Updated: The Future of Gender-Affirming Care – New Legal and Regulatory Considerations for Hospitals Providing These Services
As legal and policy developments continue to evolve, hospitals and health care professionals that provide gender-affirming care face new uncertainties regarding federal funding, compliance, and patient access. While these changes may not impact health care organizations that do not offer gender-affirming services, those that do must stay informed to navigate the rapidly changing legal landscape.
Gender-affirming care, which includes medical and psychological interventions for transgender and nonbinary individuals, is a service endorsed by the American Medical Association, the American Academy of Pediatrics, and the Endocrine Society. New federal guidance and pending legal disputes raise questions about how hospitals and health care professionals that offer these services may continue to do so while maintaining compliance with evolving regulations.
A key concern for these institutions is the potential impact on federal funding for hospitals that provide gender-affirming care, particularly for minors. Recent executive actions and policy statements have signaled that certain federal funding streams—such as Medicare and Medicaid reimbursements, medical education grants, and research funding—could be subject to additional scrutiny. While the full extent of enforcement remains unclear, agencies such as the Department of Health and Human Services and the Centers for Medicare & Medicaid Services are expected to issue further guidance that could affect reimbursement policies and institutional funding structures.
Late last week two federal courts granted temporary restraining orders (“TROs”) enjoining parts of President Trump’s Executive Order 14187, related to gender affirming care, and Executive Order 14168, related to recognition of gender identity.
On February 13, a federal court in Maryland granted a nationwide TRO prohibiting the U.S. Department of Health and Human Services (“HHS”), Health Resources and Services Administration, National Institutes of Health, National Science Foundation, and any subagencies of HHS from conditioning or withholding federal funding based on the fact that a healthcare entity or health professional provides gender affirming medical care to a patient under the age of nineteen. The TRO will be in effect for 14 days. The order also requires the federal agencies to file a status report by February 20 to inform the court about their compliance with the order. The TRO only enjoins the provisions of Executive Orders 14187 and 14168 related to federal funding and grant conditions. The other provisions of EO 14187, including those directing the Secretary of HHS to take appropriate regulatory and sub-regulatory actions in the Medicare and Medicaid programs and in health insurance coverage offered through Exchanges to end gender affirming care for children, remain in effect.
On February 14, a federal court in Washington granted a second TRO related to EO 14187, temporarily blocking enforcement and implementation of both the EO provision related to conditions on federal funding and the provision redefining the term “female genital mutilation” under a U.S. criminal statute. The TRO will also be in effect for 14 days and applies only within the states of Washington, Oregon and Minnesota.
The temporary restraining orders have paused some of the executive order’s effects, but they are only short-term measures. If they expire without further legal intervention, hospitals and health care professionals that provide gender-affirming care could once again face challenges related to federal funding, compliance risks, and regulatory enforcement. While the funding restrictions are currently blocked, the executive order also directs federal agencies to take broader action against gender-affirming care in federal programs, which could lead to further administrative and regulatory hurdles.
For hospitals and health care professionals that provide gender-affirming care and rely on Medicare and Medicaid reimbursements, federal research grants, or medical education funding, this uncertainty makes it difficult to plan ahead. There is also the question of how federal agencies will interpret and apply these policies once the TROs expire, particularly in states with existing protections for gender-affirming care.
Hospitals and health care professionals that provide gender-affirming care need to assess their financial risk, legal position, and potential compliance strategies now rather than waiting for additional court rulings. Being proactive in understanding the risks and preparing for different scenarios will help institutions navigate what remains a highly fluid and unpredictable regulatory environment.
Given the shifting regulatory environment, hospitals and health care professionals that continue to offer gender-affirming care should take proactive steps to mitigate risks and ensure compliance. Conducting a thorough review of federal funding sources will be essential in assessing exposure to potential funding restrictions. Performing an inventory of the types of gender-affirming care being provided as well as gender-affirming mental health support and research is also advisable. Engaging with legal and policy experts to develop compliance strategies will help institutions navigate changing regulations while maintaining patient care commitments.
Additionally, in states where gender-affirming services remain protected, hospitals and health care professionals may still face federal scrutiny but could have stronger legal grounds to continue offering care. In states with restrictive policies, exploring out-of-state partnerships or telehealth models may provide alternative pathways for patient access.
