Two Employer-Friendly ACA Changes
Two recent developments make significant changes to Affordable Care Act (ACA) compliance, both effective immediately and offering important benefits for employers.
Providing Forms 1095 to Employees
Since ACA was first implemented, employers have been required to report their offers of health care coverage to employees by filing Form 1095-B or 1095-C with the IRS and providing a copy of the form to employees.
Beginning with the 2024 tax year, which the reporting forms were set to be distributed in early 2025, employers are no longer required to automatically provide these forms to employees, provided two requirements are met. First, employers must notify employees that the employer will no longer automatically provide Form 1095, including a statement saying employees may request a copy and instructions on how to do so. Second, employers must provide a copy of Form 1095 to any employee who requests it, within 30 days of the request.
Note that employers must still file Form 1094 and Form 1095 with the IRS; this new rule simply relieves the responsibility to provide a copy to employees. Employers who wish to take advantage of the new rule should continue to coordinate with their service providers to ensure that Forms 1095 are prepared in time for filing to the IRS, and available to provide to employees upon request. This change may help employers save on the cost and administrative responsibility of sending the forms to each employee.
ACA Penalty Statute of Limitations
Congress has also established a new six-year statute of limitations for employer penalty assessments under the ACA. While this may seem lengthy, especially considering the common three-year statute of limitations that applies to many tax assessments, the IRS had previously taken the position that there was no statute of limitations because Forms 1094 and 1095 were not tax returns.
This change is particularly important due to frequent delays between an employer’s alleged failure to comply with ACA requirements and the IRS’s notification of a proposed penalty assessment. This delay could be multiple years, meaning that if an employer had a systematic issue regarding its offers of coverage or reporting, penalties could be assessed for several years before the employer was notified that a change was necessary for compliance. Especially in corporate transactions, this change will help provide clarity and limit exposure for ACA compliance.
Site-Neutral Medicare Proposals Currently on the Table: Considerations for Stakeholders
Site-neutral payment policies aim to standardize payments for healthcare services regardless of the site of care. Last Congress, lawmakers considered a number of Medicare site-neutral policies, ranging from ones addressing single services to broader policies that would adjust payments across multiple services and care settings. Some of these policies have also been presented as options to reduce federal spending, including on mandatory healthcare programs.
If Congressional Republicans decide to pursue cuts in Medicare spending, site-neutral policies may well be considered. In this +Insight, we review and categorize recent Medicare site-neutral policy proposals and suggest considerations to guide analysis of these policies’ potential impact.
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Healthcare Preview for the Week of: March 3, 2025 [Podcast]
Attention Turns to Government Funding
Last week, after some drama on the floor, the House passed its version of a budget resolution in a 217 – 215 vote, a week after the Senate passed its “skinny” resolution. For the reconciliation process to move forward, the chambers must work together to agree on an aligned resolution, which is likely to include Medicaid reforms.
Reconciliation will move to the background for these next two weeks as Congress shifts its focus to government funding. The continuing resolution (CR) passed in late December 2024 funded the government through March 14, 2025. The CR also included healthcare extenders, such as Medicare telehealth flexibilities, disproportionate share hospital payments, and the hospital at home waiver, but they have an expiration date of March 31 (read more on the full list of extenders here). Republican lawmakers are debating the length and scope of the next government funding package, which could be a “clean” CR to fund the government through the remainder of fiscal year 2025. If public statements are accurate, spending cuts related to Department of Government Efficiency efforts may not be pursued in this immediate government funding package. House Republicans will likely need votes from Democrats to pass a CR, so all eyes are on the outline of this package.
In his first congressional address since returning to the White House, President Trump will head to Congress on Tuesday night to deliver an address to a joint session of Congress. Like a state of the union, the address will likely focus on Trump’s agenda for his next four years, including actions on immigration, tariffs, extending tax cuts, and reducing the government’s footprint. While healthcare is not anticipated as a feature of the speech, Trump could discuss his executive orders on healthcare price transparency, Make America Healthy Again, and gender-affirming care for youth, and could lay out additional healthcare agenda priorities. Sen. Elissa Slotkin (D-MI) will provide the Democratic response.
The Senate will continue with nomination hearings this week. The Senate Health, Education, Labor, and Pensions (HELP) Committee will hold back-to-back hearings for National Institutes of Health (NIH) director nominee Jay Bhattacharya, MD, on Wednesday and US Food and Drug Administration commissioner nominee Martin Makary, MD, on Thursday. Sen. Warren (D-MA), although not on the HELP Committee, sent both nominees letters requesting confirmation that they would not lobby for the industries they would regulate for four years after leaving office. Similar topics are likely to be brought up during the hearings. Bhattacharya’s hearing will also likely focus on the recent NIH guidance capping indirect costs for research grants and his views on research transparency and NIH structure reform. Later this week, the Medicare Payment Advisory Commission will meet and discuss various topics, including draft recommendations to reform the physician fee schedule and reduce cost-sharing for outpatient services at critical access hospitals.
Today’s Podcast
In this week’s Healthcare Preview, Debbie Curtis and Rodney Whitlock join Julia Grabo to discuss the state of the government funding package ahead of the March 14 deadline.
Alabama Legislature Weighs Substantial Cannabis Reforms: Let’s All Take a Deep Breath
Well, it’s officially crazy season. An annual tradition in the Alabama statehouse since the inception of Alabama’s medical cannabis program, last week we saw a flurry of cannabis-related bills introduced with great fanfare and the accompanying panic amongst cannabis stakeholders in Alabama. I was inundated with a high volume of calls, texts, and emails unseen since the last Alabama legislative session.
And there was a little something for everyone involved in cannabis, both on the hemp and medical cannabis side. The good news? Things may be trending in the right direction.
Let’s get into it.
Medical Cannabis Proposal Encounters Substantial Opposition, Drawing to a Head Whether There Is a Real Need for a “Legislative Fix”
Shortly before he gaveled his committee to order, Sen. Tim Melson introduced a substitute to Senate Bill 72. As a reminder, the original version of SB72 would have, in relevant part: (1) expanded the total number of integrated licenses from five to seven; (2) shifted the authority of issuing licenses from the AMCC to a consultant; and (3) shielded the decision from any judicial review. And, just as important, licenses wouldn’t be issued until well into 2026, assuming there was no litigation – an assumption I defy any serious person to tell me with a straight face is valid.
When the original version of SB72 was introduced, I wrote:
In my opinion, this bill has little chance of becoming law as drafted. I base that on my opinion that the Alabama Legislature has little interest in revisiting cannabis proposals at this time, my conversations with various stakeholders (including well-heeled applicants that employ influential governmental affairs specialists), and by the knowledge that it is easier to defeat legislation than it is to pass it.
For what it’s worth, I do believe the Legislature would pass a bill if all of the relevant stakeholders agreed it was the right way forward. Unfortunately, and this is inherent in any limited license situation, we are operating in a zero-sum game where there will be winners and there will be losers and those who believe a proposal will end in their defeat will fight tooth and nail to stop it.
