Trump Administration Issues Drug Pricing Executive Order
On April 15, 2025, President Trump issued an Executive Order instructing federal agencies to implement a variety of drug pricing reforms. The Executive Order addresses drug pricing from several different angles, including pharmacy benefit manager (PBM) competition and transparency, Medicare and Medicaid drug pricing, international importation, and drug manufacturer competition (Executive Order).
The Executive Order, which is the first significant action taken by the current administration to address drug prices, echoes initiatives and policy statements announced during the first Trump administration. However, most of the drug pricing reforms announced during the first administration were never fully implemented. It is unclear how many of the proposals in this Executive Order will ultimately be implemented, but it does provide the clearest outline yet of the Trump administration’s policy priorities regarding drug prices.
Targeting the Inflation Reduction Act “Pill Penalty” and High-Cost Medicare Drugs
Improving upon the Inflation Reduction Act. The Executive Order directs the Secretary of Health and Human Services (HHS) to propose and seek comment on guidance for the Medicare Drug Price Negotiation Program (Negotiation Program). The stated purpose of the guidance is to “improve the transparency of the Negotiation Program, prioritize the selection of prescription drugs with high costs to the Medicare program, and minimize any negative impacts of the maximum fair price (MFP) on pharmaceutical innovation within the United States.” Prior predictions that a second Trump administration would seek to repeal the Inflation Reduction Act (IRA) and replace the Negotiation Program now seem off the table. Instead, the inclusion of this section suggests that this second Trump administration will, at least initially, seek opportunities to improve the existing Negotiation Program.
One such area for possible improvement is the IRA’s so-called “pill penalty.” Under the IRA, small molecule drugs (which are typically pills) are eligible for price negotiation nine years following approval by the Food and Drug Administration (FDA), whereas biological products become eligible after 13 years. The “pill penalty” has been the subject of ire for many manufacturers who have argued that it stifles innovation. The Executive Order directs HHS to work with Congress to modify the Negotiation Program to align the treatment of small molecule prescription drugs with that of biological products.
The Executive Order also directs officials to establish recommendations to President Trump on “how best to stabilize and reduce Medicare Part D premiums.” In 2022, the IRA redesigned the Medicare Part D benefit, which among other things capped Part D beneficiaries’ out-of-pocket expenses at $2,000. After a Part D beneficiary meets this $2,000 threshold, Medicare then covers 100% of such beneficiary’s remaining costs for the year. The IRA also provides a premium stabilization mechanism to limit the average premium increases for people enrolled in Part D to about $2 per month on average. In July 2024, the Centers for Medicare & Medicaid Services (CMS) announced a premium stabilization demonstration to test whether additional stabilization was needed. President Trump’s inclusion of this directive in the Executive Order suggests that this administration may seek to continue this model.
Demonstration Model on High-Cost Medicare Drugs. The Executive Order instructs HHS to develop and implement a Center for Medicare and Medicaid Innovation (CMMI) payment demonstration to improve the ability of the Medicare program to obtain better value for high-cost prescription drugs and biological products, including those not subject to the Negotiation Program. CMMI was created by the Affordable Care Act (ACA) in 2010 to test payment models (i.e., demonstrations) in Medicare, Medicaid, and the Children’s Health Insurance Program. In March, we wrote about CMMI’s premature termination of four payment and delivery demonstrations and the broader questions it raised about the future of CMMI. At the time, we noted that there was no indication that the Trump administration was planning to more broadly limit CMMI’s authority or terminate other models. The inclusion of the payment demonstration in the Executive Order lends further support to this and indicates that the administration intends to use CMMI to further its goals related to Medicare drug cost.
Focus on Pharmacy Benefit Manager Transparency
Reevaluating the Role of Middlemen. The Executive Order directs officials to develop recommendations to President Trump on how “best to promote a more competitive, efficient, transparent, and resilient pharmaceutical value chain that delivers lower drug prices for Americans.” As we outlined in the Winter 2025 edition of our PBM Update, President Trump has long been a critic of PBMs and the high costs of prescription drugs that Americans pay in comparison to other countries’ citizens. While the Executive Order does not explicitly delineate any methods or data sets that officials should consider in making their recommendations, the inclusion of this directive suggests that the role of PBMs may still be at the forefront of President Trump’s mind.
Consolidated Appropriations Act PBM Fee Disclosures. The Executive Order instructs the Secretary of Labor to propose regulations implementing Section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 (ERISA) to improve employer health plan fiduciary transparency into the compensation paid to PBMs. Pursuant to the Consolidated Appropriations Act of 2021 (the CAA), Congress amended Section 408(b)(2)(B) to require service providers to group health plans organizations to disclose information to a responsible plan fiduciary about any direct and indirect compensation the service provider expects to receive in connection with providing “brokerage services” or “consulting” to a plan. Service providers must make such disclosures for any affiliates and subcontractors as well.
There has been some ambiguity about whether PBMs, under certain arrangements, are service providers subject to the disclosure requirements as a result of ambiguous statutory drafting and the Department of Labor’s (DOL) refusal to issue implementing regulations. Some PBMs have taken the position that they are not service providers, and there has been little public indication that the DOL has been closely monitoring compliance.
In March 2023, the DOL issued a field assistance bulletin outlining a temporary enforcement policy for the CAA disclosure requirements and requiring service providers to comply in good faith with the requirements, although the 2023 guidance does not provide any additional clarity on the applicability of the disclosure requirements to PBMs or otherwise outline a recommended format for the disclosures. Notably, the DOL stated that it was not required to issue comprehensive implementing regulations and indicated that it had no plans do so, instead referencing regulations it had issued about a decade prior for analogous disclosure requirements for investment plan advisors.
By instructing the DOL to issue regulations, and calling PBMs out specifically, the Executive Order indicates that the DOL will address confusion about the applicability of the disclosure requirements to PBMs. If and once DOL issues and finalizes these regulations, DOL scrutiny over these requirements will likely increase.
Sharing 340B Program Savings with Hospital and Patients
Appropriately Accounting for Acquisition Costs of Drugs in Medicare. The Executive Order instructs HHS to publish in the Federal Register a plan to conduct a survey to determine hospital outpatient departments’ acquisition costs for covered outpatient drugs and to propose adjustments that would align Medicare payment with the cost of acquisition. In 2018 and 2019, HHS established separate reimbursement rates for 340B-participating hospitals and other hospitals. In its decision in American Hospital Ass’n v. Becerra, 596 U.S. 724 (2022), the Supreme Court of the United States held that HHS’s actions were unlawful because HHS failed to conduct a survey of the hospitals’ acquisition costs prior to setting reimbursement rates that differed by hospital group. The inclusion of this section in the Executive Order suggests that President Trump wishes to ensure HHS will follow the proper procedure prior to once again setting separate reimbursement rates for hospitals participating in the 340B drug pricing program.
Access to Affordable Life-Saving Medications. The Executive Order seeks to revive a controversial proposal from the first Trump administration that would require community health centers to “make insulin and injectable epinephrine available [to their patients] at or below” the 340B price paid by the health center. The Executive Order instructs HHS to take action that would condition federal grants to community health centers providing 340B-priced insulin and epinephrine (commonly sold as Epi-Pens) to patients who “(a) have a high cost-sharing requirement for either insulin or injectable epinephrine; (b) have a high unmet deductible; or (c) have no healthcare insurance.” The Executive Order’s associated Fact Sheet states that insulin prices “will be” as low as “$0.03, plus a small administrative fee” and injectable epinephrine “will be” as low as “$15, plus a small administrative fee.”
This proposal was initially put forth by the first Trump administration in December 2020. However, the Biden administration immediately froze implementation of the proposed rule upon taking office and instead opened a five-day comment window in March 2021 resulting in around two hundred comments from interested parties, the vast majority in opposition. Later that year, the Biden administration rescinded the proposed rule citing “the excessive administrative costs and burdens that implementation would have imposed on health centers.” At the time, the Biden administration noted the COVID-19 pandemic as a key cost contributor. Although the U.S. has since emerged from the pandemic, it is unlikely that health center sentiments towards the proposal have improved. It remains to be seen how, if at all, the second Trump administration will incorporate health center feedback in the proposal moving forward.
