Value-Based Care at a Crossroads: What’s Next and How To Prepare
The Trump administration will have its own vision on value-based care, creating specific priorities for the Center for Medicare & Medicaid Innovation (CMMI), the federal government’s primary testing ground for payment and service delivery model innovation in Medicare, Medicaid, and the Children’s Health Insurance Program. Republican political leadership may leverage CMMI’s $10 billion budget and sweeping waiver authorities to design and implement value-based care models that reflect the Trump administration’s goals. While specific actions remain unknown, the potential overall direction and key focus areas of CMMI can be forecast based on the work of the first Trump administration and incoming leadership.
This +Insight examines the current value-based care landscape and explores the potential changes on the horizon that are likely to bring both opportunities and challenges.
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GLP-1 Receptor Agonists: New Frontiers and Challenges
Obesity and diabetes have been two of the greatest public health challenges for decades. Many different diets and fads have promised the public a quick fix and a path to losing excess weight or resolving their diabetic issues.
Recently, a new class of drugs, based on GLP-1, are revolutionizing medicine and the treatment of patients with diabetes, obesity, and other disorders associated with obesity. GLP-1 is a short-acting hormone that is released after eating. This hormone helps regulate glucose levels in the body by causing the pancreas to release insulin, which lowers sugar levels in the blood. Furthermore, the hormone causes individuals to feel full by both causing the gut to reduce how quickly it processes food and acting on different parts of the brain which control hunger and satiety.
GLP-1 receptor agonists are a new class of drugs which mimic the activity of GLP-1 and maintain the benefits of the GLP-1 hormone in patients. The U.S. Food & Drug Administration (FDA) has approved many drugs in this class over the past couple of years including Ozempic, Wegovy, Mounjaro, and Zepbound to name a few. These drugs are approved to treat different conditions, including obesity and type 2 diabetes, and are now being tested for treatments far beyond obesity and diabetes. Studies to treat cardiovascular disease, addictive behavior, and rheumatologic diseases are just a few of the ongoing trials. Together, this new class of drugs could lead to sales in the tens of billions of dollars in the upcoming years.
The rapid expansion of this area of technology raises many business and legal questions. We will explore many of these throughout the upcoming articles in this series. These topics include:
Issues related to deals and licensing for GLP-1 therapeutics
Patent/IP challenges to consider for GLP-1 therapeutics
Clinical trial issues for GLP-1 therapeutics
FDA/regulatory issues for GLP-1 therapeutics
Litigation issues for GLP-1 therapeutics
For additional resources on GLP-1 Drugs and how they will change the health care & life sciences and technology industries, click here to read the other articles in our series.
First Circuit Clarifies FCA Liability Standard for AKS Violations, Deepening Circuit Split
The First Circuit has issued its long-anticipated opinion in United States v. Regeneron Pharmaceuticals, Inc., clarifying the standard for establishing False Claims Act (“FCA”) liability based on Anti-Kickback Statute (“AKS”) violations. The First Circuit held that an AKS violation must be the “but-for” cause of a claim for it to be considered “false” under the FCA. In reaching this conclusion, the First Circuit sided with the Sixth and Eighth Circuits, positioning all three courts against the Third Circuit, which has held that a mere link between an AKS violation and a claim is sufficient to establish falsity under the FCA.
A copy of the opinion can be found here.
The First Circuit’s Opinion
Regeneron Pharmaceuticals, Inc. manufactures Eylea, a drug used to treat neovascular age-related macular degeneration (a/k/a, wet AMD). Regeneron allegedly donated over $60 million to an independent charity, the Chronic Disease Fund (“CDF”), which provides financial assistance to patients who need Eylea. Regeneron’s contributions to the CDF were allegedly intended to function as an indirect co-pay subsidy for patients, effectively inducing Medicare reimbursements for Eylea prescriptions and thereby violating the AKS.
On summary judgment, the government disputed the need to establish but-for causation between the alleged kickback and the submitted claim. Instead, it maintained that any claim involving a patient who benefited from an illegal payment or referral was tainted and should be considered false for purposes of the FCA. The First Circuit disagreed, relying on Supreme Court precedent interpreting the term “resulting from” as implying a presumptive but-for causation standard. In reaching its conclusion, the First Circuit rejected the government’s arguments in support of the lower “link” standard of causation.
The First Circuit rejected each of the government’s core contentions. First, the government contended that because the AKS imposes criminal liability without requiring proof that a claim was, in fact, influenced by a kickback, the same standard should apply in the civil FCA context. The First Circuit rejected this position, reasoning that FCA liability fundamentally differs from criminal liability and that the 2010 amendment to the AKS explicitly introduced a causation element that the government must meet. The First Circuit emphasized that while criminal liability under the AKS aims to prevent corruption in medical decision-making, the FCA’s focus is on financial recovery for false claims, requiring a more direct causal link. Thus, by requiring but-for causation, the First Circuit aimed to ensure that claims brought under the FCA are truly the product of illegal inducements rather than merely associated with them.
Second, the government contended that Congress enacted the 2010 amendment against a backdrop of case law that had linked AKS violations to FCA liability without requiring proof of but-for causation. The First Circuit, however, found no indication that Congress intended to eliminate the need for causation, concluding that the amendment merely established a new pathway for proving falsity without overriding existing legal principles regarding causation. Absent explicit language in the amendment removing the requirement of causation, the First Circuit declared, the default presumption of but-for causation should apply. It further noted that previous case law interpreting similar statutory language has consistently required a direct causal link, reinforcing the assumption that Congress intended the same standard to govern FCA claims predicated on AKS violations.
Finally, the government attempted to rely on legislative history, pointing to statements made by the sponsor of the 2010 amendment suggesting that the amendment was designed to ensure that all claims “resulting from” AKS violations were false. The First Circuit rejected this argument as well, noting that legislative history cannot override the plain meaning of statutory text. Rather, the First Circuit held, the phrase “resulting from” necessarily implies a but-for causation standard unless Congress explicitly provides otherwise. Here, the First Circuit reasoned that while legislative history can offer insight into congressional intent, it cannot contradict clear statutory language. Additionally, it underscored that a broad interpretation of “resulting from” would risk imposing liability even where an AKS violation had no actual influence on a submitted claim, a result inconsistent with the FCA’s purpose of targeting fraudulent claims.