The substitute bill would change the agencies tasked with appointing the consultant and would allow for the Alabama Court of Civil Appeals to review the award of licenses if the award was arbitrary or capricious or constituted a gross abuse of discretion. It would also move up the time to issue licenses, but it would still be in 2026, again assuming no lawsuits. While the substitute is a small step in the right direction and an acknowledgment of the flaws in the original bill, I still do not see it as the right path forward.
And here’s why: I reject that Alabama’s medical cannabis program requires a “legislative fix.” I believe that the original medical cannabis law, passed four years ago, isn’t broken. Major provisions in the law are currently awaiting a decision from the Alabama Court of Civil Appeals. I attended that oral argument in person – the first oral argument heard by the appellate court about the medical cannabis program. In my opinion, and the nearly unanimous opinion of people I trust to call balls and strikes, the panel signaled with unusual clarity and unanimity that it would be upholding the law and the challenged actions of the AMCC. If that is the case, we may be mere months away from issuing licenses to dispensaries and integrated facilities.
Once a single dispensary license is issued, Alabama doctors can begin obtaining certifications to qualify patients for medical cannabis and Alabamians with qualifying conditions can begin to obtain medical cannabis cards. So, if you believe that the appellate court offers a path forward that may allow medical cannabis in 2025, why would you press for a bill that would ensure that it isn’t? Put simply, if it ain’t broke, don’t legislatively “fix” it.
Psychoactive Hemp Ban Appears to Be Heading Towards Reasonable Compromise
Shortly before he gaveled his committee to order, Melson introduced a substitute to Senate Bill 132. As a reminder, that legislation would, in relevant part, “provide that only non-psychoactive cannabinoids derived from or found in hemp are exempt from [Alabama’s] Schedule I controlled substances list, thus classifying psychoactive cannabinoids as controlled substances” under Alabama law. That means “[i]f enacted into law, that’s the ballgame for nearly all non-industrial hemp products in Alabama. Say goodbye to your increasingly popular THC-infused seltzers. Adios federally compliant gummies and the like.”
I wrote at the time:
I suspect that certain psychoactive hemp restrictions will become law in Alabama in the current legislative session or in the coming years.
If it were my call, I would choose a path that regulates these products to ensure safety and only adult access, rather than to ban them outright. Put simply: Regulate, don’t eliminate.
If the stated goals of the supporters of SB132 are to keep psychoactive hemp out of the hands of minors and ensure that psychoactive hemp is safe, then why not pass laws to keep psychoactive hemp out of the hands of minors and ensure that psychoactive hemp is safe?
When it comes to keeping psychoactive hemp out of the hands of minors, the purveyors of psychoactive hemp products should be required to employ the same type of age-gating policies employed by sellers of tobacco and alcohol. These policies have been in place for years and should be able to govern psychoactive hemp sales without much difficulty. And law enforcement – aided by law-abiding psychoactive hemp companies policing bad actors – should take the law seriously and enforce it just as they do tobacco and alcohol.
When it comes to ensuring that psychoactive hemp products are safe for consumption, the law should require that products undergo the same type of rigorous testing and analysis required of marijuana products. The products should be tested by independent laboratories, and the results should be easily accessible and made available to consumers. Any batch that fails to meet the legal requirements for hemp or reveals unsafe materials in the batch should be destroyed before it is made available to the public.
In Alabama, this would be a substantial burden to many hemp manufacturers and retailers. But there are (at least) two reasons why it makes sense. First, responsible hemp operators welcome these types of regulation, and most of them are taking these steps already. Second, the law creates a higher barrier to entry into the psychoactive hemp market and makes it more difficult for less capitalized and unsavory companies. That should have the dual benefit of eliminating untested products and reducing the shelf space of what I call “gas station crank.”
This proposal would, as a practical matter, mean that the psychoactive hemp market would be dominated by increasingly popular hemp beverages and low-THC edibles. Those are two of the most popular versions of psychoactive hemp and have been widely accepted as alternatives to alcohol and controlled substances by cohorts ranging from young adults looking to turn away from alcohol in increasing numbers, middle-aged consumers looking to cut down on their midweek alcohol intake, and older Alabamians who increasingly look to psychoactive hemp for pain relief and sleep aids.
The substitute bill addresses many of the concerns I expressed about the original version of SB132. With a few tweaks, I think it could be a workable model for other states trying to adopt responsible hemp programs.
The substitute is essentially a two-part bill that separately addresses rules for (1) “hemp beverages” and (2) “psychoactive hemp products.”
Hemp beverages would essentially be treated like beer and wine. They would be subject to the traditional three-tiered model (manufacturer to distributor to retailer) and subject to the same franchise laws. They would be subject to much stricter testing rules to ensure conformance with federal and state laws, and they would have labeling requirements to ensure both that the products are not targeting children or making health claims and that a certificate of analysis was embedded in a QR code so that consumers could be confident that the beverage is what it purports to be. There would also be a 6% excise tax on hemp beverages in addition to any other applicable sales taxes.
The substitute defines and permits under certain defined circumstances the sale of “psychoactive hemp products.” The bill would define “psychoactive hemp product” to include:
A liquid that contains psychoactive cannabinoids and may include flavorings or other ingredients that are intended for use in an electronic nicotine delivery system or any other product marketed to consumers as an electronic cigarette, electronic cigarillo, electronic pipe, electronic hookah, vape pen, vape tool, vaping device, or any variation of these terms.
A candy, gummy, capsule, or other product that contains psychoactive cannabinoids and is intended to be ingested into the body.
An oil or tincture that contains psychoactive cannabinoids and is marketed to deliver to the body sublingually psychoactive cannabinoids.
Psychoactive hemp products may not contain more than a total of 10 milligrams of psychoactive cannabinoids per serving, and one gummy may not contain more than one serving.
Each product must be labeled in a manner that includes all of the following:
The name and website of the manufacturer
The batch number
The total number of milligrams of psychoactive cannabinoids found in a single serving
The International Intoxicating Cannabinoid Product Symbol (IICPS)
A list of ingredients, including identification of any major food allergens declared by name
So, What Now?
Loyal readers of Budding Trends will recall that multiple proposals were voted out of the same committee last legislative session and did not become law. They will also recall that it took more than one legislative session to pass a medical cannabis law in the first place. Is past prologue or is this another example of reform taking time?
The Montgomery political ecosystem is largely an echo chamber powered by rumors, innuendo, gossip, and occasionally facts purveyed specifically to influence the actions of legislators. This influence can take the form of flattery, a well-intended desire for positive change, or fear. Not fear of physical harm, but fear of being out of the loop; fear of being out of touch; fear of being on the wrong side.