Continued Interest in International Importation
International Importation. The Executive Order instructs HHS to take steps to streamline the FDA process for importing prescription drugs under the Section 804 of the Food, Drugs, and Cosmetic Act (FDCA). Broadly, Section 804(b) permits the Secretary of HHS to promulgate regulations to establish a state- or Indian tribe-sponsored drug importation program (SIPs) allowing pharmacists and wholesalers to import unapproved prescription drugs from Canada, so long as HHS can certify to Congress that such imports will “pose no additional risk to the public’s health and safety” and will “result in a significant reduction in the cost of covered products to the American consumer.” 21 U.S. Code § 384(b), (l) HHS issued a final rule to implement Section 804(b) in 2020 under the first Trump administration, and in January 2024, the FDA approved the first SIP in Florida. However, at least six other states (Colorado, Maine, New Hampshire, New Mexico, Vermont, and Texas) have enacted laws and/or submitted proposals to the FDA.
As currently constituted, SIPs are heavily regulated and time-limited. For example, Florida’s SIP is only authorized for two years. Further, wholesalers and distributors cannot unilaterally submit proposals for a SIP—they can only “co-sponsor” a SIP with an eligible State or Indian Tribe (SIP Sponsors), who must submit pre-import requests to the agency and take other actions to assure the quality and safety of drugs entering the U.S. Certain drugs are also ineligible for importation, including: controlled substances; biologicals; infused, intravenous, inhaled, injected, intrathecally or intraocularly injected drugs; and any drug that is subject to a risk evaluation and mitigation strategy under Section 505-1 of the FDCA.
Managing and Reforming Medicaid Drug Payments
Promoting Innovation, Value, and Enhanced Oversight in Medicaid Drug Payment. The Executive Order directs HHS, in consultation with other policymakers, to provide the President with recommendations on “how best to ensure that manufacturers pay accurate Medicaid drug rebates consistent with [law], promote innovation in Medicaid drug payment methodologies, link payments for drugs to the value obtained, and support States in managing drug spending.” Under the current version of the Medicaid Drug Rebate Program, as many as 780 drug manufacturers pay a statutory rebate to state Medicaid programs in exchange for Medicaid coverage of the manufacturer’s product. The rebates allow the state Medicaid programs to offset the costs of providing prescription drug coverage to its residents.
The text of the Executive Order opens the door for the Trump administration to consider a wide range of proposals such as increased data and reporting obligations to accurately capture pricing data and product information, value-based care initiatives, the continued use of state supplemental rebates, and the proposal of legislative remedies to address underlying concerns with the statutory Medicaid drug rebate calculation. A Fact Sheet released by the administration specifies that the Executive Order could help reduce state drug costs by “[b]uilding off programs to help states get much better deals on expensive sickle-cell medications in Medicaid than the statutorily required 23.1% discount.” Of note, changes to the Medicaid drug rebate calculation would also affect a manufacturer’s 340B ceiling price, further increasing the discount available to 340B Covered Entities and lowering the price paid to manufacturers for the product.
Increasing Access to Affordable Medicines
Competition for High-Cost Prescription Drugs. The Executive Order directs the FDA Commissioner to issue a report providing administrative and legislative recommendations to: (i) accelerate approval of generics, biosimilars, combination products, and second-in-class brand name medications; and (ii) improve the process through which prescription drugs can be re-classified as over-the-counter (OTC) medications, including identifying prescription drugs that can be provided OTC. The Executive Order references the first Trump administration’s efforts to “to harness competitive forces and increase access to affordable medicines” by encouraging the development of generic and biosimilar alternatives to higher cost brand name prescription drugs.
President Trump’s request for a report examining pathways for generics and biosimilar is timely given ongoing bipartisan concerns over rising prescription drug costs (which Mintz wrote about here). It is unclear what the Executive Order means by “combination products,” which arguably includes a range of innovative and follow-on drugs. The Executive Order also raises questions about how HHS will accomplish accelerated approval with less resources—especially given reports that manufacturers are already seeing adverse impacts on drug development following administration-directed layoffs earlier this year.
Reducing Costly Care for Seniors. The Executive Order directs HHS to evaluate and propose regulations to ensure that payment within the Medicare program does not encourage a shift in drug administration volume away from less costly physician office settings to more expensive hospital outpatient departments. The potential for Medicare to pay the same rate for a service, regardless of where the service is provided is referred to as site-neutral payment. Site-neutral payment policies and efforts have been made for years, dating back to the second Obama administration and throughout the prior Trump administration.
Combatting Anti-Competitive Behavior by Prescription Drug Manufacturers. Finally, the Executive Order seeks to further increase competition in drug manufacturing by instructing HHS to “conduct joint public listening sessions with the Department of Justice, Department of Commerce, and the Federal Trade Commission and issue a report with recommendations to reduce anti-competitive behavior from pharmaceutical manufacturers.” Overall, the Executive Order’s broad target list demonstrates the Administration’s desire to evaluate several drivers of consumer health care costs across the pharmaceutical supply chain.
Looking ahead, stakeholders should watch how the Trump administration seeks to implement its goal of lowering prescription drug costs by targeting various entities and, utilizing multiple regulatory schemes, across the wide-ranging pharmaceutical supply chain.
Have Employees in Wyoming? Start Preparing for the Non-Compete Ban
Effective July 1, 2025, Wyoming will restrict the enforceability of non-compete agreements. In enacting Senate Bill 107, Wyoming joins a growing list of states that have significantly restricted, or completely banned, non-compete agreements.
Specifically, the law provides that, as of July 1, 2025, “[a]ny covenant not to compete that restricts the right of any person to receive compensation for performance of skilled or unskilled labor” is void. However, the law will not apply retroactively, and it contains several exceptions, including the following:
Sale of Business: Any covenant not to compete contained in a contract for the purchase and sale of a business or the assets of a business.
Protection of Trade Secrets: Any covenant not to compete to the extent the covenant provides for the protection of trade secrets as defined by Wyoming Statute §6‑3‑501(a)(xi). The statute defines “trade secret” as “the whole or a portion or phase of a formula, pattern, device, combination of devices or compilation of information which is for use, or is used in the operation of a business and which provides the business an advantage or an opportunity to obtain an advantage over those who do not know or use it.”
Recovery of Training Expenses: Any contractual provision providing for the recovery of all or a portion of the expense of relocating, educating, and training an employee as follows: (i) recovery of not more than 100% of the expense for an employee who has served an employer for a period of less than two years; (ii) recovery of not more than 66% of the expense for an employee who has served an employer for more than two, but less than three years; and (iii) recovery of not more than 33% of the expense for an employee who has served an employer for more than three, but less than four years.
Executive and Management Personnel: Any covenant not to compete with executive and management personnel and officers and employees who constitute professional staff to executive and management personnel. The law does not define who is deemed “executive” or “managerial.”
Additionally, the Wyoming law contains specific provisions pertaining to non-compete covenants with physicians. Any covenant not to compete provision in an employment, partnership or corporate agreement with physicians that restricts the right of a physician to practice medicine, as defined by Wyoming law, upon termination of the physician’s employment, partnership or corporate affiliation is void. Further, a physician may disclose their continuing practice of medicine and new professional contact information to any patient with a rare disorder (as defined by the National Organization for Rare Disorders), or to certain successor organizations.
To ensure compliance with Wyoming’s new law come July 1, 2025, Wyoming employers should carefully revise their employment agreements and consider alternative means for protecting their business interests moving forward, such as robust confidentiality and non-disclosure clauses and non-solicitation covenants, unless one of the exceptions set forth above applies.
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As State Legislatures Debate Strengthening the Corporate Practice of Medicine Limitations, a Drug Manufacturer’s Lawsuits Shine a Light on the Relationship Between Telehealth Companies and Affiliated Medical Groups
Drug manufacturer Eli Lilly has filed suit against four companies involved in making, prescribing, and/or selling compounded versions of its weight loss and diabetes drugs ZEPBOUND® and MOUNJARO®.
Lilly’s drugs, injected under the skin, are the only FDA-approved medicines containing tirzepatide in the United States.
Two complaints, filed April 23 in the U.S. District Court for the Northern District of California, contend that the founders and chief executive officers of Mochi Health Corp. (“Mochi Health”) and Fella Health exerted control over multiple affiliated entities, including medical groups, in violation of California law prohibiting unlicensed individuals and corporations from practicing medicine (generally known as the “Corporate Practice of Medicine” or “CPOM” laws). The plaintiffs allege unfair competition and false advertising under state law and the Lanham Act; and assert state CPOM claims through supplemental and/or diversity jurisdiction.