What’s Next? Deepening Circuit Splits, Potential Supreme Court Intervention, and Lingering Constitutional Questions
As a threshold matter, this opinion raises the bar for the government to establish FCA liability in AKS-related cases, as it now must demonstrate that an illegal kickback was the direct cause of a false claim rather than merely showing an association between the two. Additionally, the ruling deepens an existing circuit split. With the First Circuit joining the Sixth and Eighth Circuits in requiring but-for causation, only the Third Circuit maintains the broader “link” standard. This divergence increases the likelihood that the Supreme Court will take up this issue to resolve the inconsistency among the Circuits. The potential for Supreme Court review and the deepening circuit split highlight just one of the many ways in which the FCA has recently taken on new prominence. This case unfolds against the backdrop of other developments, including the Trump administration’s stated intent to use the FCA to challenge DEI initiatives among government contractors and ongoing constitutional challenges to the FCA’s qui tam provisions. These developments will shape the future landscape of FCA litigation and compliance. Stakeholders should, accordingly, continue to monitor how courts and regulators navigate these evolving issues.
OSH Law Primer, Part XI (Continued): Understanding and Contesting OSHA Citations—The Whys and Hows
This is a continuation of the eleventh installment in a series of articles intended to provide the reader with a very high-level overview of the Occupational Safety and Health (OSH) Act of 1970 and the Occupational Safety and Health Administration (OSHA) and how both influence workplaces in the United States.
By the time this series is complete, the reader should be conversant in the subjects covered and have developed a deeper understanding of how the OSH Act and OSHA work. The series is not—not can it be, of course—a comprehensive study of the OSH Act or OSHA capable of equipping the reader to address every issue that might arise.
Quick Hits
If an employer decides to contest a citation, the employer must serve OSHA with a notice of contest within fifteen working days of receiving the citation. A failure to resolve a case through an informal settlement conference or file a notice of contest within fifteen working days will result in the citation becoming a final order of the Occupational Safety and Health Review Commission (OSHRC).
Employers may have multiple reasons for contesting citations, including the high cost of abatement, the risk of a citation being used by OSHA as the basis for a repeat violation, the risk of a citation being used in a civil lawsuit under state law, and potential impacts on business reputation and competitiveness.
Once a notice of contest is filed, OSHA forwards the citation and contest to OSHRC, which follows a litigation-like process involving hearings and evidence presentation before an ALJ. The ALJ’s decision can be appealed to the Review Commission and federal circuit courts. State plan states may have different procedures and deadlines.
The first article in this series provided a general overview of the OSH Act and OSHA; the second article examined OSHA’s rulemaking process; the third article reviewed an employer’s duty to comply with standards; the fourth article discussed the general duty clause; the fifth article addressed OSHA’s recordkeeping requirements; the sixth article covered employees’ and employers’ respective rights; the seventh article addressed whistleblower issues; the eighth article covered the intersection of employment law and safety issues; the ninth article discussed OSHA’s Hazard Communication Standard (HCS); the tenth article in the series examined voluntary safety and health self-audits; and the previous article reviewed OSHA’s citation process. In this article, we continue our discussion of the process for contesting OSHA citations.
Contesting OSHA Citations
If the employer decides to contest the citation, it must serve a notice of contest on the OSHA office that issued the citation within fifteen working days of receipt of the citation. Failure to either (a) settle a case through an informal settlement conference or (b) file a notice of contest within fifteen working days will result in the citation becoming a final order of the Occupational Safety and Health Review Commission (OSHRC).
Why Do Employers Contest Citations?
While the penalty amount may be minor, abatement can become cost-prohibitive. OSHA officials are typically not experts in the employer’s industry. The abatement methods they may request can oftentimes be broad and burdensome. Abatement may require, for example, substantial changes to manufacturing equipment, the purchase of new, expensive equipment, or change processes affecting the employer’s other facilities or ability to compete against others in the industry. These costs may quickly spiral an employer into competitive disadvantage.
Any citation on an employer’s record may be used by OSHA as the basis for a repeat violation. Repeat violations will typically subject an employer to a multiple of five or ten times the previous citation.
If an employer has multiple citations and violations in a brief amount of time, the odds increase that, for subsequent inspections and citations, an OSHA inspector will conclude the company is willfully or intentionally violating the OSH Act.
Depending on state law, OSHA citations may be used in a variety of ways in civil lawsuits, such as wrongful death or personal injury actions. For example, in some states, violations of safety standards can be introduced to prove that the employer was negligent per se. In other states, violations may be used as evidence of the employer’s gross negligence.
When soliciting business and new contracts, prospective customers are more frequently scrutinizing vendors’ safety records, including a review of OSHA citations issued to the employer. Citations cannot be concealed; each one is published on OSHA’s website, dating all the way back to 1971. Vendors with certain violations or several violations may be disqualified from soliciting business.
In addition, each citation on an employer’s record increases the likelihood of damage to the employer’s goodwill and business reputation. The more violations on an employer’s record, the more likely it is for the employer to be perceived as an unsafe company, scaring away business, lowering morale, inviting organized labor to recruit employees to a union for protection, and increasing additional scrutiny from OSHA.
The Process of an OSHA Contest
The notice of contest must be in writing. Federal OSHA has no form for a notice of contest. While there are no formalities or magic words to intone, an employer must adequately identify all aspects of the citation that it wishes to contest—the alleged violation, the characterization of the violation, the penalty, the abatement, the abatement date, or all the above. The notice must be adequate to put OSHA on notice that the employer is contesting either all or at least some part of the citation.
The notice of contest must be served on OSHA within fifteen working days of receipt of the citation. With very few exceptions, a citation not timely contested becomes a final order of the Occupational Safety and Health Review Commission (OSHRC) (known also as “the Review Commission”), and the order may not be reviewed by any court or agency.
OSHA starts counting the fifteen-day clock on the day when the citation is received by any agent of the employer. The agency typically sends the citation via certified mail to the closest local office where the alleged violation occurred, but sometimes OSHA will serve citations in person. In large companies, this can create confusion as to when a citation was received, as the citation moves from local offices to the legal and health, safety, and environment (HSE) departments. Rather than waste time guessing when the citation was received by the company, the safest practice is to assume OSHA hand-served the citation on the company on the date of issuance listed on the citation and count fifteen working days from then.
Engaging in settlement discussions with OSHA does not stop the clock on the contest period. In many employers’ minds, the contest period creates a way-too-short deadline to negotiate a settlement with OSHA. But keep in mind settlement talks can always continue after an employer submits its Notice of Contest.
Once OSHA receives an employer’s notice of contest, the agency must immediately forward the citation and contest to the Occupational Safety and Health Review Commission in Washington, D.C. The Review Commission is frequently mistaken as being part of OSHA. It is an independent federal agency tasked by the U.S. Congress to resolve contested OSHA citations. Upon receipt of the contest materials, an OSHRC clerk will docket the matter and pass the case on to the Chief Administrative Law Judge (ALJ). The chief ALJ will then assign the case to one of the Review Commission’s ALJs in the District of Columbia, Atlanta, or Denver.