Anyone who can get someone to pay them to offer an opinion on what will happen moving forward can probably get whatever the opinion they are paying to hear. After all, what’s the point in hiring someone in a government affairs role if they can’t convince you they can accomplish your objectives? With that in mind, and with full disclosure that I have clients who wish for differing outcomes (although I’m obviously not working any client against another), I think the best advice is to just read the room. What is leadership in the House and Senate saying publicly on the issue? What are the implications of the fact that the Alabama Court of Civil Appeals is currently deciding a case that could bring finality (or more confusion) to the issue? Who benefits most from change? Who suffers? And what is the chance that the Alabama Legislature could see this fight unfold and decide a medical cannabis program simply isn’t workable?
Find someone who can tell you the answers to those questions, and you’ll be in good hands.
Sitting Atop a Telehealth Cliff?
Once again, Congress is quickly approaching a telehealth cliff.
Without passing additional legislation, current Medicare telehealth flexibilities will expire on March 31, 2025. If this happens, millions of beneficiaries who have used telehealth as a means for receiving needed and often critical health care services, especially since 2020, will lose coverage for this benefit starting on April 1, 2025. This will mean, with limited exceptions, that Medicare beneficiaries will have to travel to a health care provider’s office or a health care facility to receive most telehealth services.
What Medicare Beneficiaries Have Come to Rely Upon
The COVID-19 pandemic changed perceptions of telehealth for many Americans. Starting in March 2020, Congress eased restrictions for Medicare beneficiaries as many health care providers closed offices and patients worried about being exposed to the virus in traditional in-person health care settings. Telehealth, and the greater access that the Medicare flexibilities allowed beneficiaries to have, was enormously appealing to patients living in rural areas or with mobility problems. Between April 2020 and June 2020, nearly half of all Medicare beneficiaries had at least one virtual medical visit.
Fast forward to May 2023, when the COVID-19 public health emergency officially came to an end. Congress folded extensions of the Medicare telehealth flexibilities into various spending bills, including a bill passed in December 2024. The difference? Unlike the other extensions, the bill (the American Relief Act, 2025 or “Act”) only created a 90-day extension for the Medicare telehealth flexibilities, through the end of March 2025. Section 3207 of the Act outlines what the continued flexibilities currently are:
Lifting geographic restrictions and maintaining the expanded list of originating sites including patients’ homes.
Expanding the list of distant site practitioners to include all practitioners who are eligible to bill Medicare for covered services (e.g., physical therapists, occupational therapists, speech-language pathologists, audiologists, marriage and family therapists, and mental health counselors).
Allowing federally qualified health centers and rural health clinics to serve as distant site providers of telehealth services.
Allowing payment for audio-only telehealth services.
Extending the waiver of the requirement for practitioners who provide behavioral and mental health via telehealth to provide in-person visits within 6 months of the first telehealth visit and annually thereafter.
Extending Acute Care Hospital at Home waiver authorities.
Medicare beneficiaries can receive the telehealth services described above through March 31, 2025.
What Happens Next?
With the March 31st deadline fast approaching, key organizations like the American Telemedicine Association (ATA) are working overtime to raise awareness of the pending deadline and ensuring telehealth remains accessible and viable for both patients and providers. In a recent letter to policymakers, ATA urged Congress to act decisively before the looming deadline. The ATA’s letter focused on the following priorities:
Making Medicare telehealth flexibilities permanent—removing geographic restrictions limiting telehealth to rural areas, ensuring FQHCs and RHCs can continue offering virtual care, and guaranteeing fair reimbursement rates for all providers.
Preserving audio-only telehealth options—for many telehealth users, especially seniors and those living in locations without reliable broadband access, phone calls are the only way to connect patients to providers in order to receive care via telehealth. Losing this flexibility will disproportionately affect vulnerable patients.
Rolling back restrictive Drug Enforcement Administration regulations—removing in-person visit requirements for prescribing controlled substances via telehealth. This has been a subject of other recent Health Law Advisor posts.
The More Things Change… DOJ’s Latest Cyber Settlement Shows Continued False Claims Act Risk
Although the change in administrations has heralded shifting enforcement priorities at the U.S. Department of Justice (DOJ), cybersecurity enforcement under the False Claims Act (FCA) appears to be alive and well. That is the takeaway from the recent DOJ announcement that Health Net Federal Services and its parent, Centene Corporation, have agreed to pay over US$11 million to resolve a FCA matter alleging cybersecurity violations.
The Health Net Settlement
According to DOJ, Health Net entered into a contract with the Department of Defense to administer the Defense Health Agency’s TRICARE health benefits program. Health Net allegedly failed to meet certain cybersecurity controls as part of its government contract and falsely certified compliance with those requirements in annual reports to the government. The government alleged that the company failed to timely scan for known vulnerabilities and to remedy security flaws on its networks and systems. In addition, according to the government, Health Net allegedly ignored reports from third-party security auditors and its own audit department regarding cybersecurity risks on the company’s networks and systems. Those risks related to, among other things, asset management, firewalls, patch management, and password policies. The government alleged that, as a result of these purported failures, the company’s claims for reimbursement under the contract were false, even if there was not any exfiltration or compromise of data or protected health information.
This latest settlement builds on prior DOJ actions against government contractors for alleged cybersecurity failures. Foley has reported on those prior actions here and here, including DOJ’s FCA suit against Georgia Tech, which remains pending.
The Health Net settlement demonstrates that the Trump Administration’s DOJ remains focused on cybersecurity enforcement, particularly pursuant to the FCA. This is not surprising, given the administration’s pronouncements about stamping out alleged fraud, waste, and abuse. Further, this was a theme echoed by several DOJ speakers at a national qui tam conference in Washington, D.C. in February 2025.
Also, where a federal contract involves the military, as was the case with the Health Net settlement, this administration is likely to be especially committed in its investigative and prosecution efforts. Indeed, it is notable that the Health Net settlement does not appear to have arisen from a qui tam suit, which would mean the government initiated the investigation on its own. Finally, the fact remains that cybersecurity has always been a bipartisan issue.
Recommendations
In light of the Health Net settlement and the new administration’s interest in cybersecurity enforcement, companies and other recipients of federal funds (including colleges and universities) should consider the following steps to enhance cybersecurity compliance and reduce FCA risk:
Catalogue and monitor compliance with all government-imposed cybersecurity standards. This includes not only ongoing knowledge of the organization’s contracts, but also continuously monitoring and assessing the organization’s cybersecurity program to identify and patch vulnerabilities and to assess compliance with those contractual cybersecurity standards.
Develop and maintain a robust and effective compliance program that addresses cybersecurity issues. In many companies, the compliance program and information security functions are not well integrated. An effective compliance program will address cybersecurity concerns and encourage employees to report such concerns. When concerns are identified, it is critical to escalate and investigate them promptly. Because the FCA’s qui tam provisions allow employees and others to file suit on behalf of the United States, it is critical to respond to employees’ concerns effectively.