This latest development on the drug compounding front comes at a time when states are keeping a sharp eye on private investment in the health care space—increasingly proposing legislation to strengthen CPOM laws and also increase oversight on corporate transactions involving health care entities. The majority of U.S. states have some form of CPOM restriction, and some, including Oregon, Texas, and Washington, are considering taking steps advocates say will strengthen theirs—with proposals, for example, to prevent private equity groups or hedge funds from interfering with health care decisions and limiting or eliminating common forms of affiliation with professional medical practices.
Though it was eventually vetoed by the governor, California’s AB 3129 would have explicitly prohibited activity that would likely already violate the state’s CPOM laws (see a previous EBG blog post on the subject) and current California AB 1415 has resuscitated many of those provisions for the current legislative session. Oregon’s proposed HB 4130, which did not pass the state Senate, would have strengthened requirements for professional corporations organized to practice medicine (see another previous blog post). Earlier in 2025, we explored the current landscape of proposed U.S. state legislation with respect to health care corporate structures, some with CPOM provisions. Here, we discuss the CPOM aspects of the Eli Lilly lawsuits, below.
Mochi Health
Mochi Health prescribes and sells compounded tirzepatide to patients. Neither of Mochi Health’s two owners—who are husband and wife—are licensed physicians. Yet the latter, who serves as CEO of Mochi Health, has allegedly represented that she has experience as a doctor and that her business was developed by doctors. The Mochi suit includes in its state law unfair competition claim 1) unlawful corporate control of practice of medicine and prescription practices; 2) the issuance of prescriptions without a medical indication; and 3) unlawfully holding the CEO out as a licensed physician.
As the lawsuit states, California law restricts unlicensed individuals and corporations from engaging in the practice of medicine. The complaint alleges violations of California Business and Professions Code § 2052 prohibiting the unlicensed practice of medicine and covering those who advertise or hold themselves out “as practicing, any system or mode of treating the sick or afflicted…or who diagnoses, treats, operates for, or prescribes” for any physical or mental condition.
The complaint also alleges violations of § 2054, prohibiting individuals from holding themselves out as a physician if lacking a valid license. Unlicensed persons, whether individuals or corporations, cannot employ physicians or engage in the practice of medicine under §§ 2400 et seq.; a corporation cannot hold a medical license. The California Medical Board has also determined that certain decisions—including the need for diagnostic tests, the need for referrals, control of medical records, hiring/firing of medical staff, and alterations to prescriptions—may only be made by a physician.
The complaint alleges that defendants are “entangled in and exercise control over multiple entities” involved in tirzepatide prescribing, compounding, and distribution activities. These include 1) Mochi Medical, an affiliated medical services provider to which Mochi Health refers patients (the wife is allegedly the CEO of both Mochi Health and Mochi Medical, and the appointed director of the latter is reportedly the wife’s father); 2) a pharmacy that supplied Mochi Health’s patients with compounded tirzepatide (the pharmacy is allegedly owned indirectly by the husband); and 3) a distributor that imports weight loss drugs to the pharmacy from China (the wife reportedly serves as governor of the distributor).
The complaint alleges this corporate arrangement violates California law, noting that “Mochi Health and its unlicensed owners exercise undue influence and control over, among other things, the prescribing decisions of physicians at Mochi Medical and, as a result, engage in, and aid and abet, the unlawful corporate practice of medicine,” the plaintiffs contend.
The plaintiffs further claim that Mochi Health—without patient specific or medical reasons—switched dosages and prescriptions for patients, which involved ordering changes to the additives mixed in with the compounded tirzepatide drugs and changing dosages “to non-standard doses that have never been studied.” The complaint alleges that these changes were made en masse and were performed to improved the “business’s bottom line and [in] the mistaken belief that [such] alterations would all [the business] to continue selling—and making money from—knockoff tirzepatide.”
Fella Health
Fella Health prescribes and sells compounded tirzepatide to patients. The lawsuit against Fella Health claims that company is “engaged in the unlicensed practice of medicine on multiple fronts,” with non-physicians offering unlicensed medical advice to patients and also modifying prescriptions without a patient consultation or a prior determination by a physician that the modification is medically necessary.
Fella Health allegedly directs its customers to Fella Medical Group, P.A., a Florida professional association and Fella Medical Group, P.C., a California professional corporation, which Fella Health advertises as “independent medical groups.” The nonphysician founder and CEO of Fella Health is also the CEO of Fella Medical Group P.A. and the lawsuit alleges that he exercises control over both “independent medical groups.”
The complaint further alleges that this nonphysician CEO, and other nonphysician employees communicate directly with patients through social media, text, and phone calls. The communications reportedly included giving medical advice, increasing dosages of patient medications, changing prescriptions without good faith examination by a licensed professional or medical indication; and accelerating titration schedules for financial gain.
“Under California state law, unlicensed persons cannot own and control medical practices, Bus. & Prof. Code §§ 2400 et seq., § 2052, or exercise undue control or influence over clinical decisions and doing so constitutes unfair competition,” the complaint states, asserting later: “Beyond [the] control over Fella Medical Group, Fella also engages in the corporate practice of medicine by allowing non-physicians to offer medical advice to customers and by modifying patient prescriptions for business reasons, not medical ones.”
The claims against Fella include unlawful corporate control of practice of medicine and prescription practices in violation of the California Unfair Competition Law, false advertising in violation of the same law; false or misleading advertising promotion in violation of the Lanham Act; and civil conspiracy claims.
Takeaways
Entities operating in the health care space, especially those using a “friendly PC” or “captive PC” affiliation model, need to exercise caution to prevent non-physicians from exercising unlawful control over physician decision-making. This lawsuit demonstrates that all companies need to evaluate whether their business model complies with state CPOM restrictions – and provides a theory by which competitors may allege claims for financial damages related to a company’s actual or alleged non-compliance. Non-physician entities—whether telemedicine companies, private equity groups, medical spas, etc.—affiliated with medical groups need to evaluate whether they have appropriate controls in place to separate the administrative functions of the platform and the business operations from the clinical decision making at the medical practice. As alleged in this suit, compliance is a question of “on the ground” operational fact as much as it is one of appropriate legal structure and documentation.
Christopher R. Smith, Erin Sutton, William Walters, and Ann W. Parks contributed to this article
Spring Things for Employers to Consider
Trees are beginning to bloom, and bees are buzzing in flower fields as spring is officially underway. As summertime approaches and temperatures continue to rise, employers should be prepared for “Spring Things,” such as navigating employee summer vacation schedules, hosting summer outings and retreats, implementing casual Fridays, and even welcoming interns. Below are a few “Spring Things” that manufacturers should consider as interns join the workplace, employees take off for summer vacations, and summer outings and other warm-weather activities get underway.
Use of Paid Time Off and Vacation
Employer-paid time off (PTO) and vacation policies are essential ways to increase employee morale, productivity, and retention. However, during the summer months, when employees may spend more time at the beach and engaging in recreational activities, employers should ensure that their PTO and vacation policies are applied consistently and that employees comply with all policy requirements to meet business needs.
Employers should review their PTO policies to ensure clarity related to eligibility, notice, accrual, approval, and use. If employers identify issues, they may need to revise the policy. For example, if employees are taking vacation in 2- or 3-week increments and disrupt business operations, the policy may need to be revised so that employees may only take vacation in 1-week increments. Similarly, if exempt employees are taking half-days and not inputting their PTO use or vacation in the HRIS program, the policy may need to be updated to clarify that any time out of the office must result in the use of PTO or vacation—this issue may require monitoring. On the other hand, if employees are not using their vacation, it may be time for managers to communicate with certain team members to encourage them to use their PTO.
Casual Fridays, Pizza Mondays, and Summer Outings
With the return of summertime comes employer-hosted events and teambuilding-focused activities, increasing engagement and improving employee morale. While the goal of these activities is to have fun in an inclusive and safe environment, employers should consider ways to minimize the legal risks associated with these summertime workplace activities and initiatives.
Employers may implement “casual days” in the summer to bring some of the summer fun into the workplace and ensure employees stay comfortable as the summer heat gets turned up. However, manufacturers should be mindful of employee safety and consider whether certain types of footwear or other clothing could pose a safety risk (e.g., employees working on a specific machine). Further, human resources may need to remind employees, generally and individually, of the dress code policy, which contains minimum standards of professionalism in the workplace (e.g., prohibiting offensive clothing).