The Review Commission will send the employer a two-part docketing card with the case number. The employer must detach and post the half of the card that contains a notice to employees informing them that the citation is under contest and of their rights to participate in the proceedings. The employer must then date and sign the other half of the card and mail it back to the Review Commission. This second half of the card notifies the Review Commission of the posting. If the employer fails to return the card, the Review Commission will send a reminder. If OSHRC receives no card back from the employer, it reserves the right to dismiss the employer’s contest.
Once docketed with the Review Commission, the case will follow certain procedures that appear very similar to a normal litigation track in state or federal courts. Ultimately, the ALJ will schedule a hearing to hear witnesses and receive evidence from all parties. OSHA will proceed first, and typically call the compliance officer who conducted the inspection as its first witness. The employer/respondent will have the opportunity to cross-examine any of OSHA’s witnesses, just as OSHA will have an opportunity to cross-examine the respondent’s witnesses. The hearing can continue for days or weeks, until both sides have presented their full cases to the ALJ. Thereafter, the ALJ will issue a decision that can be appealed by either party to the Review Commission, and thereafter, federal circuit courts.
State Plan States
Currently, there are twenty-two state plan states. State plan states maintain their own state OSH Act and have some subtle differences in the manner they handle citations and deadlines for appeal. Typically, the specific jurisdictional requirements are included in the citation packet the state plan sends to the employer. An employer seeking to appeal a state citation may want to carefully review the expectations outlined in the specific jurisdiction.
California Bill Seeks to Expand Scope of OHCA’s Review to Private Equity, Management Service Organizations and Others
California is considering an expansion of the types of entities that would comprise “health care entities” as defined by and subject to the review of the Office of Health Care Affordability (OHCA). AB 1415 would require private equity groups, hedge funds and their respective affiliates (including newly created entities) entering into material change transactions with health care entities to provide notice of the transactions to OHCA. Current law only requires the health care entities themselves to provide such notice. The bill would also add certain management services organizations, health systems and entities that “own, operate or control” providers (as defined by OHCA) to the list of health care entities that are subject to OHCA’s review. Further, the bill would change the definition of “provider” to “a private or public health care provider” with an expanded list of entity types. The proposed revisions are detailed below:
1. Private Equity Groups, Hedge Funds and Entities Newly Formed to Contract with Health Care Entities Would Be Subject to OHCA’s Notice Requirements
AB 1415 would require private equity groups, hedge funds and newly created business entities created for the purpose of entering into agreements or transactions with a health care entity to provide notice to OHCA of transactions or agreements that would transfer ownership or control over a material amount of the assets or operations of the health care entity. While health care entities party to material change transactions are already subject to OHCA’s notice requirements, the bill would expand the required disclosures to the private equity groups and hedge funds themselves. The definitions of “private equity group” and “hedge fund” generally include the investment entities managed by fund managers for their investors but exclude the individual investors themselves if they do not participate in the management of the funds. The definition of “hedge fund” specifically excludes entities that solely provide or manage debt financing secured in whole or in part by the assets of a health care facility, including, but not limited to, banks and credit unions, commercial real estate lenders, bond underwriters and trustees. AB 1415’s definitions of “private equity group” and “hedge fund” largely mirror the definitions included in last year’s AB 3129, which would have required prior notice to and approval of the California Attorney General for certain health care investments by private equity groups and hedge funds. 1
The proposed expansion of OHCA’s jurisdiction to private equity groups and hedge funds is likely a response to Governor Newson’s veto of AB 3129 last year, in which the Governor reasoned that it was OHCA’s role to review certain health care transactions and that additional, separate processes like those in AB 3129 appeared to be unnecessary and duplicative. Instead of attempting another run at a separate review process aimed at private equity and hedge funds (among others), this time the approach is to expand OHCA itself. Unlike the Attorney General under AB 3129, OHCA does not and still would not have the authority to block transactions, but transactions subject to OHCA’s review are not permitted to close until the completion of OHCA’s review process, which can be burdensome and lengthy.
2. “Provider” Would Be Defined as a “Private or Public Health Care Provider” and Include a Potentially Non-Exclusive List of Entity Types
OHCA’s governing statute defines “provider,” one of the sub-categories of “health care entity,” with an exhaustive list of entity types. AB 1415 would change the definition to “a private or public health care provider” and states that the definition includes the list of entity types from the original definition (with some additions, described below).
If passed as drafted, the language may create ambiguity over whether certain entities are captured under the definition of “provider.” First, the definition does not define the difference between a “private” or “public” provider. Second, it is unclear whether the list of entities is exhaustive. If the list is non-exhaustive, members of the health care industry would have little guidance on whether they constitute a health are entity. This definition would benefit from clarifications in revisions to the bill or OHCA’s implementing regulations.
3. Management Services Organizations Would Become Health Care Entities Subject to OHCA’s Review
AB 1415 would add management services organizations (MSOs) to the definition of health care entity. MSOs would include any entity that provides administrative services or support for a provider (as defined by statute), not including the direct provision of health care services. Administrative services or support would include, but not be limited to, utilization management, billing and collections, customer service, provider rate negotiation and network development.
This addition could include many types of management arrangements that were previously excluded from OHCA’s statute and governing arrangement. The legislature may be targeting “friendly PC” arrangements where MSOs operate all non-clinical business operations of a health care practice, but the addition could also capture arrangements that manage smaller portions of practice operations. For example, the addition may capture arrangements that outsource billing and collections or customer service functions to vendors that otherwise have no influence over the health care operations of their clients.
4. Entities that Own, Operate or Control Entities Listed Under the Definition of “Provider” Would Be Health Care Entities Subject to OHCA’s Review
Under AB 1415, entities that own, operate or control the entities listed under the definition of “provider” would become health care entities subject to OHCA’s notice and review “regardless of whether it is currently operating, providing health care services, or has a pending or suspended license.” This addition would expand the notice requirements to a broad range of owners and operators over health care entities that have not otherwise been captured by the current law.
Like the changes to the definition of “provider,” this language creates ambiguities that will benefit from further revision to the bill or OHCA’s regulations. For example, holding companies that own provider entities would become health care entities subject to notice even if they held other assets unrelated to the provision of health care services in California and or included other assets and services lines that do are not health care entity services. The legislature may have intended to capture transactions that occur at a holding company level that do not include the health care entities themselves. If that is the case, arguably some these types of transactions are already captured by OHCA’s regulations, which apply to health care entities that are a “subject of” a material change transaction.
5. Health Systems Would Be Included as Health Care Entities Subject to OHCA’s Review
AB 1415 would add health systems to the enumerated list of providers. “Health system” would mean (1) a hospital system, as defined in subdivision (e) of Section 127371; (2) a combination of one or more hospitals and one or more physician organizations; or (3) a combination of one or more hospitals, one or more physician organizations, or one or more health care service plans or health insurers.