Where non-compliance with cybersecurity standards is identified, organizations should evaluate potential next steps. This includes whether to disclose the matter to the government and cooperate with government investigators. Organizations should work with experienced counsel in this regard. Proactively mapping out a strategy for investigating and responding to potential non-compliance can instill discipline to the process and streamline the organization’s approach.
Major Regulatory Updates from the West Coast: New California and Washington Approaches to Healthcare Private Equity and MSO Regulation
State legislatures on the West Coast are intensifying their focus on private equity and management service organizations (MSOs) in healthcare, introducing new regulatory measures that could significantly reshape investment strategies, ownership structures, and operational matters in the healthcare space in these states. As state legislatures respond to growing concerns about the role of non-licensed entities in healthcare decision-making, recent proposals reflect a heightened focus on transaction scrutiny, ownership structures, and the autonomy of licensed providers.
California’s Senate Bill 351 (“SB 351”) and Assembly Bill 1415 (“AB 1415”), introduced in February 2025, seek to reinforce state oversight of healthcare investments, particularly those involving private equity, hedge funds, and MSOs. While SB 351 reinforces existing restrictions on corporate control over clinical decision-making, AB 1415 expands the authority of the California Office of Health Care Affordability (OHCA), extending its pre-transaction notice and clearance requirements to a broader range of entities. Meanwhile, Washington’s Senate Bill 5387 (“SB 5387”) is moving through committee review and proposes strict regulations that would limit lay ownership of healthcare practices and curb MSO involvement in operational control.
Below provides an overview of the key components and takeaways from these state legislative efforts.
Legislative Developments at a Glance
Legislation
Key Provisions
Status
SB 351 (California, First Read Feb. 12, 2025)
Codifies limits on private equity and hedge fund influence in clinical decision-making; bans non-competes & non-disparagement clauses; grants enforcement authority to the Attorney General.
Moving through committee review.
AB 1415 (California, Feb. 21, 2025)
Expands OHCA oversight and pre-closing transaction filing requirements to private equity, hedge funds, MSOs, health systems and other provider entities.
Assembly-Pending Referral.
SB 5387 (Washington, First Read Jan. 21 2025)
Requires healthcare providers to hold majority ownership of practices; limits roles, ownership and control among individuals and entities involved MSO-professional entity arrangements;
Moving through committee review.
California’s SB 351: Focused on Maintaining Clinical Decision-Making Autonomy
SB 351 reinforces California’s existing corporate practice of medicine (CPOM) prohibition by specifying certain restrictions on private equity firms and hedge funds in clinical decision-making. The bill enumerates specific restrictions to ensure that key medical and operational decisions remain within the control of licensed providers.
Specifically, SB 351 would codify the following restrictions:
Prohibiting investors from determining diagnostic tests, treatment options, patient volume, or referral requirements.
Restricting non-licensed entities from owning or managing patient medical records or influencing billing and coding practices.
Expanding enforcement authority, allowing the California Attorney General to seek injunctive relief for violations.
Banning non-compete and non-disparagement clauses in management contracts and asset sale agreements involving medical and dental practices.
While SB 351 strengthens the state’s CPOM framework, it does not contain a mandatory state pre-approval process for private equity-backed healthcare transactions, which was a feature of the much publicized Assembly Bill 3129 last year, which was ultimately vetoed by Governor Gavin Newsom.[i] Rather, the core provisions focus on clarifying what are generally recognized legal boundaries surrounding the corporate practice of medicine doctrine and clinical autonomy.
California’s AB 1415: Expanded OHCA Authority Over Healthcare Transactions
Concurrently, AB 1415 proposes a significant expansion of OHCA’s authority over healthcare transactions. The bill would broaden the scope of entities required to file pre-transaction notices with OHCA, including private equity groups, hedge funds, MSOs, and health system affiliates, all of which were previously outside the agency’s direct oversight.
If enacted, AB 1415 would reshape California’s healthcare transactional landscape by:
Requiring private equity firms, hedge funds, and newly formed holding entities involved in healthcare deals to submit filings to OHCA with respect to their involvement in material transactions.
Expanding the definition of “provider” to health systems and their affiliates to subject such entities to OHCA review. The definition is also reframed to include “any private or public health care provider”, as opposed to the current framework which lists out specific licensure or service line categories constituting a “provider”.
Expressly bringing management services organizations (MSOs) under OHCA authority, which were notably excluded under prior regulations, and consequently more directly impacting physician practice management models.
The proposed expansion of OHCA’s jurisdiction under AB 1415 represents a dramatic shift in California’s approach to healthcare transaction oversight. By requiring private equity groups, hedge funds, MSOs, and health systems to submit pre-transaction notices, the bill would broaden the regulatory reach of OHCA.
While AB 1415 would not grant OHCA the authority to block transactions outright (unlike the approach taken in last years’ AB 3129), its review process could delay closings involving such entities and introduce additional compliance burdens to navigate healthcare deals in California. As seen with prior legislative efforts, this bill signals a continued push for increased scrutiny of non-licensed entities and investors in healthcare. While the measure is likely to face intense lobbying efforts, it is worth reminding our readers that Governor Newsom’s veto statement specifically called out the existing OHCA authority and framework as a reason why AB 3129 was not necessary. Here, it will be interesting to see whether carving in private equity stakeholders within the OHCA framework makes this type of legislation more likely to get enacted into law.
Washington’s SB 5387: New Restrictions on Healthcare Ownership Structures
Meanwhile, Washington’s SB 5387 takes a relatively strict and targeted approach to regulating lay entity arrangements and influence over health care practices. Specifically, the bill includes the following key features:
Non-licensed individuals, corporations, or entities cannot own or control health care practices or employ licensed healthcare providers unless explicitly permitted under state law.
Whereas under existing law shareholders, officers and directors of professional service entities do not necessarily have to be licensed in Washington, this bill would require Washington-licensed healthcare providers to retain control of such entities by holding a majority of the voting shares, serving as the majority of directors, and occupying key leadership roles. The bill also adds what appears to be an active practice requirement to be an owner of a professional health care entity.
Shareholders, directors and officers of professional health care practices would be prevented from owning equity in or serving as an officer, director, employee or contractor of an MSO contracted with such practice, or receiving significant financial compensation from such MSO in return for ownership or management of the professional entity. Such shareholders, directors and officers would also not be able to transfer or relinquish control over the issuing of shares in the practice or the paying of dividends.
The provisions in SB 5387 take an approach similar to the version of California’s AB 3129 originally passed by the California State Assembly in May 2024, as well as Oregon’s HB 4130 passed by the Oregon House of Representatives in February 2024 (which ultimately failed to be enacted into law). Both prior bills called into question the viability of the “friendly” PC-MSO model commonly used by private equity and other investors, which typically involve succession agreements and similar arrangements that give certain control rights to MSOs relating to professional entities, among other features. Here, by delineating broad ownership and control requirements and restrictions involving professional entities and MSOs, it could prove to be difficult in practice to utilize such PC-MSO structures in Washington if the bill as currently drafted is enacted into law.