Manufacturers planning to hold summer outings, retreats, and other events should consider several issues before sending out the invitations. One such issue is whether employees are required to participate in a particular activity, in which case any injuries or illness could result in workers’ compensation coverage with regard to the injury/illness. Employers should also consider what events/activities will be inclusive to all employees rather than presenting a barrier to access or entry; whether alcohol will be served and, if so, how it will be managed; and what measures are needed to ensure professionalism during such events/activities.
Interns in the Workplace
Manufacturers may be welcoming interns into their businesses in the summer. It goes without saying that internship programs can play a key role in a company’s ability to develop and retain talent, generate new ideas and perspectives, and provide valuable mentorship and opportunity to individuals entering the field, resulting in goodwill in the professional community and the enrichment of the workplace. With these benefits come certain legal compliance challenges related to intern compensation and how internship programs are structured. Manufacturers should take the time to carefully review the administration of their internship programs now to ensure compliance throughout the summer and beyond.
One key issue is whether interns are considered “employees” under applicable law and must be paid. The question is, who is the “primary beneficiary” of the relationship – is it the intern or the employer? It can be very difficult for employers to meet the “primary beneficiary” standard. For example, if an intern is enrolled in an academic study program, is receiving academic credit, is not replacing paid employees, and is essentially working a schedule around their academic calendar, it may be possible for the intern to be “unpaid.”
Specifically, in determining who is the primary beneficiary of the relationship, courts apply a number of factors to determine whether the intern or the employer is the primary beneficiary, including the extent to which:
The intern and employer clearly understand there is no expectation of compensation;
The internship provides training similar to that which would be given in an educational environment;
The internship is tied to the intern’s formal education program by integrated course work or receipt of academic credit;
The internship accommodates the intern’s academic commitment by corresponding to the academic calendar;
The internship’s duration is limited to the period in which it provides the intern with beneficiary learning;
The intern’s work complements (rather than displaces) the work of paid employees while providing significant educational benefits to the intern; and
The intern and employer understand there is no entitlement to a paid job at the internship’s conclusion.
These factors are difficult for employers to meet, and in most instances, interns who are working for the summer must be paid in a manner consistent with applicable law (i.e., minimum wage and overtime).
SCOTUS Considers Article III Questions with Significant Implications on Class Action Certification
The Supreme Court of the United States (SCOTUS) heard oral argument this week in Labcorp v. Davis (No. 24-304) to determine “[w]hether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.” If the Court’s answer is “no” or some form of “no”, that would support defense counsel’s mechanisms for challenging class certification on the front end of litigation.
There is currently a split among the federal circuit courts on the question. When faced with the issue of how many uninjured persons can be certified within a class without tripping over Article III, courts have taken three general viewpoints. Some circuits hold that Article III bars certification when the class would include any persons who lack standing. Other circuits, viewing the question through Rule 23(b)(3), permit certification if no more than a de minimis portion of the class includes uninjured parties. The third group of circuit courts all but defers the question to post-certification stages of a case, unless it is evident that a “great many” or “large portion” of unnamed class members lack standing.
The Labcorp case comes to SCOTUS out of the Ninth Circuit, one of the handful of circuits that do not impose a material Article III hurdle at the class certification stage. The plaintiffs in the case successfully obtained class certification from the district court for disability discrimination claims, even though there did not seem to be much dispute that the class definition captured an appreciable number of uninjured persons. After the Ninth Circuit affirmed the certification order, Labcorp petitioned and obtained certiorari from SCOTUS, leading to Tuesday’s argument before the Court.
At oral argument, Labcorp principally argued that district courts must address jurisdictional questions of standing (injury) before reaching the merits of a class action—i.e., before certifying a class. Otherwise, defendants are faced with the prospect of defending a large number of claims by parties who independently lack standing, increasing the scope of potential litigation risk in the case and creating monumental settlement pressure. Courts also would be in a position of entering dispositive orders that are binding on unnamed class members who suffered no injury and therefore had no standing to be included in the first place, in violation of Article III. Alternatively, Petitioner addressed that a class certification encompassing uninjured parties would plague litigation with individualized inquiries as to who was actually injured, contrary to Rule 23(b)(3). Labcorp argued that the first issue (Article III standing) can typically be addressed by requiring courts to define the class to only include those individuals who have been injured. But even assuming a class can be redefined to exclude individuals who lack injury, Labcorp argued that a class cannot be certified under Rule 23 unless there is an administrable way to separate non-injured individuals without conducting minitrials as to each. To do so would present clear ‘predominance’ and ‘commonality’ issues under Rule 23(b)(3).
In contrast, Respondents’ counsel argued that courts need not take up all Article III questions at the class certification stage and specifically that absent class members should not be required to demonstrate their standing until the court acts on them as individuals, typically at the relief phase of the case. Respondents’ counsel placed particular emphasis in their briefing on existing precedent, in which the Court suggested that “class certification issues” in some cases are “logically antecedent to Article III concerns” and “should be treated first.”
The Solicitor General of the United States also participated in the argument and focused primarily on Rule 23’s certification requirements. Specifically, the government argued that the Rule 23(b) certification analysis encompasses elements of ‘predominance,’ ‘commonality,’ and the like, that cannot be satisfied when the class includes injured members. The government firmly pressed that Rule 23 requires class members to share a common injury or else the class action mechanism breaks down. Therefore, an individual who has not first suffered an injury should not be part of the class. See U.S. Amicus Brief, Mar. 12, 2025 (“Courts should not certify a class under Rule 23(b)(3)—which permits class actions seeking money damages—when some members of the proposed class lack any Article III injury.”).
Many of the Justices, especially from the more liberal side of the Court, confronted the Petitioner’s Article III positions head on. These included challenges regarding the logistical difficulties district courts would face in sorting out broad Article III inquiries at the class certification stage, as compared to current measures that allow standing to be addressed after all class members come before the court at the relief stage. Some Justices also raised procedural concerns as to whether they could even consider Petitioner’s arguments given the procedural posture from which the case was presented from the Ninth Circuit below. These discussions signaled that the Court may defer or limit its ruling on the Article III and Rule 23(b)(3) questions at issue.
The Court’s ultimate resolution of the case is difficult to predict. For now, the key takeaways are that many Justices appear unprepared to impose a strict Article III requirement applicable to unnamed class members at the certification stage, and the Court may even punt some or all of the meatier constitutional issues for a later day. Given that the Court’s prior class action standing opinions—e.g., Spokeo (2016) and TransUnion (2021)—were rendered as split decisions, it would not be surprising to see a similar outcome here.
EPA Outlines Actions to Address PFAS
On April 28, 2025, the U.S. Environmental Protection Agency (EPA) outlined upcoming Agency action to address per- and polyfluoroalkyl substances (PFAS). According to EPA’s announcement, “[i]n line with Administrator Zeldin’s Powering the Great American Comeback initiative, EPA’s work in this space will advance Pillar 1: Clean Air, Land, and Water for Every American, and Pillar 3: Permitting Reform, Cooperative Federalism, and Cross-Agency Partnership.” EPA states that these actions “are guided by the following principles: strengthening the science, fulfilling statutory obligations and enhancing communication, and building partnerships.” EPA plans additional actions and decisions across its program offices to help communities impacted by PFAS contamination. Below are the actions outlined on April 28, 2025, as well as links to our memoranda and blogs for more information.
Strengthening the Science
Designate an Agency lead for PFAS to align and manage better PFAS efforts across Agency programs.
Implement a PFAS testing strategy under Toxic Substances Control Act (TSCA) Section 4 to seek scientific information informed by hazard characteristics and exposure pathways. More information is available in memoranda on EPA’s first, second, third, fourth, and fifth test orders for PFAS.
Launch additional efforts on air-related PFAS information collection and measurement techniques related to air emissions.
Identify and address available information gaps where not all PFAS can be measured and controlled.
Provide more frequent updates to the PFAS Destruction and Disposal Guidance — changing from every three years to annually — as EPA continues to assess the effectiveness of available treatment technologies. More information on EPA’s updated interim guidance is available in our May 7, 2024, memorandum.
Ramp up the development of testing methods to improve detection and strategies to address PFAS.
Fulfilling Statutory Obligations and Enhancing Communication
Develop effluent limitations guidelines (ELG) for PFAS manufacturers and metal finishers and evaluate other ELGs necessary for reduction of PFAS discharges.
Address the most significant compliance challenges and requests from Congress and drinking water systems related to national primary drinking water regulations (NPDWR) for certain PFAS. More information on EPA’s drafting water standards for PFAS is available in our May 9, 2024, memorandum.