Health systems were likely already captured by current law, which includes health facilities like acute care hospitals. However, the addition of “health system” as a type of health care entity could create further ambiguity. For example, the bill does not define the word “combination” as used in the definition of “health system” and does not appear to apply to a specific legal entity. It may be uncertain whether the definition of health care entity would capture an entity that is a subsidiary of a health system that would not otherwise be considered a health care entity but for its affiliation with the health system. The addition could also expand OHCA’s jurisdiction by potentially pulling in holding companies up the corporate chain from health care entities that do not directly own or operate any health care entity services solely by virtue of its inclusion in the overall “health system.”
Takeaways
AB 1415 demonstrates that California’s interest in reviewing private equity and hedge fund investments as well as MSOs in health care did not end with AB 3129.2 It also shows a continued appetite to expand OHCA’s jurisdiction less than a year after its review process has begun. It remains to be seen how the bill may be amended in the legislature to further expand its scope or clarify ambiguities in the current language. If passed, AB 1415 would also require OHCA to revise its implementing regulations. Members of the California health care industry should monitor the developments of AB 1415 to determine if their current operations and anticipated transactions may be subject to OHCA’s expanded jurisdiction and strategize early.
[1] Our prior discussions of AB 3129 can be found here:
https://natlawreview.com/article/californias-ab-3129-continues-national-trend-scrutinizing-private-equity
https://natlawreview.com/article/california-considers-revisions-legislation-health-care-investments-and-regulations
https://natlawreview.com/article/california-legislators-pass-ab-3129-require-notice-and-consent-private-equity-and
https://natlawreview.com/article/governor-newsom-vetoes-ab-3129-addressing-private-equity-california-health-care
[2] The California Senate is currently considering SB 351, which would revive some of AB 3129’s corporate practice of medicine-related restrictions on private equity affiliates providing management services to physicians and dentists. Our analysis of SB 351 can be found here: https://natlawreview.com/article/california-reintroduces-legislation-restrict-private-equity-management-health-care
Last-Minute Changes to Michigan’s Earned Sick Time Law: What Employers Need to Know
Takeaways
Changes to eliminate, modify or clarify certain provisions of the Michigan ESTA were signed by the governor on 2/21/25 and became effective immediately. The law requires most Michigan employers to permit employees to accrue and use paid earned sick time annually.
Under the amended ESTA, paid earned sick time begins to accrue as of 2/21/25. Small businesses have until 10/1/25 to start providing 40 hours of sick time and may cap usage at 40 hours in one year. All other employers may cap usage at 72 hours in one year.
Employers should review the changes and take immediate steps to comply with the amended ESTA.
Article
After the Michigan Supreme Court’s opinion in Mothering Justice v. Attorney General and State of Michigan, No. 165325 (July 31, 2024), Michigan’s Earned Sick Time Act (ESTA), which expanded employee paid sick time rights, was set to take effect on Feb. 21, 2025, late on Feb. 20, 2025, a bill was passed to amend the ESTA. The amended ESTA became effective at 12:02 a.m. on Feb. 21, 2025, and was signed by Governor Gretchen Whitmer later that morning.
The amended ESTA still requires most Michigan employers to permit employees to accrue and use paid earned sick time annually. However, the amended ESTA removes certain rebuttable presumptions that an employer had violated the ESTA and eliminates an employee’s right to file a private cause of action for a violation of the ESTA, all of which were in the previous version of the ESTA.
The amended ESTA also modifies or clarifies certain provisions of the ESTA, and there are key changes employers should be cognizant of to ensure compliance with the amended law.
Key Changes in Amended ESTA
Scope
The definition of “employee” was modified to exclude:
An individual employed by the U.S. government;
An unpaid trainee or unpaid intern;
An individual employed in accordance with the Youth Employment Standards Act; and
An individual who works in accordance with a policy of an employer if: (a) The policy allows the individual to schedule the individual’s own working hours; and (b) The policy prohibits the employer from taking adverse personnel action against the individual if the individual does not schedule a minimum number of working hours.
Accrual of Earned Sick Time
Employees must accrue one hour of paid earned sick time for every 30 hours worked, not including hours used as paid time off.
Small employers (defined as an employer with up to 10 employees on payroll during at least 20 calendar workweeks in either the current or preceding calendar year) may cap usage of paid earned sick time at 40 hours in one year.
All other employers may cap usage of paid earned sick time at 72 hours in one year.
Frontloading
As an alternative to the accrual of paid earned sick time, an employer may provide an employee not less than 72 hours of paid earned sick time (40 hours for small employers) at the beginning of the year for immediate use. If earned sick time is frontloaded, employers are not required to:
Allow an employee to carry over any unused paid earned sick time;
Calculate and track an employees’ accrual of paid earned sick time; or
Pay out unused accrued paid earned sick time at the end of the year in which the time was accrued.
“Use-it-or-lose-it” applies if time is frontloaded.
Carryover
Unlike the original ESTA, unlimited carryover of unused paid earned sick time is not required under the amended Act. Under the amended ESTA, employers may cap carryover of unused paid earned sick time at 72 hours (40 hours for small businesses).
Waiting Period
Employees hired after Feb. 21, 2025, can be required to wait 120 days after beginning employment before using accrued paid earned sick time.
Notice Requirements
If the need for paid earned sick time is foreseeable, employers can require up to seven days’ advanced notice.
If unforeseeable, employers may require employees to give notice either:
As soon as practicable; or
In accordance with the employer’s policy on using sick time, if: (a) The employer notifies the employee of their policy in writing after Feb. 21, 2025; and (b) The policy allows employees to provide notice after the employee is aware of the need to use sick time.
Employers can require “reasonable documentation” for paid earned sick time of more than three consecutive days. Employers must give employees not more than 15 days to provide such documentation upon request and are required to pay all out-of-pocket expenses the employee incurs to obtain that documentation.
Unlike the original version of the ESTA, the amended ESTA permits employers to take adverse personnel action if employees use paid earned sick time for a purpose other than one allowed under the Act.
Usage Increments
Paid earned sick time can be used in either one-hour increments or the smallest increment the employer uses for absences.
Rate of Paid Sick Time
Employees using paid earned sick time must be paid at a rate equal to the greater of either the normal hourly or base wage for that employee, or the established minimum wage. Employers are not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities in calculating a normal hourly wage or base wage.
No Payout Upon Separation
Like the original ESTA, the amended ESTA does not require payout of accrued, unused paid earned sick time upon the employee’s separation from employment.