Looking Ahead
California and Washington are advancing significant legislative changes that would reshape the west coast healthcare investment landscape. We will continue tracking the proposed bills as they progress and provide updates on their impact on healthcare transactions in these states. For more information, contact our team for guidance on navigating these proposed changes.
FOOTNOTES
[i] See our previous blog series on California Assembly Bill 3129 pursued by CA state legislators in 2024: Update: Governor Newsom Vetoes California’s AB 3129 Targeting Healthcare Private Equity Deals | Healthcare Law Blog (sheppardhealthlaw.com), published October 2, 2024, Update: AB 3129 Passes in California Senate and Nears Finish Line | Healthcare Law Blog (sheppardhealthlaw.com), published September 6, 2024, California’s AB 3129: A New Hurdle for Private Equity Health Care Transactions on the Horizon? | Healthcare Law Blog (sheppardhealthlaw.com), published April 18, 2024, and Update: California State Assembly Passes AB 3129 Requiring State Approval of Private Equity Healthcare Deals | Healthcare Law Blog (sheppardhealthlaw.com), published May 30, 2024.
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IRS Issues Guidance on Recent Relief from Health Coverage Reporting to Individuals
In December 2024, the Paperwork Burden Reduction Act (“PBRA”) was signed into law, providing, among other things, for an alternative manner for employers and other reporting entities to satisfy their obligations with respect to furnishing IRS Forms 1094-C and 1095-C to individuals. Under the PBRA, beginning with the forms for the 2024 calendar (due March 3, 2025), a reporting entity may forego automatically furnishing the forms to individuals if certain notice requirements are satisfied. In particular, in lieu of automatically furnishing the forms, the PBRA allows a reporting entity to post a clear, conspicuous, and accessible notice, stating that individuals may receive a copy of the forms upon request (the “Replacement Notice”).
However, the PBRA did not contain specifics as to how to satisfy the Replacement Notice requirement. On February 21, 2025, the IRS issued new guidance, IRS Notice 2025-15, which helps to clarify the Replacement Notice requirement. Notice 2025-15 provides that a reporting entity may satisfy the Replacement Notice requirement by complying with existing regulations regarding a similar replacement notice procedures for Form 1094-B. Based on those existing regulations and Notice 2025-15:
The Replacement Notice must be posted on the reporting entity’s website, in an area reasonably accessible to all responsible individuals (e.g., current and former employees), accompanied by an email address and a physical address to make requests and a telephone number for any questions.
The Replacement Notice must be written in plain, non-technical terms in a font-size large enough to draw attention.
The Replacement Notice must be posted by the due date for furnishing the 1095-B or 1095-C, including the automatic 30-day extension, if applicable. For example, for 2024 Forms 1095-B and 1095-C, the Notice must be posted by March 3, 2025.
The Replacement Notice must be retained in the same place on the website through October 15 of the year following the calendar year to which the Replacement Notice relates.
The employer must furnish the Form 1095-B or 1095-C to a requesting responsible individual within 30 days of the date the request is received, but not earlier than January 31 of the year following the calendar year for which the return was required, and the Form may be provided electronically if the requesting individual consents.
Takeaway
The alternative manner of furnishing Forms 1095-B and 1095-C will be an attractive option for many employers looking to eliminate paper mailers, and reduce printing and mailing costs and burden. This can be a viable option as long as all of the requirements are met regarding the Replacement Notice and the employer has procedures in place to the timely furnish the forms when requested by a responsible individual. However, employers should keep in mind that certain states have their own guidelines requiring ACA-like written statements, and, if an employer is subject to any such state requirements, they may need to continue to provide paper forms via mail.
McDermott+ Check-Up: February 28, 2025
THIS WEEK’S DOSE
House Passes Budget Resolution. The Senate and House must now align on a unified resolution for the reconciliation process to begin in earnest.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. Discussion focused on nominees’ views on artificial intelligence, pharmacy benefit managers (PBMs), and the impact of paused federal funding on grants and healthcare programs.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. Lori Chavez-DeRemer received some bipartisan support, and a full Senate vote is expected next week.
House Energy & Commerce Committee Advances Oversight Plan. The markup turned highly partisan as Republicans put forth an agenda that includes biological threat preparedness and response, substance use, and Medicare and Medicaid operations.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. Members agreed on the need for PBM reform and referenced work from the 118th Congress.
Senate Aging Committee Examines Opioid Epidemic. Members discussed varying policy approaches to combatting opioid use disorder among seniors.
President Trump Signs Healthcare Price Transparency EO. The executive order (EO) directs agencies to increase enforcement of healthcare price transparency regulations.
Trump Administration Issues Memo Requiring Federal Agencies to Submit RIF Plans. Among a number of directives, the memo directs agencies, including the US Department of Health and Human Services (HHS), to submit phase one of a reduction in force (RIF) plan for their federal workforce by March 13.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. It remains unclear what scope of rules could be impacted by this statement.
CONGRESS
House Passes Budget Resolution. On February 25, the House voted 217 – 215 to advance its version of a budget resolution to outline the reconciliation process. In a dramatic display of how quickly things can change, the vote was initially cancelled because of ongoing opposition from Reps. Burchett (R-TN), Davidson (R-OH), Spartz (R-IN), and Massie (R-KY) due to concerns that the resolution did not include enough spending cuts. With only a one-seat margin, Republicans couldn’t proceed with that much opposition. However, three of the representatives were convinced to change their votes moments after the vote had been cancelled, and the vote proceeded. Ultimately, all Democrats voted no, and Rep. Massie was the sole Republican to join them.
The resolution would enable a single reconciliation bill to tackle immigration, energy, defense, and temporary extension of tax cuts from the first Trump administration. The resolution directs the House Energy & Commerce Committee to find at least $880 billion in savings, which could include significant Medicaid cuts.
The House vote follows the Senate’s vote last week to advance its version of a “skinny” budget resolution that did not include tax policy and would therefore include less healthcare savings. With two options for how to proceed on reconciliation, the House and Senate now must negotiate a unified budget resolution and pass it through both bodies in order for the reconciliation process to begin. Those budget negotiations will proceed mostly behind the scenes, as Congress must turn its attention to funding government before the March 14 deadline.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. The Senate Committee on Commerce, Science, and Transportation held a nomination hearing for Michael Kratsios to serve as the director of the Office of Science and Technology Policy (OSTP) and for Mark Meador to serve as a commissioner for the Federal Trade Commission (FTC). Members questioned Meador about FTC investigations into PBMs and consolidation, and Meador noted his intent to ensure competition in the healthcare industry. Members questioned Kratsios about guardrails for artificial intelligence, and he expressed his view that artificial intelligence can make a positive impact on healthcare.