As this issue continues to develop, healthcare institutions and professionals that provide gender affirming care must remain agile and prepared for further policy changes. The next several months are likely to bring additional legal challenges, agency directives, and potential legislative responses that could further shape the landscape. Hospitals and health care professionals providing gender-affirming care should actively assess their institutional risk, consult legal and policy experts, and remain engaged in broader policy discussions to ensure they can continue to deliver these services while staying compliant with applicable laws.
Healthcare Preview for the Week of: February 18, 2025 [Podcast]
President’s Day Shortened Week
After the President’s Day long weekend, the House is out of session this week. The Senate is in session, with a continued focus on nominations and potential floor action on the budget resolution that the Senate Budget Committee reported last week. This week the Senate Homeland Security & Governmental Affairs Committee will hold a hearing for Dan Bishop, nominated to be deputy director of the Office of Management and Budget. Healthcare could certainly be a topic that is raised at the hearing.
What remains to be seen this week is whether there will be additional steps toward budget reconciliation. Last week, the Senate and House budget committees passed very different budget resolutions. The Senate version is the first of two reconciliation efforts and is focused only on energy, immigration, and defense policies, while the House wants to pass one big package with all priorities, including extending the Trump tax cuts. Either version will likely include healthcare policies in order to offset spending priorities, although the magnitude of healthcare cuts, in particular for Medicaid, is far greater in the House, whose budget resolution targets a minimum of $880 billion in savings from the House Energy and Commerce Committee. With the House out this week, the Senate could advance its budget resolution to floor consideration and send it on to the House. Of course, the House is not required to then act on that bill. It is very possible that the House could move forward with its own approach. But, before either body can turn to the substantive work of developing a reconciliation package, a unified budget resolution must pass both bodies.
Last Thursday, Robert F. Kennedy (RFK) Jr. was confirmed and sworn in as secretary of the US Department of Health and Human Services (HHS). His Senate confirmation vote was 52 – 48, with Sen. McConnell (R-KY) the sole Republican to vote no. As predicted, immediately after RFK Jr.’s swearing in, President Trump took several healthcare actions. He signed an executive order establishing the Make America Healthy Again Commission, whose initial mission is to advise the president on how to address childhood chronic diseases. The order directs the commission to study contributing causes, advise the president on public education, and provide government-wide recommendations to address contributing causes. Additional executive orders on healthcare could be forthcoming.
As forecast, the Trump administration laid off thousands of HHS employees on Friday and over the weekend, including at the US Food and Drug Administration, the Centers for Medicare and Medicaid Services, and the National Institutes of Health. The Trump administration contends that the layoffs did not include essential workers. Individuals laid off primarily include those in a probationary period, but the impact of these changes is still being understood and is likely to impact the operation of Medicare, Medicaid, federal grant programs, and other HHS functions.
Today’s Podcast
In this week’s Healthcare Preview podcast, Debbie Curtis and Rodney Whitlock join Julia Grabo to recap the mass HHS layoffs over the long weekend and discuss next steps in the budget reconciliation process.
January 2025 Bounty Hunter Plaintiff Claims
California’s Proposition 65 (“Prop. 65”), the Safe Drinking Water and Toxic Enforcement Act of 1986, requires, among other things, sellers of products to provide a “clear and reasonable warning” if use of the product results in a knowing and intentional exposure to one of more than 900 different chemicals “known to the State of California” to cause cancer or reproductive toxicity, which are included on The Proposition 65 List. For additional background information, see the Special Focus article, California’s Proposition 65: A Regulatory Conundrum.
Because Prop. 65 permits enforcement of the law by private individuals (the so-called bounty hunter provision), this section of the statute has long been a source of significant claims and litigation in California. It has also gone a long way in helping to create a plaintiff’s bar that specializes in such lawsuits. This is because the statute allows recovery of attorney’s fees, in addition to the imposition of civil penalties as high as $2,500 per day per violation. Thus, the costs of litigation and settlement can be substantial.
The purpose of Keller and Heckman’s latest publication, Prop 65 Pulse, is to provide our readers with an idea of the ongoing trends in bounty hunter activity.