No Retaliation
The amended ESTA prohibits an employer, or any other person, from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any right protected under the ESTA. It also prohibits an employer from taking retaliatory personnel action or discriminating against an employee because the employee has exercised a right under the ESTA.
Removal of Rebuttable Presumption
The amended ESTA removed the rebuttal presumption of a violation of the ESTA if an employer took an adverse personnel action against a person withing 90 days after that person engaged in certain protected activities under the ESTA.
No Private Right of Action
Unlike the original ESTA, the amended ESTA does not provide employees a private cause of action.
Required Posters and Notice
Employers have 30 days from Feb. 21, 2025, to post posters consistent with the amended ESTA and provide written notice to employees as required by the ESTA.
The Department of Labor and Economic Opportunity is required to create and make available to employers notices and posters for employers’ use in complying with the amended ESTA. The Department is required to provide the notices and posters in English, Spanish, and any other language deemed appropriate by the Department. Posters reflecting the amendments to the ESTA, however, are not currently available.
Takeaways
Under the amended ESTA, paid earned sick time begins to accrue as of Feb. 21, 2025. Small businesses have until Oct. 1, 2025, to start providing 40 hours of sick time. New businesses with up to 10 employees have a three-year grace period after forming.
Employers should take immediate steps to comply with the ESTA.
The Top 10 Things Every Employer Should Know About OSHA
In the evolving landscape of workplace safety regulations, it is essential for construction employers to stay well-informed about the Occupational Safety and Health Administration’s (OSHA) protocols and guidelines. Our series, “Top 10 Things Every Employer Should Know About OSHA,” breaks down critical aspects ranging from the rights and responsibilities during OSHA inspections to intricacies of compliance standards and potential citation scenarios. This comprehensive guide aims to empower employers with the knowledge needed to navigate OSHA regulations effectively, ensuring safer work environments and minimizing legal risks.
Here’s a recap of our list of the top 10 things every employer should know about OSHA:
No. 1 – Walkaround Representatives
Employers and employees have the right to have representatives present during an OSHA site inspection.
According to 29 CFR 1903.8(c), employers and employees have the right to authorize a representative to accompany OSHA officials during workplace inspections for the purpose of aiding the inspection (also known as walkaround representatives). OSHA regulations require no specific qualifications for employer representatives or for employee representatives who are employed by the employer. We encourage all employers to have a designated walkaround representative present during OSHA inspections, which could include legal counsel.
No. 2 – Be Present in Manager Interviews
We all know that OSHA has the right to interview folks as part of an investigation. Whether a company representative and the company attorney can also attend an interview depends on the position of the person being interviewed.
If the person to be interviewed is a non-managerial employee, OSHA can conduct the interview in private, outside the presence of the employer or the employer’s representatives. Not so with managerial employees. If OSHA wants to interview a management-level employee, the employer has the right to have a company representative and/or attorney present.
No. 3 – Employees Have Rights When It Comes to OSHA Interviews
Although OSHA has the right to conduct private, one-on-one interviews with a company’s non-managerial employees, those same employees have rights too. Read the full article for details and things to consider.
No. 4 – OSHA Must Issue a Citation Within Six Months
OSHA has a time limit on issuing citations. It must issue a citation within six months of the occurrence of any violation. The only exception to this rule is where the employer has concealed the violative condition or misled OSHA. If such a situation occurs, OSHA must issue the citation within six months from the date that OSHA learns, or should have known, of the condition.
So, the moral of the story is just because it’s been a couple months since an OSHA inspection does not mean OSHA has decided not to issue a citation. You can check on the status of OSHA’s investigation by reviewing the OSHA establishment search page to see whether OSHA has closed its inspection or not.
No 5. – OSHA Can Issue Citations for Unsafe Work Conditions That Have Not Resulted in an Employee Injury
Most frequently, employers do not hear from OSHA unless there is a reported workplace injury. When a reported workplace injury occurs, OSHA performs a walkthrough inspection of the worksite and may ultimately issue a citation for hazardous conditions OSHA believes may have caused or contributed to the incident. However, OSHA is not limited to issuing citations for hazardous conditions that may have caused or contributed to a workplace injury. Rather, OSHA can cite employers for any and all hazardous conditions to which workers may have been exposed regardless of whether the cited condition was in any way related to the incident.
No 6. – But No One Was There? OSHA Can Still Cite for Unsafe Work Conditions Where Workers Were Not Exposed
We often hear, “OSHA can’t cite me because I didn’t employ the injured worker.” Unfortunately, this statement is often untrue.
Under OSHA’s Multi-Employer Doctrine, if you are an employer on a worksite where other companies are also performing work (e.g., construction sites and oil/gas well sites), you can be subject to citation for workplace hazards to which other companies’ employees are exposed. OSHA created the Multi-Employer Doctrine in recognition that there are many circumstances in which multiple employers will be working on a single worksite at the same time thereby affecting the working conditions to which all workers are exposed.
No. 7 – OSHA Can Issue Citations for Unsafe Work Conditions That Do Not Violate Any Specific OSHA Standard
Many employers have a false notion that OSHA can’t issue a citation if there is no specific standard violated.
The reality is, however, that OSHA has a catchall/gap filler provision that allows it to cite an employer even if no specific standard was violated: the “General Duty Clause,” Section 5(a)(1) of the Occupational Safety and Health Act. OSHA can cite employers for violations of the General Duty Clause if a recognized serious hazard exists in the workplace and the employer doesn’t take reasonable steps to prevent or abate the hazard. The General Duty Clause is used only where there is no standard that applies to the particular hazard.
No. 8 – Employers Have 15 Working Days to Contest a Citation but Have the Option to Negotiate a Settlement with OSHA Before That Deadline
What happens if OSHA issues a citation and you do not agree with any or all of it? You have 15 working days from the date you receive the citation to contest in writing the citation, proposed penalty, and/or the abatement date. Read the full article to learn more about your options and how to reach a favorable settlement.
No. 9 – The Particulars on OSHA Violations: How Much Notice Is Enough?
Just what does an OSHA citation have to include? Section 9(a) of the Occupational Safety and Health Act requires that citations “describe with particularity the nature of the violation, including a reference to the provision of the Act, standard, rule, regulation, or order alleged to have been violated.”
This statutory mandate is designed to ensure that OSHA properly informs employers of alleged violations so they can correct hazards promptly and avoid unnecessary litigation. However, the Occupational Safety and Health Review Commission and the courts have consistently interpreted this requirement to mean that citations need only provide employers with “fair notice” of the violation. In other words, as long as an employer is put on notice that a particular condition may violate OSHA standards, additional specifics can be obtained through discovery. As a result, OSHA often issues citations with broad language rather than granular detail.