The Senate Homeland Security & Governmental Affairs Committee held a nomination hearing for Dan Bishop to serve as deputy director of the Office of Management and Budget (OMB). Discussion predominately focused on border security and federal workforce cuts. Health-related topics included the impact of paused federal grant funding on rural hospital operations, federal funding of abortions, and transparency of federally funded research. Bishop will next testify before the Senate Budget Committee on March 5, and both committees must vote on his nomination before it heads to the Senate floor.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. In a 14 – 9 vote, the Senate Health, Education, Labor, and Pensions (HELP) Committee advanced the nomination of Lori Chavez-DeRemer as secretary of labor to the full Senate. Sens. Hassan (D-NH), Hickenlooper (D-CO), and Kaine (D-VA) voted yes, and Sen. Paul (R-KY) joined the remaining Democrats to vote no. Chavez-DeRemer previously represented Oregon’s fifth district in the House, and Sen. Paul expressed concern about her cosponsorship of a bill that would have made unionization easier. The US Department of Labor shares jurisdiction over certain healthcare issues with HHS, including the Affordable Care Act, the Health Insurance Portability and Accountability Act, and employer-sponsored insurance. A vote is expected next week on the Senate floor, where Chavez-DeRemer could continue to receive bipartisan support.
House Energy & Commerce Committee Advances Oversight Plan. During the markup, members discussed the committee’s oversight and authorization plan for the 119th Congress. Each House committee must submit such a plan to the House Administration and Oversight and Government Reform Committees by March 1. The plan states that the Energy & Commerce Committee will conduct oversight of federal agencies’ efforts on biological threat preparedness and response, ensure cost transparency in Medicare and Medicaid, examine the cost of chronic diseases, and examine government cybersecurity initiatives.
The markup became quite contentious, with Democrats offering numerous amendments that would require the committee to study the impact of any cuts to Medicaid and federal research funding, examine layoffs at HHS, and assess the US Food and Drug Administration’s leadership on vaccine development and safety. All amendments offered by Democrats were rejected along party lines.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. There was strong bipartisan support during the hearing for PBM reform. However, Democrats expressed frustration that such policies were already fully debated in the 118th Congress and included in the December 2024 bipartisan healthcare package that was ultimately dropped from the year-end continuing resolution. Republicans indicated that they would like to investigate fraud and abuse within the drug supply chain and examine the PBM rebate model, and they noted concern about how PBMs harm independent pharmacies. Democrats also referenced the $880 billion in savings directed at the Energy & Commerce Committee in the House budget resolution, noting their concern over any cuts to Medicaid.
Senate Aging Committee Examines the Opioid Epidemic. The hearing focused on opioid use disorder’s impact on older Americans and featured a panel of local law enforcement and elected officials, caregivers, and subject matter experts. Witnesses recommended a variety of policy solutions, including taking a stronger law enforcement approach against drug dealers, increasing access to treatments such as medication-assisted therapy, and eliminating the Medicaid inmate exclusion. Democrats noted that decreasing Medicaid funding would impact access to and coverage of substance use disorder treatment, while Republicans focused on strengthening border security to prevent opioid use disorder.
ADMINISTRATION
President Trump Issues Healthcare Price Transparency EO. The EO, Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information, aims to build on the first Trump administration’s efforts to increase the transparency of healthcare prices. It specifically references a 2019 Trump EO and subsequent regulations that required hospitals and plans to publicly disclose negotiated prices. The Biden administration expanded on those regulations, but there have been reports of hospital non-compliance.
Differing from previous hospital price transparency requirements, the 2025 EO states that prices should be “actual prices” and not estimates. This EO directs the US Departments of the Treasury, Labor, and HHS to “rapidly implement and enforce” healthcare price transparency regulations within 90 days, including by:
Requiring disclosure of prices of items and services, not estimates;
Issuing updated guidance or proposed regulatory action to ensure pricing information is standardized and comparable across hospitals and plans; and
Issuing guidance or proposed regulatory action to update enforcement policies designed to ensure compliance.
A fact sheet can be found here.
Trump Administration Issues Memo Requiring Agencies to Submit Federal RIF Plans. The memo comes in response to President Trump’s February 13 EO, “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative.” The memo directs federal agencies to initiate large-scale RIFs and submit an agency RIF and reorganization plan (ARRP) as phase one of the initiative by March 13. The memo notes that ARRPs should seek to achieve:
Better service for the American people;
Increased productivity;
A significant reduction in the number of full-time-equivalent positions;
A reduced real estate footprint; and
A reduced budget outline.
Phase two of the initiative will focus on creating more productive, efficient agency operations. Agencies must submit a phase two plan by April 14, with implementation by September 30. Agencies or components that provide direct services to citizens (such as Social Security, Medicare, and veteran’s healthcare, according to the memo) are not to implement any proposed ARRPs until the OMB and Office of Personnel Management certify that the plans will have a positive effect on the delivery of such services.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. The Administrative Procedure Act (APA) exempts certain rules from formal notice-and-comment rulemaking, including rules regarding “public property, loans, grants, benefits, or contracts.” Despite this exemption, past guidance (known as the Richardson Waiver) encouraged greater public participation and directed government agencies to still use the more formal rulemaking process for this category of rules. HHS issued a new policy statement on February 28, stating that it will rescind the Richardson Waiver, and “matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, are exempt from the notice and comment procedures of 5 U.S.C. 553, except as otherwise required by law. Agencies and offices of the Department have discretion to apply notice and comment procedures to these matters but are not required to do so, except as otherwise required by law.” The scope of the rules that could be impacted by this change are not easily defined, even under caselaw, and would need to be reconciled against other statutes and legal requirements that may still require notice-and-comment rulemaking.
QUICK HITS
Senate Judiciary Committee Advances the HALT Fentanyl Act with Bipartisan Vote. The HALT Fentanyl Act, S. 331, would permanently classify fentanyl-related substances as schedule I controlled substances, align penalties for offenses involving these substances with those for fentanyl analogues, establish a new registration process for certain research, and make other changes to research registration requirements. The legislation, which passed the House with bipartisan support in early February, advanced from the committee by a vote of 16 – 6.
Energy & Commerce Committee Privacy Working Group Issues RFI. The newly formed working group is exploring the potential creation of a federal comprehensive data privacy and security framework. The request for information (RFI) focuses on artificial intelligence, data security, enforcement, and existing privacy frameworks. Responses are due by April 7.
MACPAC Holds February 2025 Meeting. The Medicaid and CHIP Payment and Access Commission (MACPAC) meeting included discussion on transitions of care for children and youth with special healthcare needs, hospital supplemental and directed payments, self-directed home- and community-based services, access to opioid use disorder medications, Section 1115 substance use disorder demonstrations, prior authorization, healthcare for children in foster care, and access to residential care for children and youth with behavioral health needs.