Determine how to use better Resource Conservation and Recovery Act (RCRA) authorities to address releases from manufacturing operations of both producers and users of PFAS. More information on two proposed rules that would modify the definition of hazardous waste as it applies to cleanups at permitted hazardous waste facilities and that would amend the RCRA regulations to add multiple PFAS compounds as hazardous constituents is available in our February 5, 2024, memorandum.
Add PFAS to the Toxics Release Inventory (TRI) in line with congressional direction from the 2020 National Defense Authorization Act (NDAA). Available resources include:
May 22, 2024, blog item on final rule updating the list of TRI chemicals to add seven PFAS;
October 17, 2024, memorandum on proposal to add 16 individual PFAS and 15 PFAS categories representing more than 100 individual PFAS to the TRI list of chemicals;
January 13, 2025, blog item on the addition of nine PFAS and February 7, 2025, blog item on the postponement of the addition; and
January 22, 2025, blog item, on a proposed rule clarifying the supplier notification requirements for TRI-listed PFAS and February 24, 2025, blog item on the reopened comment period.
Enforce Clean Water Act (CWA) and TSCA limitations on PFAS use and release to prevent further contamination.
Use Safe Drinking Water Act (SDWA) authority to investigate and address immediate endangerment.
Achieve more effective outcomes by prioritizing risk-based review of new and existing PFAS chemicals.
Implement TSCA Section 8(a)7 “to smartly collect necessary information, as Congress envisioned and consistent with TSCA, without overburdening small businesses and article importers.” More information on EPA’s reporting rule and postponement of the submission period is available in our October 3, 2023, memorandum and September 4, 2024, blog item.
Work with Congress and industry to establish a clear liability framework that operates on polluter pays and protects passive receivers.
Building Partnerships
Advance remediation and cleanup efforts where drinking water supplies are impacted by PFAS contamination.
Work with states to assess risks from PFAS contamination and the development of analytical and risk assessment tools.
Finish public comment period for biosolids risk assessment and determine path forward based on comments. More information on the draft risk assessment and reopened comment period is available in our January 14 and April 28, 2025, blog items.
Provide assistance to states and tribes on enforcement efforts.
Review and evaluate any pending state air petitions.
Resource and support investigations into violations to hold polluters accountable.
Commentary
EPA’s continued “all of EPA” approach is welcome news. PFAS continues to be a significant issue that drives public concern. EPA is likely to continue to approach PFAS organized in several chemical category bins: medium- and long-chain perfluorocarboxylates and perfluorosulfonates and substances that degrade into them, short-chain PFAS, fluoropolymers, fluorinated gases, and other substances. Each bin represents a different potential for risk because of the extraordinary breadth of properties and toxicities between and among PFAS. This is in marked contrast to states that define PFAS so broadly that there are some members that contain only a single fluorine and include PFAS that are not persistent or bioaccumulative. Some states seem to be taking a more measured approach, like New Mexico, but it remains to be seen if this is a trend or exception.
We remain concerned that EPA is relying on science that finds a correlation between changes in antibody response that are small relative to natural variability. As the Agency for Toxic Substances and Disease Registry (ATSDR) noted in 2023, “it is well known that, in a normal vaccine response, there is already a wide distribution in the levels of titers considered normal. Changes of 30% or more in antibody titers can be within normal variations of IgG for the general population.” While it is natural to want to rely on the most protective level that has been identified in any study, an inappropriately protective approach may lead EPA to impose costly control measures that do not lead to actual health protection.
A Common Denominator Governs the Medicare Fraction – SCOTUS Today
In its 2022 decision in Becerra v. Empire Health Foundation, for Valley Hospital Medical Center, the U.S. Supreme Court held that the phrase “entitled to [Medicare Part A] benefits” applied to “all those qualifying for the program, regardless of whether they are receiving Medicare payments for part or all of a hospital stay.” 597 U. S. 424, 445 (2022) (quoting §1395ww(d)(5)(F)(vi)(I); alteration in original).
In doing so, the Court left open the question of what it means to be “entitled to supplementary security income [SSI] benefits . . . under subchapter XVI.” §1395ww(d)(5)(F)(vi)(I).
Today, in Advocate Christ Medical Center v. Kennedy, the Court, in a 7–2 decision (with Justice Barrett writing for the majority and Justice Jackson, joined by Justice Sotomayor, dissenting), held “that a person is entitled to such benefits when she is eligible to receive a cash payment during the month of her hospitalization.” Today’s decision continues the unbroken string of losses that the petitioner hospitals have suffered in this litigation at both the administrative and judicial levels.
Like Empire Health, Advocate Christ Medical Center concerns the so-called “Medicare fraction,” statutorily defined as
“the fraction (expressed as a percentage), the numerator of which is the number of such hospital’s patient days for such period which were made up of patients who (for such days) were entitled to benefits under part A of this subchapter and were entitled to [SSI] benefits (excluding any State supplementation) under subchapter XVI of this chapter, and the denominator of which is the number of such hospital’s patient days for such fiscal year which were made up of patients who (for such days) were entitled to benefits under part A of this subchapter.” §1395ww(d)(5)(F)(vi)(I).
The petitioner hospitals asserted that the “entitled to” phrase encompasses all patients enrolled in the SSI system at the time of their hospitalizations, even if those patients were not entitled to an SSI payment during that month. Unsurprisingly, the hospital’s theory would result in the inclusion of significantly more people into the numerator of the Medicare fraction, thereby increasing the amount of funding a hospital may receive. See §§1395ww(d)(5)(F)(vii)–(xiv). According to their theory concerning the potential adjustment governed by the Medicare fraction, the hospitals claim that the Department of Health and Human Services underfunded them during the fiscal years 2006–2009.
As our readers who are health care lawyers understand, the Medicare fraction concerns a reimbursement rate adjustment known as the “disproportionate share hospital adjustment,” which provides enhanced Medicare payments to hospitals that serve “an unusually high percentage of low-income patients.” The enhancement is based on the assumption that such patients are more expensive to treat than high-income patients.
Justice Barrett succinctly describes what the dispute over the Medicare fraction is about:
The numerator counts “the number of patient days attributable to Medicare patients who are poor”—i.e., those Medicare patients who are entitled to SSI benefits under subchapter XVI. Id., at 430. The denominator counts “the number of patient days attributable to all Medicare patients.” Ibid. When the Medicare fraction is expressed as a percentage and added to the Medicaid fraction’s percentage, the sum of the two yields the “‘disproportionate patient percentage.’” §1395ww(d)(5)(F)(vi). The resulting percentage “determines whether a hospital will receive a DSH adjustment”—and if so, how much. Id., at 431. “The higher the disproportionate-patient percentage,” the more funding a hospital receives.
Barrett goes on to note that the “benefits” in question are cash benefits, a conclusion easily reached given that such benefits are to be “paid” in cash and eligibility for them is to be determined on a monthly basis. Ultimately, the Court concludes that a patient is an individual who is
“entitled to [SSI] benefits . . . under subchapter XVI” when she is eligible to receive an SSI cash payment. And because eligibility is determined on a monthly basis, an individual is considered “entitled to [SSI] benefits” for purposes of the Medicare fraction only if she is eligible for such benefits during the month of her hospitalization.
The essence of the hospital’s and the dissenters’ position is that the wording of the statute should be read as defining entitlement to SSI benefits to mean that a patient is entitled to them “even if she does not qualify for a payment during the month of hospitalization.” However, the majority quickly disposed of that view as being contradicted by Empire Health. Recognizing that Congress had to make a choice with respect to achieving certain economies in the provision of covered health care services, the Supreme Court affirmed the judgment of the U.S. Court of Appeals for the District of Columbia Circuit and held that “[f]or purposes of the Medicare fraction, an individual is ‘entitled to [SSI] benefits’ when she is eligible to receive an SSI cash payment during the month of her hospitalization.”
In what some might see as unusual given recent events, the Court concluded its opinion by stating that “[w]e must respect the formula that Congress prescribed.”
California’s Workplace Violence Law, Part II: Top FAQs One Year Into SB 553 [Podcast]
In this podcast, Sacramento shareholders and, Karen Tynan and Robert Rodriguez—who are the co-chairs of Ogletree Deakins’ Workplace Violence Prevention Practice Group—answer the most frequently asked questions (FAQs) on California’s workplace violence law. Robert and Karen, both of whom are shareholders in the firm’s Sacramento office, review essential training requirements, the importance of maintaining accurate violent incident logs, and best practices for involving employees in developing effective prevention plans to ensure the workplace remains safe and compliant with Senate Bill (SB) No. 553, which went into effect on July 1, 2024.