No. 10 – Unlocking the Secrets of OSHA Inspections Through FOIA Requests
Did you know that you can request files from OSHA? Under the Freedom of Information Act (FOIA), employers, employees, and third parties have the right to request documents from OSHA’s inspection files. These records provide valuable insight into the evidence and reasoning behind OSHA’s decisions, including citations issued during site inspections. They can also be critical in legal proceedings, including lawsuits related to workplace safety.
A Deepened Divide: Appellate Court Joins False Claims Act Circuit Split in Favor of Health Care Defendants
On February 18, 2025, the United States Court of Appeals for the First Circuit issued its opinion in United States v. Regeneron Pharmaceuticals Inc., finding that, in Anti-Kickback Statute (AKS) cases, the government must show a claim would not have been submitted “but for” the AKS violation to establish False Claims Act (FCA) liability.1
This appeal stemmed from allegations that Regeneron Pharmaceuticals induced prescriptions of Eylea, an ophthalmological drug, by covering copayments for certain recipients of the drug. The government contended that the funding of copayments constituted kickbacks and therefore resulted in false claims made to Medicare in violation of the FCA. At issue for the First Circuit was the interpretation of “resulting from” in the 2010 amendment to the AKS, which provides that a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].”2 The Court ultimately decided that “statutory history provides no reason to deviate from the ordinary course, in which we treat ‘resulting from’ as requiring but-for causation” and that this interpretation would not render it difficult for the government to establish liability. 3
The First Circuit’s ruling is favorable for health care providers, as it sets a higher bar for the government to prove causation in FCA cases involving AKS violations. Nevertheless, the decision deepens a circuit split regarding the causation requirements of FCA claims arising from AKS violations. While this decision aligns the First Circuit with the Sixth and Eighth Circuits, the decision contrasts with the Third Circuit, which requires only a demonstration of a link “between the alleged kickbacks and the medical care received . . .”4 This circuit split will continue to persist until the Supreme Court addresses the issue. However, the timing of such a decision is uncertain, especially after the Supreme Court declined to hear a related appeal from the Sixth Circuit in 2023.5
As courts continue to take on this issue, health care providers and FCA litigants should closely monitor developments in this area, particularly if they operate in jurisdictions without controlling case law. Understanding the applicable causation standard is crucial for navigating FCA litigation effectively and staying informed will be key to managing potential risks and liabilities as the legal landscape evolves.
[1] United States v. Regeneron Pharmaceuticals Inc., No. 23-2086, 2025 WL 520466 (1st Cir. Feb. 18, 2025).
[2] See 42 U.S.C. § 1320a-7b(g).
[3] Regeneron Pharmaceuticals Inc., 2025 WL 520466, at *8-9.
[4] United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89, 93 (3d Cir. 2018).
[5] United States, ex rel. Martin v. Hathaway, 63 F.4th 1043 (6th Cir. 2023), cert. denied, No. 23-139, 2023 WL 6378570 (Oct. 2, 2023).
Risk Bearing Entity Requirements: New Jersey and New York
This blog reviews the regulatory requirements that apply to risk bearing entities (RBE) in New Jersey and New York. New Jersey and New York demonstrate distinct approaches to the registration and regulation of RBEs and provider network activities. This blog is part of Foley & Lardner’s RBE Series (see our Introduction posted November 18, 2024).
A variety of RBE reimbursement models that incorporate financial risk can trigger a requirement for Organized Delivery System (ODS) licensure in New Jersey and/or Independent Practice Association approval requirements in New York. Specifically, as generally noted in our Introduction, these models could include traditional or global capitation structures (e.g., financial responsibility for health care services delivered), bundles and episodic structures or other alternative payment models (e.g., financial responsibility for health care services for health conditions or treatments), shared savings, gain sharing, and other upside or downside risk structures (e.g., financial responsibility for total cost of care or achievement of medical loss ratios).
New Jersey
New Jersey classifies an organization that contracts with a carrier to provide, or arrange to provide, health care services or benefits under the carrier’s benefits plans as an ODS.[1] A “carrier” includes insurers, hospital service corporations, medical service corporations, health service corporations, and health maintenance organizations. An ODS often convenes licensed health care providers into a provider network to support its contracts with carriers. An ODS is either certified or licensed depending on whether it assumes financial risk from a carrier. An ODS that assumes financial risk must be licensed. Otherwise, an ODS that will not be compensated on the assumption of financial risk (such as a provider network of licensed health care providers utilizing fee-for-service reimbursement), or is determined to assume de minimus risk, must be certified.[2]
An ODS may include preferred provider organizations, physician hospital organizations, or independent practice associations.[3] However, organizations that only contract to provide pharmaceutical services, case management services, or employee assistance plan services may not require a license or certification. In addition, ODSs are defined to exclude licensed health care facilities and providers.[4]
To apply for ODS licensure or certification, an organization must submit an application to the New Jersey Department of Banking and Insurance on prescribed forms together with copies of organizational documents, standard contract forms, and with respect to licensure applications only, financial information.[5] Unlike a certified ODS, a licensed ODS must comply with risk-based capital, liquidity, minimum net worth, and minimum statutory deposit requirements; and meet other financial standards and ongoing reporting and disclosure obligations commonly applicable to state-licensed insurance companies.[6]
Whether certified or licensed, an ODS must meet minimum standards to perform functions under contracts with carriers.[7] The standards are similar to those carriers would have to comply with if performing such function themselves.
New York
New York classifies an organization that convenes licensed health care providers into a provider network for the provision of health care services through contracts with “managed care organizations” (MCO) and/or workers compensation preferred provider organizations or their participants as an Independent Practice Association (IPA).[8] MCOs include a health maintenance organization or other person or entity arranging, providing, or offering comprehensive health service plans to individuals or groups.
Prior to corporate formation or operation, IPAs must receive approval from the New York State Department of Health (Department of Health). The Department of Health requires the submission of certain information, such as contact, organizational, and operational information of the proposed IPA. A checklist of the IPA formation requirements is found here.[9] Notably, the certificate of incorporation or articles of organizations of the IPA must include “Independent Practice Association” or “IPA” in its name, contain express powers and purposes permitting provider network activities, and include prescribed authorizing language and prohibited activities, and related sign-offs from the New York State Departments of Education and Financial Services.[10] Further, some IPA requirements that are specific to MCO engagements are shouldered by MCOs.[11]
An IPA that intends to engage in risk-sharing in New York must demonstrate to the Department of Health and the Department of Financial Services (which houses the Superintendent of Insurance) that the IPA is financially responsible and capable to assume risk. The review of whether the IPA is financially responsible and capable includes an evaluation of proposed risk sharing and insurance, stoploss, reserves, or other arrangements to satisfy obligations to MCOs, participating provider, and enrollees.[12] Risk-sharing means “the contractual assumption of liability by the health care provider or IPA by means of a capitation arrangement or other mechanism whereby the provider or IPA assumes financial risk from the MCO for the delivery of specified health care services to enrollees of the MCO”.
