduled to be published in the Federal Register on Thursday, January 11 and will take effect on March 11, 2024. The rule effectively repeals the majority of a Trump-era rule that was blocked by federal court orders before it even went into effect.

The new rule reinstates provisions of an Obama-era rule that placed the Office for Civil Rights (OCR), the HHS office that handles nondiscrimination enforcement, in charge of coordinating complaints for violations of the conscience protections of various federal laws. The rule also implements a voluntary notice provision that establishes an industry best practice to alert employees to their rights under the laws.Continue Reading HHS Repeals Most of 2019 Health Care Conscience Protection Rule

Recent efforts by the federal government to develop a strategy for guiding (and regulating) the use of artificial intelligence (AI) have targeted multiple industry sectors, with healthcare at the forefront. For example, under the President’s recent executive order, in 2024 the Department of Health and Human Services is required to educate itself, publish guidance, and…

The Centers for Medicare & Medicaid Services (CMS) has published its final rule that requires nursing homes enrolled in Medicare and Medicaid to disclose additional ownership and management information to CMS and state Medicaid agencies. The rule finalizes CMS’s proposed rule from February, with just two differences, as we describe further below.

The rule implements Section 1124(c) of the Social Security Act, which was added by the Affordable Care Act to require the disclosure of additional information about ownership and oversight of nursing facilities. Medicare-enrolled skilled nursing facilities (SNFs) and Medicaid-enrolled nursing facilities (NFs) will soon be required to report many detailed aspects of their ownership and management structure, including both the executive leadership and any members of the facilities’ governing bodies.

CMS plans to gather the information in 2024, beginning when the revisions to the Form CMS-855A is completed, regardless of where a facility is on its current five-year revalidation schedule. The information will then be made publicly available within one year.

Of note in the final rule is that CMS declined to finalize a broad definition of “real estate investment trust” (also known an “REIT”) from its February proposed rule and instead has finalized a definition that it finds more consistent with current federal law and industry practice.Continue Reading CMS Finalizes Nursing Home Ownership Rule

On October 31, FDA will be offering a webinar on its proposed rule ”Medical Devices; Laboratory Developed Tests.”

This webinar comes about a month after FDA issued a proposed rule revising 21 C.F.R. Part 809 (specifically, 21 C.F.R, § 809.3) to state, explicitly, that in vitro diagnostics (IVDs) are medical devices, even if they are developed and manufactured in a laboratory setting.

This category of tests is generally referred to as “laboratory developed tests” (LDTs) and FDA has historically extended enforcement discretion, accepting the availability of certain LDTs outside of the FDA device clearance and approval pathway.

Of course this has not been a straightforward situation: we have seen decades of debate among FDA and industry stakeholders about the exact boundaries of FDA’s expressed enforcement discretion—where those boundaries should lie, and even interpretation (gleaned from enforcement action) of more precisely where they do, in FDA practice, actually lie.Continue Reading The Latest Episode of the LDT Drama: FDA Issues Long-Awaited Proposed Rule for Laboratory Developed Tests