Colorado Bill Would Ban Restrictive Covenants With Healthcare Providers
On April 21, 2025, Colorado legislators passed a bill to outlaw restrictive covenants with healthcare providers. The bill further clarifies when noncompete agreements can be enforced in the purchase or sale of a business.
Quick Hits
The Colorado legislature passed a bill to ban noncompete agreements with doctors, physician assistants, dentists, nurses, and midwives.
The bill clarifies when noncompetes can be used in the purchase or sale of a business, including the sale of direct and indirect ownership interests.
If signed by the governor, the bill will take effect on August 6, 2025.
State law permits noncompete agreements and nonsolicitation agreements with certain highly compensated employees, but the bill would exclude healthcare providers from that provision.
State law permits restrictive covenants designed to protect trade secrets. However, the bill would not allow a restrictive covenant if it “prohibits or materially restricts a health-care provider” from disclosing to existing patients prior to the provider’s departure the following information:
the healthcare provider’s continuing practice of medicine,
the healthcare provider’s new professional contact information, or
the patient’s right to choose a healthcare provider.
The bill clarifies the state law provision that permits noncompete agreements related to the sale of a business. The bill would allow the purchase or sale of a business exception to be applied to the sale of all, or substantially all, of a business’s assets. For the sale of a minority interest in a business for individuals who received the equity as part of their compensation, the noncompete agreement’s duration in years would not be permitted to exceed “the total consideration received by the individual from the sale divided by the average annualized cash compensation received by the individual from the business.”
Next Steps
Employers in Colorado may wish to inventory all of their noncompete agreements and determine if any apply to healthcare providers. They may wish to consider using other strategies, such as nondisclosure agreements and employee retention strategies, to serve similar purposes, including protecting an employer’s trade secrets and training investments.
The bill does not apply to existing noncompete agreements, but if signed by the governor, it will apply to those entered or renewed after August 6, 2025.
This article was co-authored by Leah J. Shepherd
CMS Issues CY 2026 MA & Part D Rate Announcement, Final Rule on CY 2026 Policy and Technical Changes to Programs, While Seeking Input on Burdensome Medicare Regulations for Rescission
Several April releases seem to signal some basis for optimism for stakeholders in Medicare Advantage and Part D, though with sufficient undertones to recommend caution.
In April, the Centers for Medicare and Medicaid Services (CMS) released its Final Rule on CY 2026 Policy and Technical Changes to the Medicare Advantage (MA) Program, Medicare Prescription Drug Benefit (Part D) Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (PACE) (the “2026 Final Rule)—and also released this CY 2026 Rate Announcement for MA and Part D. At approximately the same time, CMS posted an appeal for input on approaches and opportunities to streamline Medicare regulations and reduce unnecessary regulatory burden, providing MA and Part D stakeholders with an opportunity to highlight areas for potential change.
Of particular note, the CY 2026 Rate Announcement includes a plan payment increase that is up more than $25 billion from its original proposal and continues the three-year phase-in of the move to the V28 risk adjustment model. This came just days after CMS issued the 2026 Final Rule. Created under a sharply different political landscape, the 2026 Final Rule departs from the Proposed Rule of November 26, 2024 (“2026 Proposed Rule”) in a number of ways.
As we predicted in our previous Insight, the Trump Administration chose not to finalize some aspects of the 2026 Proposed Rule. The 2026 Final Rule balked at a number of proposals—owing at least in part to Executive Order 14192 of January 31, 2025, “Unleashing Prosperity Through Deregulation,” which was cited by CMS. With deferrals listed at 90 FR 15795 and 15892, the 2026 Final Rule is perhaps notable for
Deferring addressing proposed expansion of the definition of what would be considered Medicare marketing subject to CMS submission, as well as limitations on the marketing of the value of supplemental benefits (see our previous post);
Not adopting guardrails for artificial intelligence (AI) in ensuring equitable access to MA services (see our previous post; CMS will continue to consider future AI rulemaking);
Not finalizing proposed changes relating to Part D and Medicaid coverage of anti-obesity medications (see our previous post);
Deferring various proposed improvements to Star Ratings (see our previous post; the Health Equity Index Reward for Part C and D Star Ratings is still under review, while the 2026 Final Rule updates breast cancer screening measures in Part C by expanding the age range to align with updated clinical guidelines).
Not adopting the additional step in a formulary review process for generics and biosimilars (CMS may address formularies in a future rulemaking);
Not adopting annual health equity analysis of utilization management policies and procedures (currently under review);
Not adopting requirements for MA plans to provide culturally and linguistically appropriate services (currently under review);
Not adopting quality improvement and health risk assessments (HRAs) focused on equity and social determinants of health (currently under review);
Deferring addressing Part D Medication Therapy Management (MTM) Program Eligibility Criteria (see Table 4 at 90 FR 15892);
Deferring ensuring equitable access to behavioral health benefits (see Table 4 and our previous post);
Deferring changes regarding MA Provider Directories (see Table 4 and our previous post); and
Deferring enhancing rules on internal coverage criteria (see Table 4).
These deferrals represent policy considerations that the Administration neither rejected nor adopted. The long list raises the questions of whether CMS will make the effort to formally address any of these proposals in future rulemaking or will kick these cans down the road for the next administration. We further discuss the Rate Announcement, and what is included in the Final Rule, below.
CY 2026 Rate Announcement
The statutorily required CY 2026 Rate Announcement, formally known as the CY 2026 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies, responded to CMS’s request for comments on the 2026 Advance Notice of Methodological Changes which published on January 10, 2025. The effective growth rate—representing the current estimate of growth in benchmarks used to determine payment for MA plans, based on the growth in Medicare Fee For Service (FFS) Medicare per capita costs—is 9.04 percent, which is higher than the estimate of 5.93 percent in the Advance Notice.
Plan Payment Increase. Of particular interest, and based on the significant increase in the actual FFS growth rate over the estimate relied on in the Advance Notice, the Trump Administration announced a plan payment increase that exceeds that proposed by the Biden Administration (an expected average change in revenue that is up 5.06 percent as opposed to 2.23 percent).
V28 CMS-HCC (Hierarchical Condition Category) Risk Adjustment Model. The administration also announced a continuation of the 3-year phase in of the move to the V28 risk adjustment model which began in 2024. For non-PACE organizations, CMS will use 100 percent of the risk score calculated using the 2024 CMS-HCC risk adjustment model. For PACE organizations, for CY 2026, CMS will begin phasing out the 2017 CMS-HCC model as proposed by calculating risk scores as a blend of 10 percent of the risk score calculated using the 2024 CMS-HCC risk adjustment model and 90 percent of the risk score calculated using the 2017 CMS-HCC risk adjustment model.
Star Ratings. Reflecting the estimated effect of changes in the Quality Bonus Payments for the upcoming payment year, this number remains unchanged from the 2026 Advance Notice, at -.0.69 percent. The Rate Announcement includes the list of eligible disasters for adjustment, non-substantive measure specification updates, and the list of measures included in the Part C and D improvement measures and Categorical Adjustment Index for the 2026 Star Ratings. CMS will consider comments to the Advance Notice relating to substantive measure specification changes and new measures, to be made in future rulemaking.
Risk Model Revision and FFS Normalization. Both the 2026 Advance Notice and the 2026 Rate Announcement lists -3.01 percent.
Medical Education Costs. For CY 2026, CMS will complete the phase-in of the technical adjustment as proposed in the 2026 Advance Notice by applying 100 percent of the adjustment for medical education costs associated with services to MA enrollees for CY2026. In CY 2024, CMS initiated a three-year approach for removing these costs, related to services that MA enrollees receive, from the historical and projected expenditures supporting the FFS costs that are included in the growth rate calculations. [From press release and Fact Sheet.]
CY 2026 Final Rule: What Does It Include?