Conclusion
New Jersey ODS licensure or certification and New York IPA approval requirements have become increasingly important as RBEs have moved beyond their early beginnings as a means for independent physician practices to band together to negotiate access to payor contracts. They have now become major players in network development and supporting delegated payor functions.
The regulatory frameworks for RBE operations differ from state to state, and their applicability can vary based on specific offerings, services, and relationships of RBEs. We recommend careful review of RBE operations and relationships against applicable requirements of operating states.
Awareness of these requirements is crucial for RBEs, as well as downstream and upstream contracting entities that may be indirectly subject to regulations. For example, the terms of provider agreements of an ODS must meet specific requirements in New Jersey,[13] and MCOs in New York are not permitted to contract with an IPA that has not been approved by the New York State Departments of Health, Education, and Financial Services.[14]
[1] N.J. Stat. § 17:48H-1.
[2] N.J. Stat. § 17:48H-1; N.J. Admin. Code § 11:22-4.3(c).
[3] See N.J. Stat. § 17:48H-1.
[4] See N.J. Admin. Code § 11:22-4.2.
[5] N.J. Stat. §§ 17:48H-2, 17:48H-3, 17:48H-11, 17:48H-12; N.J. Admin. Code §§ 11:22-4.4, 11:22-4.5.
[6] See, e.g.,N.J. Admin. Code §§ 11:22-4.8, 11:22-4.9.
[7] N.J. § 17:48H-33 (certified and licensed ODS are subject to carrier standards in N.J. Stat. § 26:2S-1 et seq.)
[8] 10 NYCRR § 98-1.2.
[9] https://www.health.ny.gov/health_care/managed_care/hmoipa/ipa_formation_requirements.htm (last accessed Jan. 12, 2025).
[10] 10 NYCRR § 98-1.5(b)(6)(vii).
[11] See, e.g., 10 NYCRR § 98-1.18.
[12] 10 NYCRR ss. 98.1-2, 98.1-4.
[13] See N.J. Admin. Code §§ 11:24B-5.1-11:24B-5.7.
[14] See 10 NYCRR § 98-1.5(b)(6)(vii).
Michigan Makes Significant Revisions to Earned Sick Time Act
Late on Thursday, February 20, 2025, the Michigan legislature passed amendments to the Earned Sick Time Act (ESTA) that was otherwise set to take effect by court order the next day. The amendments were signed into law by Governor Gretchen Whitmer on Friday, February 21, 2025. Had the legislature and governor not acted, some very onerous provisions of the law would have gone into effect. The amendments which are effective immediately update the Michigan sick leave law as follows:
Accrual basis. The accrual rate under the amended ESTA remains one (1) hour of sick leave for every 30 hours worked. There is no cap on accrual, but employers may cap usage at 72 hours per year. The amendments changed the law’s carryover provisions to allow employers to limit the amount of carryover to 72 hours for large employers (with over ten employees). For small employers, the accrual basis has also changed. Under the prior version of the law, small employers would have been required to provide up to 40 hours of paid leave and 32 hours of unpaid leave. The amendments no longer require 32 hours of unpaid leave. Small employers still must provide accrual of sick leave at the same rate (one (1) hour for every 30 hours worked) but may cap accrual of sick leave at 40 hours of paid leave.
Front loading. Under the prior version of the law, frontloading was not contemplated, and the state’s guidance advised that, even if employer’s frontloaded paid sick leave, it must still reconcile with the amount the employee would have accrued and must carry over any unused sick leave year to year. Under the amended version now in effect, an employer may choose to frontload 72 hours of sick leave at the start of the benefit year. If frontloading, the employer is not required to carryover, track accrual, or pay out sick leave at the end of the year. Small businesses may front load 40 hours of sick leave.
For part-time employees, employers may frontload the amount of sick leave the employees would be expected to accrue under the one (1) hour of sick leave for every 30 hours worked method. In order to take advantage of this, the employer must provide notice to the employee of the expected number of hours, and the employer must provide extra time if the actual time worked is higher than predicted.
Waiting period. Employers can now require new employees to wait 120 days before they are permitted to use sick leave (rather than 90); accrual or front loading is still required at the start of employment.
Combining sick leave with a PTO policy. The amendments make clear that sick leave can be added to a PTO policy so long as the PTO policy provides at least the same amount of leave as the ESTA. The amendments clarify that PTO time can be used for sick leave purposes or any purpose and that employers are not required to provide additional sick leave if an employee uses PTO for another purpose.
Rate of pay. The amended ESTA states that sick leave should be paid at the “normal hourly wage or base rate” but not less than minimum wage. Overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, and gratuities do not need to be included in the normal hourly wage/base rate.
Notice requirements. If the need to use sick leave is foreseeable, the employer may require seven days’ notice. If the need for leave is not foreseeable, the employer may require the employee to give notice in either of the following ways: (1) as soon as practicable; or (2) in accordance with the company’s policy regarding use of sick leave as long as (i) on the date of hire, or effective date of the law or when the policy takes effect, the employer provides the written policy to employees; and (ii) the notice requirement allows the employee to provide notice after the employee is aware of the need for use of sick time.
An employer cannot deny the use of leave for not following the notice policy if the employer (1) did not provide a written policy; or (2) the employer made changes to the policy and did not provide notice of the policy change within five days of the change.
Discipline. Employers can discipline employees for abuse of the sick leave policy or failure to follow the notice provisions.
There is no private right of action for employees. Like Michigan’s prior sick leave statute, in effect since 2018, all complaints must go through the Michigan Department of Labor and Economic Opportunity. In addition, the rebuttable presumption of violation of the law, which would have otherwise come into effect on February 21, 2025, was also removed by these amendments.
Collective Bargaining Agreements. If a collective bargaining agreement is in effect and conflicts with the ESTA, the amended act applies beginning on the stated expiration date in the collective bargaining agreement (notwithstanding any statement in the agreement that it continues in force until a future date or event or the execution of a new collective bargaining agreement). In other words, in the event of a conflict, any collective bargaining agreement that is in effect controls — until the expiration of the contract, at which time the provisions of the amended sick leave law will take effect.
Increments of usage. The amendments permit the employer to choose either (1) one-hour increments or (2) the smallest increment the employer uses to account for absences of uses of other time. The key difference here from the prior version of the ESTA is the employer choice for increment and that it is what the “employer” uses for absences, whereas the original ESTA mandated that the smaller of one hour or the smallest increment the employer’s payroll system should be used to account for absences.