CMS Announces Medicare Drug Price Negotiation Program Public Engagement Events. The events, held from April 16 to 30, will allow patients, clinicians, caregivers, and consumer and patient organizations to share input for the second cycle of Medicare drug price negotiations. More information can be found here. Read about the drug selection process in an infographic here.
Congressional Democrats Raise Concerns Over HHS Layoffs. Senate Finance Committee Ranking Member Wyden (D-OR) and Senate HELP Committee Ranking Member Sanders (I-VT) sent a letter to HHS expressing concern over the layoffs of probationary employees working on organ transplantation modernization efforts. House Energy & Commerce Committee Ranking Member Pallone (D-NJ) and Health Subcommittee Ranking Member DeGette (D-CO) raised concerns over the impact of layoffs at the Centers for Disease Control and Prevention, National Institutes of Health (NIH), and Food and Drug Administration (FDA).
HHS OIG Report Finds Increased Medicare Part D Spending for Weight Loss Drugs. From 2019 to 2023, spending increased by 364% for 10 medications, including anti-obesity medications such as Ozempic, that are covered as type 2 diabetes treatments. The report follows a proposed rule from the Biden administration that would allow Medicare Part D to cover certain anti-obesity medications for weight loss purposes; it remains unclear whether the policy will be finalized under the current administration.
NEXT WEEK’S DIAGNOSIS
Congress will be in session next week. With a budget resolution passed in both chambers and next steps in flux, discussion will likely shift to funding the government, which must be addressed by March 14 in order to avoid a government shutdown. The Senate will continue to hold nomination hearings. On March 5, the Senate HELP Committee will hold its hearing for NIH director nominee Jay Bhattacharya, and the Senate Budget Committee will hold its hearing for OMB deputy director nominee Dan Bishop. On March 6, Senate HELP will hold its hearing for FDA commissioner nominee Martin Makary. President Trump will give the joint address of his second term to Congress on March 4. The Medicare Payment Advisory Commission will meet March 6 and 7.
Trump Administration Issues Executive Order Prioritizing Hospital Price Transparency Enforcement
On February 25, 2025, President Donald Trump issued an Executive Order titled “Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information” (the 2025 Order). The 2025 Order directs federal agencies to take various actions to prioritize enforcement of healthcare price transparency requirements for hospitals and health plans “to support a more competitive, innovative, affordable, and higher quality healthcare system.”
Price Transparency Rules Background
The 2025 Order follows a 2019 Executive Order issued by then-President Trump titled “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First” (the Price Transparency Order). That 2019 Price Transparency Order resulted in the adoption of regulations commonly called the Hospital Price Transparency Rules. Those Rules, in pertinent part, require hospitals to maintain a consumer-friendly display of pricing information for up to 300 shoppable services and a machine-readable file with negotiated rates for every single service the hospital provides. Read our previous analysis of the 2019 Price Transparency Order here, and our analysis of a 2024 OIG audit of hospital compliance with the Price Transparency Rules here.
2025 Price Transparency Executive Order Requirements
The 2025 Order now tasks the Departments of Treasury, Labor, and Health and Human Services with taking “all necessary and appropriate action” to implement and enforce the Hospital Price Transparency Rules because “hospitals and health plans were not adequately held to account when their price transparency data was incomplete or not even posted at all.”
Specifically, within 90 days of the 2025 Order, the federal agencies must:
(a) require the disclosure of the actual prices of items and services, not estimates;
(b) issue updated guidance or proposed regulatory action ensuring pricing information is standardized andeasily comparable across hospitals and health plans; and
(c) issue guidance or proposed regulatory action updating enforcement policies designed to ensurecompliance with the transparent reporting of complete, accurate, and meaningful data.
Notably, the phrase “actual prices of items and services” is not defined in the Order, and the express rebuke of pricing “estimates” appears to run counter to the approach taken under the No Surprises Act regulations (requiring the provision of good faith estimates) and certain state laws that require health care providers to furnish estimates to patients upon request. Whether and to what extent the agencies define these terms in subsequent guidance and/or rulemaking will be essential for health care organizations to monitor.
Takeaways for Health Care Organizations
Prior to the 2025 Order, the Centers for Medicaid and Medicare Services (CMS) had already issued civil monetary penalties for non-compliance with the Hospital Price Transparency Rules, and the 2025 Order appears intended to ramp up that type of enforcement action.
Hospitals, health plans, and providers should expect further guidance and enforcement information from these federal agencies during the 90-day period, which ends May 26, 2025. Regardless, health care organizations would be well-advised to review their price transparency processes and information available for consumers, as well as their policies to prepare for closer scrutiny of pricing disclosure practices. Additional information about the current Hospital Price Transparency Rules is available from CMS here.
GAO’s Updated High-Risk List Still Includes EPA’s Process for Assessing and Controlling Toxic Chemicals
On February 25, 2025, the U.S. Government Accountability Office (GAO) issued a report entitled High-Risk Series: Heightened Attention Could Save Billions More and Improve Government Efficiency and Effectiveness, “highlight[ing] 38 areas across the federal government that are seriously vulnerable to waste, fraud, abuse, and mismanagement or that are in need of transformation.” The category “Seizing Opportunities to Better Protect Public Health and Reduce Risk” lists high-risk areas focused on addressing critical weaknesses in public health efforts, including “ensuring the Environmental Protection Agency [(EPA)] provides more timely reviews of potentially toxic chemicals before they are introduced into commercial production and widespread public use.” GAO’s report includes an overview of “Transforming EPA’s Process for Assessing and Managing Chemical Risks,” noting that EPA “needs to address capacity issues to more effectively assess and manage chemicals posing risks to human health and the environment.” GAO added this issue to its High-Risk List in 2009 because EPA had not developed sufficient risk information to limit exposure to chemicals that may pose a risk to human health and because of issues with the Integrated Risk Information System’s (IRIS) Program. Since then, the Toxic Substances Control Act (TSCA) was amended in 2016 by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, prompting EPA to change its approach to assessing and managing chemicals. Similarly, the Office of Research and Development (ORD) “is more effectively using its portfolio of toxic chemical assessment products — which include IRIS and other chemical assessments like Provisional Peer-Reviewed Toxicity Values — to provide a range of risk assessments informing EPA’s decision-making on the protection of public health and the environment.” GAO states that given the changes to these programs, it is evaluating EPA’s work managing chemical risks through a single combined rating and will no longer assess the IRIS Program and TSCA implementation separately.
GAO’s rating is unchanged since the last update, finding that all five criteria still need attention:
Leadership commitment (partially met): Since 2023, EPA leadership has continued to demonstrate a strong commitment to implementing its TSCA responsibilities, including seeking resources to address outstanding program needs. According to former President Biden’s fiscal year 2025 request, these additional resources are essential for EPA to complete existing chemical risk evaluations within the statutory timeframe and modernize information technology (IT) systems supporting the TSCA program. EPA leadership and officials in ORD overseeing the IRIS Program have not increased resources or examined workforce needs for either the program or across EPA, however.