The Final Rule amends regulations for Part C), Part D, Medicare cost plans, and PACE to implement changes related to prescription drug coverage, the Medicare Prescription Payment Plan, dual eligible special needs plans (D-SNPs), Part C and D Star Ratings, the Medicare Drug Price Negotiation Program, and other programmatic areas. The Final Rule also codifies Part C and Part D sub-regulatory guidance; certain Part D requirements from the Inflation Reduction Act of 2022 (IRA); and finalizes two IRA-related provisions regarding selected drugs with maximum fair prices (MFPs) in effect under the negotiation program. Key provisions include:
Vaccine cost-sharing changes. The 2026 Final Rule finalizes as proposed changes to section 11401 of the Inflation Reduction Act (IRA) of 2022—amending section 1860D-2 of the Social Security Act to require that, effective for plan years beginning on or after January 1, 2023, the Medicare Part D deductible shall not apply to, and there is no cost-sharing for, an adult vaccine recommended by the Advisory Committee on Immunization Practices (ACIP) covered under Part D.
Insulin cost-sharing requirements. The 2026 Final Rule finalizes as proposed changes to section 11406 of the IRA—amending section 1860D-2 to require that, effective for plan years beginning on or after January 1, 2023, the Medicare Part D deductible shall not apply to covered insulin products, and the Part D cost-sharing amount for a one-month supply of each covered insulin product must not exceed the statutorily defined applicable copayment amount for all enrollees.
For 2026 and each subsequent year, with respect to an insulin product covered under a prescription drug (PDP) plan, or a Medicare Advantage prescription drug (MA-PD) plan, prior to an enrollee reaching the annual out-of-pocket threshold, the applicable cost sharing amount is the lesser of
$35;
An amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with Part E of Title XI [of the Social Security Act]; or
An amount equal to 25 percent of the negotiated price, as defined in § 423.100, of the covered insulin product under the PDP or MA-PD plan.
Medicare Prescription Payment Plan. The 2026 Final Rule largely adopts proposed regulatory changes to codify agency guidance implementing § 11202 of the IRA. The proposal adds a new § 423.137 establishing requirements for the Medicare Prescription Payment Plan, adds new Part D materials and content at § 423.2267, adds Medicare Prescription Payment Plan information to the list of required content for Part D sponsor websites, and adds the Medicare Prescription Payment Plan to the list of Part D requirements waived for the Limited Income Newly Eligible Transition (LI NET) program. It further codifies requirements in the Final CY 2025 Part D Redesign Program Instructions for the treatment for Medical Loss Ratio (MLR) purposes of unsettled balances for 2026 and future years. (The Rule does make “a few exceptions,” listed at 15793).
Dually Eligible Enrollees. The Rule finalizes new federal requirements for D-SNPs designed to address program fragmentation, including for plan use of integrated member identification cards and integrated health risk assessments (HRAs).
Prescription Drug Event (PDE) Records. The Final Rule codifies at § 423.325 specific timely submission requirements for PDE Records, as proposed.
Medicare Transaction Facilitator Requirements for Network Pharmacy Agreements. The 2026 Final Rule finalizes a proposal requiring Part D sponsors’ network participation agreements with contracting pharmacies require such pharmacies to be enrolled in the Medicare Drug Price Negotiation Program’s Medicare Transaction Facilitator Data Module and that such pharmacies certify the accuracy and completeness of their enrollment information in the MTF DM.
MA Organization Determinations. The 2026 Final Rule clarifies the definition of MA “organization determination” to include MA plan decisions made concurrent to the enrollee’s receipt of services. It also codifies requirements related to the delivery of notices of coverage decisions to providers, clarifies that an enrollee’s liability for services cannot be determined until an MA organization has made a claims payment determination, and restricts plans’ ability to use information gathered after an inpatient admission has taken place.
Risk Adjustment Data Updates. The 2026 Final Rule changes the definition of Hierarchical Condition Categories (HCCs) and codifies the practice of requiring the collection and submission of risk adjustment data by PACE organizations and cost plans.
Burden Reduction and Deregulatory Efforts
Also in early April, CMS posted an appeal titled “Unleashing Prosperity Through Deregulation of the Medicare Program Request for Information” (Medicare Deregulation RFI). Through this RFI, CMS asks for input “on approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries, Medicare Advantage and Part D plans, and other stakeholders participating in the Medicare program” in an effort “to reduce unnecessary administrative burdens and costs, and create a more efficient healthcare system”. Commenters are asked to identify
specific Medicare administrative processes, quality, or data reporting requirements that could be automated or simplified to reduce the administrative burden on facilities and providers;
changes that could be made to simplify Medicare reporting and documentation requirements without affecting program integrity; and
documentation or reporting requirements within the Medicare program that are overly complex or redundant.
Submissions under this RFI are due by June 10, 2025, and could form the basis for the Trump Administration’s MA and Part D and related regulatory proposals for the 2027 plan year.
Takeaways
The regulations covered by the Final Rule become effective on June 3, 2025. The Final Rule’s provisions generally apply to coverage beginning January 1, 2026, with exceptions:
Updates to marketing and communications provisions at §§ 422.2267 (e)(30) and (32) for integrated member ID cards are applicable for CY marketing and communications beginning October 1, 2026;
Requirements related to eligibility and election, targeted outreach, and general outreach regarding participation in the Medicare Prescription Payment Plan for 2026 (at various provisions) are applicable beginning October 1, 2025;
The HRA provision at §422.101(f) is applicable beginning October 1, 2026, for HRAs conducted for effective dates of enrollment on or after January 1, 2027;
The updated Part C Breast Cancer Screening measure as described in section IIIE of the Final Rule is applicable for 2029 Star Ratings beginning January 1, 2027.
Epstein Becker Green Attorney Ann W. Parks contributed to the preparation of this post.
Top Mistakes to Avoid After Suffering a Personal Injury
Suffering a personal injury can turn your life upside down in an instant. Between medical appointments, missed work, and emotional stress, it’s easy to feel overwhelmed and even easier to make a misstep without realizing it. Whether you were injured in a car accident, at work, or somewhere else, avoiding these common mistakes can protect both your health and your ability to recover financially.
1. Not Getting Medical Attention Right Away
Even if your injuries seem minor, seeing a doctor as soon as possible is important. Some injuries, such as whiplash or concussions, can take time to show symptoms. Delaying medical treatment can worsen your condition and give the insurance company a reason to argue that your injuries were not serious.
2. Talking Too Much to the Insurance Company
Insurance adjusters might sound friendly on the phone, but their job is to save their company money. Giving a recorded statement or signing paperwork too soon can harm your case. It is your right to tell them you would like to speak with your lawyer first.
3. Not Following Doctor’s Orders
If your doctor tells you to rest, go to physical therapy, or avoid certain activities, you should follow their orders. Ignoring medical advice not only risks your health, but it can also make it look like you’re not as injured as you say you are.
4. Waiting Too Long to Take Action
Every state has time limits for filing personal injury claims, called statutes of limitations. If you wait too long, you could lose your right to compensation forever. Not acting soon enough also makes it more difficult to gather evidence and talk to witnesses. The sooner you act, the better.
5. Trying to Handle It All on Your Own
Navigating a personal injury claim without a lawyer can be overwhelming, especially with strict deadlines, complex paperwork, and tough negotiations involved. Insurance companies often have teams working to minimize payouts, which can make the process even more challenging. Having a knowledgeable personal injury lawyer can help ensure your rights are protected and that you understand your options every step of the way.
Conclusion
Recovering from a personal injury is a process—physically, emotionally, and financially. By avoiding these common mistakes, you give yourself the best chance to heal and move forward. Focus on your recovery, keep records of everything, and don’t hesitate to seek help.
Recent Legal and Regulatory Developments Involving Gender-Affirming Care
On January 28, 2025, President Trump signed Executive Order 14187 (the “EO”), which directed the federal government to take steps to ensure that the federal government does not “sponsor, promote, assist, or support” the “‘transition’ of a child from one sex to another,” including the provision of gender-affirming care to individuals under the age of nineteen. Specific provisions of the EO directed, among other things, that: (1) all federal agencies rescind or amend all policies relying on guidance issued by the World Professional Association for Transgender Health; (2) federal agencies that provide research or education grants to hospitals and medical schools take “appropriate steps” to ensure that institutions receiving federal research or education grants end gender-affirming care to individuals under the age of nineteen; (3) the Secretary of the Department of Health and Human Services (“HHS”) take all appropriate regulatory and legal action to end gender-affirming care for individuals under the age of nineteen—such as through Medicare or Medicaid conditions of participation or conditions for coverage, clinical-abuse or inappropriate-use assessments relevant to State Medicaid programs; (4) the U.S. Attorney General to enforce an existing federal law against “genital mutilation” (18 U.S.C. § 116), and coordinate with state attorneys general to enforce state laws against gender-affirming care; and (5) the Director of the Office of Personnel Management include provisions in the Federal Employee Health Benefits and Postal Service Health Benefits programs call letter for the 2026 plan year specifying that eligible carriers exclude coverage for pediatric transgender surgeries or hormone treatments.