Doctor’s notes. Like the original ESTA, documentation may still only be requested of any employee after more than three consecutive sick days are used. However, the amendments added the requirement that requested documentation must be supplied by the employee within 15 days. The requirement to pay the out-of-pocket costs for obtaining a doctor’s note remains.
Notice to employees. Employers have 30 days to provide employees with written notice to each employee of the sick leave policy and this new law. Small employers have until October 1, 2025, to implement the changes.
Exemptions.
Nonprofit agencies are exempt from the ESTA.
The following types of employees are not entitled to sick leave: employees of the U.S. government; any employee who (1) sets his or her own schedule and (2) faces no punishment for not meeting a minimum amount of hours; unpaid trainees/interns; and minors.
The changes mark a significant departure from the Michigan sick leave requirements that have been in place since 2018 and the Earned Sick Time Act that would have otherwise taken effect on Friday, February 21, 2025. It is likely that employees are also tracking these changes and will ask questions regarding how policy change affect their ability to take sick leave and PTO generally. Employers should review their policies and ensure compliance with the provisions of the new law.
Healthcare Preview for the Week of: February 24, 2025 [Podcast]
Can the House Pass a Budget Resolution This Week?
The House is back from recess, so both chambers of Congress are in session this week (although the House is out again on Friday).
With 18 days left to pass a budget before the March 14, 2025, deadline, the focus this week is on whether the House can pass a budget resolution. There may be a budget resolution vote on Tuesday evening, but this timing could shift if Republicans are not able to get enough support. House Republicans have a 218 – 215 majority, meaning they can only afford to lose one vote.
President Trump has endorsed having “one big, beautiful bill” that includes a permanent extension of the 2017 tax cuts, as opposed to the Senate’s approach of two separate reconciliation bills.
On February 13, 2025, the House Budget Committee approved a budget seeking at least $880 billion in mandatory spending cuts to programs overseen by the House Energy and Commerce Committee. The Medicaid program is a likely target to provide a significant portion of those savings. Some Republicans have started to raise concerns about the level of potential funding cuts to Medicaid because of the impact such cuts would have on constituents and providers in their districts and across their states.
Outside of budget discussions, the House Energy and Commerce Health Subcommittee will hold a hearing on pharmacy benefit managers. The Senate will hold hearings for several of President Trump’s cabinet nominees, including nominees for deputy secretary of the US Department of Homeland Security, deputy director of the Office of Management and Budget, director of the Office of Science and Technology Policy, and federal trade commissioner. Senate committees will also hold hearings on combatting the opioid epidemic and the HALT Fentanyl Act.
The Medicaid and CHIP Payment and Access Committee also meets this week and will cover topics such as state supplemental and directed payments, substance use disorder, and the prior authorization process.
Today’s Podcast
In this week’s Healthcare Preview podcast, Debbie Curtis and Rodney Whitlock join Maddie News to discuss the status of the reconciliation process in the House, including the debate on Medicaid, and the looming March 14 government funding deadline.
Medicaid in the Crosshairs What Restructuring Could Mean for States, Providers, and Beneficiaries
As budget negotiations heat up in Washington, Medicaid has emerged as a key target for cost-cutting measures. With policymakers looking to trim federal spending while maintaining commitments to Social Security and Medicare, Medicaid is one of the few major programs left on the table. Proposals floating around Capitol Hill include everything from block grants and per capita caps to stricter eligibility requirements and reductions in federal matching rates. These potential changes could fundamentally alter the structure of Medicaid, shifting more financial responsibility to states and reshaping access to care for millions of Americans.
Waivers: A Policy Battleground
One of the most immediate levers for Medicaid reform lies in the use of Section 1115 waivers, which allow states to test innovative ways to deliver and finance care. Historically, waivers have been used to expand coverage, integrate social determinants of health into Medicaid, and experiment with new payment models. Under the Biden administration, states received waivers for initiatives like continuous eligibility for young children, health-related social needs interventions, and pre-release Medicaid coverage for individuals exiting incarceration. Many of these waivers are now under review, and the current administration may opt to roll them back, cutting off funding for programs designed to improve access and reduce health disparities.
At the same time, some states are eyeing waivers as a vehicle for more restrictive Medicaid policies, including work requirements and premium obligations for low-income enrollees. These policies, which were a hallmark of the first Trump administration, could return in full force, despite previous legal challenges. While work requirements are often framed as a way to encourage self-sufficiency, past attempts have led to significant coverage losses due to administrative complexity and reporting barriers. Georgia remains the only state actively implementing work requirements today, but other states could quickly follow suit if federal leadership signals support for these policies.
Federal Financing: More State Burden, Fewer Federal Dollars
The core structure of Medicaid financing—a federal-state matching system—has long provided states with a reliable source of funding for healthcare. However, a range of proposals could shift more of the financial burden to states.
One option is reducing the enhanced federal match for the Affordable Care Act expansion population, which currently stands at 90%. Rolling it back to standard Medicaid match rates would force expansion states to pick up a larger share of the tab, potentially leading some to scale back or even withdraw from expansion altogether.
Another major consideration is the reduction or elimination of provider taxes and intergovernmental transfers, which many states rely on to fund Medicaid. Provider taxes currently help states generate the non-federal share of Medicaid dollars, but restrictions on these financing tools could leave states scrambling to fill budget gaps. Without new revenue sources, states may have no choice but to cut provider rates, reduce optional benefits, or impose enrollment caps.
The Ripple Effect on Providers and Beneficiaries
The impact of Medicaid restructuring would extend beyond state governments. Providers—particularly safety-net hospitals, nursing homes, and home care agencies—could see sharp reductions in reimbursement, making it harder to sustain services for Medicaid populations. Proposals to limit state-directed payments and disproportionate share hospital funds could further destabilize facilities that serve a high percentage of low-income patients.
For Medicaid beneficiaries, the stakes are even higher. Changes in eligibility criteria, enrollment procedures, or benefit packages could leave millions without coverage. Older adults and individuals with disabilities who rely on Medicaid for long-term care may face significant barriers if states scale back HCBS funding, tighten income requirements, or impose cost-sharing mechanisms.
What Comes Next?
Medicaid is at a crossroads. As policymakers weigh different restructuring options, stakeholders across the healthcare landscape—including states, providers, and advocacy groups—must be prepared to engage. The decisions made in the coming months could redefine Medicaid’s role in the healthcare system, reshaping everything from eligibility and benefits to how care is financed and delivered.
For those invested in the future of Medicaid, now is the time to track policy developments, understand the implications of potential changes, and advocate for solutions that preserve access while ensuring financial sustainability. The outcome of this debate will determine whether Medicaid continues to serve as a safety net for millions—or whether its role is significantly diminished in the name of fiscal restraint.