Capacity (partially met): The Office of Chemical Safety and Pollution Prevention (OCSPP) and IRIS Program officials reported a lack of capacity to carry out their work effectively, but both have taken steps to identify needed resources. According to EPA, among the 1,163 premanufacture notice (PMN) reviews completed between 2017 and 2022, EPA typically made its determination within the initial 90-day review period less than ten percent of the time. According to GAO, EPA specifically completed these reviews in 181 days or more between 53 and 90 percent of the time. GAO states that the OCSPP Assistant Administrator “stated that although EPA has prioritized resources for its new chemicals program, the agency will continue to struggle for as long as the budgetary constraints persist. Moreover, senior managers in OCSPP’s New Chemicals Division [(NCD)] told us the division lacks expertise and resources to assess the sufficiency of its existing evidence-building capacity or to identify actions to maintain or enhance that capacity.”
Action plan (partially met): The IRIS Program and OCSPP’s NCD have conducted strategic planning activities. IRIS Program staff included in their April 2024 resource analysis the Program’s plans for preparing various types of chemical assessments relying on current budget and human resources. NCD drafted a strategic plan in August 2024 that includes five goals related to the New Chemicals Program and identifies metrics and strategies for achieving each goal. GAO notes that it found that NCD “did not follow key practices for effectively assessing, building, or using evidence for its planning activities,” however.
Monitoring (partially met): The IRIS Program’s April 2024 resource analysis included metrics to track the Program’s progress in meeting user needs for chemical assessments. The IRIS Program improved its monitoring processes by implementing changes to the Program’s chemical nomination surveys in 2022 and to the way that survey was carried out. GAO states that it found that OCSPP’s NCD did not follow key practices for effectively assessing, building, or using evidence for its activities, however. It found NCD had not completed foundational planning actions, such as preparing its draft strategic plan in final.
Demonstrated progress (partially met): The IRIS Program has made progress in carrying out its chemical assessment activities. EPA has made progress in implementing its PFAS Strategic Roadmap, as well. OCSPP continues to face challenges in carrying out its responsibility to make determinations on new chemical reviews within the 90-day review period, however. According to GAO, EPA stated that it is committed to improving the efficiency and transparency of its New Chemicals Program and has launched related process improvements, such as finalizing updates to the regulations that govern new chemical reviews.
GAO concludes that attention is needed to resources (budgetary and staffing), strategic planning, and monitoring to make progress in this high-risk area. According to GAO, as of January 2025, three recommendations related to assessing and managing chemical risks remain open, including the following focused on OCSPP’s planning and assessment efforts:
OCSPP should develop a process and timeline to align fully its workforce planning efforts for implementing TSCA chemical review responsibilities with workforce planning principles;
OCSPP’s NCD should, as it prepares its strategic plan in final, address relevant key practices for managing and assessing the New Chemicals Program, including involving stakeholders and identifying resources; and
OCSPP’s NCD should implement a systematic process for aligning its performance management approach with key management and assessment practices.
New York Amends the Warehouse Worker Injury Reduction Act
On February 14, 2025, New York Governor Kathy Hochul signed into law amendments to the New York Warehouse Worker Injury Reduction Act (A2432/S808).
Quick Hits
Employers are required to comply with all aspects of the law by the June 1, 2025, effective date.
The definition of “musculoskeletal injuries and disorders” was replaced by “work-related musculoskeletal disorders,” making it clear that the musculoskeletal disorder must be work-related.
The amendment expands who is qualified to conduct the worksite evaluation.
Employee input is required in worksite evaluations.
Expanded Definitions
The amendments expand the definition of “musculoskeletal injuries” to now cover “work-related musculoskeletal disorders” affecting “the muscles, nerves, tendons, ligaments, joints, cartilage of the body’s musculoskeletal system including the muscles, nerves, tendons, ligaments, joints, cartilage and spinal discs of the upper and lower limbs, neck, shoulders, and back.”
Specifically, the amended definition covers “work-related conditions,” such as injuries, illnesses, or disorders that:
are caused by exposures while working that either significantly cause or contribute to the resulting condition or that exacerbate a preexisting condition;
are caused by ergonomic risk factors, including, but not limited to, “rapid pace, forceful exertions, extreme or static postures, repetitive motions, direct pressure, contact stress, vibration or cold temperatures;” or
do not occur because of workplace accidents, such as slips, trips, and falls.
The amendment also uses the term “competent person” to expand the category of qualified individuals who can draft a worksite evaluation. A “competent person” is anyone “capable of performing a job hazard assessment to identify and assess existing and predictable ergonomic risk factors” that may cause or contribute to musculoskeletal disorders. The term “competent person” is not limited to ergonomists, but also includes industrial hygienists, certified safety professionals, or other health and safety professionals who are academically qualified or possess extensive knowledge and training in managing workplace injury risks.
Injury Reduction Programs
Covered employers are still required by the law to implement an injury reduction program to minimize the risk of work-related musculoskeletal disorders. Employers must ensure not only that every job, process, or operation of work activity is covered (or a representative number thereof), but also that every shift is covered as well.
Worksite Evaluations
Prior to the amendment, worksite evaluations were required only to “obtain recommendations” from workers, whereas now they “shall incorporate input” from workers “either directly or through an employee-led workplace safety committee.” This suggests that employee input must be expressly recorded in the written worksite evaluation that is required in any injury reduction program.
The amendment also removes the requirement that a certified ergonomist evaluate the worksite and replaces the evaluator with a competent person. The competent person is responsible for identifying risk factors, including “rapid pace, forceful exertions, extreme or static postures, repetitive motions, direct pressure, contact stress, vibration, or cold temperatures” that may or could cause work-related musculoskeletal disorders. Existing, active workplace safety committees formed through collective bargaining may also review or conduct worksite evaluations, so long as the committee is maintained “in conjunction with an injury prevention program that fully complies with the federal Occupational Safety and Health Act.”
A board-certified ergonomist is required to review the written worksite evaluation when either an employee-led workplace safety committee files a written request to the employer “based upon a material concern related to the findings of a competent person,” or, in the absence of an active employee-led workplace safety committee, when “any employee-led committee makes a formal recommendation based upon a material concern” related to the worksite evaluation findings.
On-Site Treatment
The amendment clarifies that the on-site treatment requirements under the law are not limited to medical offices or first aid stations but rather any location staffing medical professionals that treat warehouse workers “for symptoms of work-related musculoskeletal disorders.”
Key Takeaways
The amendment follows New York’s focus on workplace safety in specific industries. Recently, Governor Hochul signed into law amendments to the Retail Worker Safety Act, and the New York Assembly introduced Assembly Bill (A) No. 4936, proposing new workplace violence prevention duties for public employers.
With the law’s June 1, 2025, effective date quickly approaching, covered employers may want to consider drafting their injury reduction programs now.