Federal Government Responses
The provisions of the EO related to research and education grants have been enjoined by two different federal courts (which are pending on appeal): (1) in the Western District Court of Washington, with the injunction only to apply to the states of Washington, Minnesota, Oregon, and Colorado, and (2) in the District Court of Maryland, with the injunction applying nationwide, though an emergency order to enforce the injunction was denied on March 28, 2025. However, federal agencies have already taken actions to implement the other provisions of the EO. On January 31, 2025, in accordance with the EO, the U.S. Office of Personnel Management (“OPM”) issued Carrier Letter Number 2025-01A, instructing insurance carriers for federal employees and postal workers (each carrier for federal employees, a “FEHB Carrier”, and each carrier for postal workers, a “PSHB Carrier”) to “‘exclude coverage for pediatric transgender surgeries or hormone treatments’ for the purpose of gender transition” for covered individuals under the age of nineteen for the plan year of 2026. Treatments excluded under this policy include “treatments prescribed for the purpose of delaying the onset or progression of normally timed puberty (including GnRH agonists),” “use of androgen blockers, estrogen, progesterone, and testosterone to align an individual’s physical appearance with an identity that differs from his or her sex,” and “surgical procedures used to align an individual’s physical appearance with an identity that differs from his or her sex”. The letter does allow coverage for surgeries or hormone treatments that are meant to facilitate gender transition for individuals above the age of nineteen, but it does not require such coverage. Carriers are required to comply with this letter for the plan year of 2026. OPM had previously issued Carrier Letter Number 2023-12 on May 23, 2023, preventing FEHB Carriers and PSHB Carriers and from excluding from coverage “services related to gender affirming care, such as hormone therapy, genital surgeries, breast surgeries, and facial gender affirming surgeries”, which Carrier Letter Number 2025-01A now supersedes.
Most recently, on April 11, 2025, the Centers for Medicare and Medicaid Services (“CMS”) issued a letter to State Medicaid Directors reminding states that the use of federal funds received by the State Medicaid programs as part of its federal financial participation for coverage of “procedures, treatments, or operations for the purpose of rendering an individual permanently incapable of reproducing” is prohibited for those procedures if they are performed on a person under the age of twenty-one (42 C.F.R. § 441.253(a)). The letter also reiterates the requirement that states maintain a drug utilization program that complies with Section 1927 of the Social Security Act (42 U.S.C. § 1396r-8) and implies that CMS will publish additional guidance on drug utilization program requirements regarding the prescription of drugs for gender-affirming care treatments, but does not currently implement any changes to the existing requirements. As support for its position, the letter cites studies on the prevalence of gender affirming treatment and to a review conducted in the United Kingdom that found poor quality of studies on gender dysphoria and a lack of reliable evidence to inform gender-based clinical decisions. CMS had previously issued a Quality & Safety Special Alert Memo on March 5, 2025, citing to the same studies as the April 11th letter on the denoted dangers and harmful effects of gender-affirming treatments.
HHS also recently agreed to drop its Biden-era appeal seeking to overturn a judicial order which prevented HHS from enforcing anti-discrimination provisions of the Affordable Care Act (the “ACA”) with respect to transgender individuals in Florida. Previously, in 2024, HHS had published a Final Rule with respect to Section 1557 of the ACA to clarify that such Section protected LGBTQ+ individuals by prohibiting entities receiving federal funding, including healthcare providers, from discriminating against transgender individuals. The State of Florida, several Florida government agencies, and the Catholic Medical Association filed suit and were granted an injunction which blocks the imposition of the anti-discrimination provisions in Florida. Under Biden, HHS appealed the injunction. However, at the request of HHS, the Court of Appeals for the Eleventh Circuit dismissed the appeal on April 3, 2025. This follows a similar dismissal in the Court of Appeals for the Fifth Circuit, where HHS dropped its appeal of a nationwide injunction in Tennessee and a Texas- and Montana-specific injunction in Texas. As a result, HHS may not enforce the anti-discrimination provisions in the ACA with respect to transgender individuals and accordingly, entities receiving federal funds, including certain Medicare payments, may face a low risk of enforcement by HHS as a result of denying care or coverage to transgender individuals.
Parallel State Government Actions
While the EO applies only to federal agencies, many states have also moved to reinstitute state-level prohibitions on gender-affirming care. On April 3, 2025, Ohio Attorney General Dave Yost appealed to the Supreme Court of Ohio to overturn a court order which blocks enforcement of a law preventing the use of hormone or puberty blocking treatments for transgender individuals under the age of eighteen, and also requested the Court prohibit any injunctive relief while the appeal is pending. The law had previously been passed over Governor Mike DeWine’s veto in January of 2024. If successful, doctors in Ohio would be prohibited from providing gender affirming hormone or puberty blocking treatments for transgender individuals under the age of eighteen.
In total since 2021 and as of March 19, 2025, twenty-seven states have passed bans on gender-affirming healthcare: Idaho, Utah, Montana, Wyoming, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Texas, Iowa, Missouri, Arkansas, Louisiana, Kentucky, Tennessee, Mississippi, Indiana, West Virginia, South Carolina, Alabama, Ohio, North Carolina, Georgia, and Florida have banned gender-affirming care whether through medication and surgical procedures, while Arizona and New Hampshire have only banned gender affirming surgical care (though Governor Katie Hobbs of Arizona issued an executive order allowing transgender state employees to receive insurance coverage for gender-affirming healthcare services). A challenge to Tennessee’s ban on gender-affirming care is currently pending before the U.S. Supreme Court. The United States had originally filed briefs in support of the original plaintiffs in the case arguing that the Tennessee law violated the Equal Protection Clause of the Fourteenth Amendment, but in a letter dated February 7, 2025, the U.S. Department of Justice changed its position to state that it no longer holds the view that the Tennessee law violates the Fourteenth Amendment, but that the case should not be dismissed so that a ruling on the equal protection question will provide guidance to many cases currently pending in the lower courts.
Not all states, however, have enacted similar legislation. The District of Columbia and the following sixteen states have enacted a variety of protections for gender-affirming care, including “shield” laws to protect providers against enforcement actions initiated by other states that impose bans on gender-affirming care and mandatory insurance coverage for gender-affirming care procedures through application of state non-discrimination laws: Washington, Oregon, California, Arizona (though per the above executive order access is limited only to state employees), Colorado, New Mexico, Minnesota, Illinois, Maryland, New York, New Jersey, Connecticut, Vermont, Rhode Island, Massachusetts, and Maine. Additionally, several state attorneys general, including the state attorneys general of California and New York, have sent letters to individual healthcare providers warning them that withholding medical services from transgender individuals on the basis of their gender identity could violate state anti-discrimination laws.
Notably, on April 4, 2025, eleven states filed an amicus curiae brief in support of a lawsuit before the Court of Appeals for the Sixth Circuit seeking to overturn Michigan’s ban on conversion therapy for minors. Michigan state law prohibits treatment intended to change a person’s sexual orientation or gender identification “including but not limited to, efforts to change behavior or gender expression or to reduce or eliminate sexual or romantic attractions or feelings toward an individual of the same gender,” often referred to as conversion therapy. The plaintiffs in the initial lawsuit argued that the ban unconstitutionally prohibited therapists’ freedom of speech. A federal court judge for the Western District of Michigan found that the Michigan law does not intrude on a therapist’s First Amendment right and upheld the prohibition on conversion therapy. The plaintiffs then appealed to the Sixth Circuit. While this case does not directly involve gender-affirming care, all of the states which are party to the amicus curiae brief have implemented bans on gender-affirming care.
As the legal and political landscape continues to evolve, healthcare organizations and healthcare providers that offer gender-affirming care may face significant new legal, regulatory and financial risks, particularly where there is the potential for conflict between federal requirements and state laws. Even in the absence of direct conflict, there are significant differences between the EO’s stated objectives and state law restrictions on gender-affirming care, such as the specified age range to which the laws apply. The potential complexities and consequences resulting from such differences make it imperative that healthcare organizations and healthcare providers pay careful attention to developments relating to restrictions on gender-affirming care and consult legal counsel as necessary.
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