In January of 2025, product manufacturers, distributors, and retailers were the targets of 337 new Notices of Violation (“Notices”) and amended Notices, alleging a violation of Prop. 65 for failure to provide a warning for their products. This was based on the alleged presence of the following chemicals in these products. Noteworthy trends and categories from Notices sent in January 2025 are excerpted and discussed below. A complete list of Notices sent in January 2025 can be found on the California Attorney General’s website, located here: 60-Day Notice Search.
Food and Drug
Product Category
Notice(s)
Alleged Chemicals
Dietary Supplements: Notices include protein powder, prenatal vitamins, and spirulina
22 Notices
Lead and Lead Compounds
Assorted Prepared Food and Snacks: Notices include chips, soup mix, plant-based patties, and protein bars
21 Notices
Cadmium and Lead and Lead Compounds
Seafood: Notices include sardines, mussels, cod liver, tuna, and clams
19 Notices
Cadmium and Cadmium Compounds and Lead and Lead Compounds
Cannabinoid Products: Notices include tinctures, gummies, CBD oil, and seltzer
14 Notices
Delta-9-tetrahydrocannabinol
Fruits and Vegetables: Notices include olives, chopped spinach, dried tomatoes, and artichoke hearts
13 Notices
Lead and Lead Compounds and Cadmium and Cadmium Compounds
Spices and Sauces: Notices include chat masala, dried ginger, and chili
6 Notices
Lead and Lead Compounds
Noodles, Pasta, and Rice: Notices include vegetable lasagna, cheese tortellini, and angel hair pasta
4 Notices
Lead and Lead Compounds and Cadmium
Mint Products: Notices include mint candy and mint caffeine pouches
2 Notices
Pulegone
Seafood: Notices include whole clams and sardines
2 Notices
Perfluorononanoic acid (PFNA) and its salts, Perfluorooctane Sulfonate (PFOS), and Perfluorooctanoic Acid (PFOA)
Dietary Supplements
1 Notice
Perfluorooctanoic Acid (PFOA)
Fruits and Vegetables: Notices include dried mandarin oranges
1 Notice
Perfluorooctanoic Acid (PFOA)
Cosmetics and Personal Care
Product Category
Notice(s)
Alleged Chemicals
Personal Care Products: Notices include shaving cream, moisturizers, shampoo, sunscreen, and hair dye
52 Notices
Diethanolamine
Personal Care Products: Notices include shaving cream, cleansing foam, and hair mousse
5 Notices
Nitrous oxide
Consumer Products
Product Category
Notice(s)
Alleged Chemicals
Plastic Pouches, Bags, and Accessories: Notices include pet carriers, water bottle sleeves, lunch bags, and eyewear cases
60 Notices
Bisphenol A (BPA), Di(2-ethylhexyl)phthalate (DEHP), Diisononyl phthalate (DINP), and Di-n-butyl Phthalate (DBP)
Tools: Notices include screws, solder slugs, lead anchors, and brass hose nozzles
45 Notices
Bisphenol S (BPS), Di(2-ethylhexyl)phthalate (DEHP), Di-n-butyl Phthalate (DBP), and Lead and Lead Compounds
Glassware and Ceramics: Notices include mugs, vases, ramekins, and bowls
38 Notices
Lead
Housewares: Notices include tablecloths, corkscrews, and vinyl seat cushions
11 Notices
Di(2-ethylhexyl)phthalate (DEHP), Diisononyl phthalate (DINP), Di-n-butyl Phthalate (DBP), and Lead
Sports Gear: Notices include roller skates, batting gloves, and dumbbells
8 Notices
Chromium (hexavalent compounds), Di(2-ethylhexyl)phthalate (DEHP), Diisononyl phthalate (DINP), and Lead
Moth Balls
6 Notices
Naphthalene and p-Dichlorobenzene
Clothing, Shoes, and Jewelry: Notices include hats, gloves, rain footwear, and sandals
5 Notices
Di(2-ethylhexyl)phthalate (DEHP) and Chromium (hexavalent compounds)
Cookware: Notices include single-use oval burrito bowls and paper straws
2 Notices
Perfluorooctanoic Acid (PFOA)
There are numerous defenses to Prop. 65 claims, and proactive measures that industry can take prior to receiving a Prop. 65 Notice in the first place. Keller and Heckman attorneys have extensive experience in defense of Prop. 65 claims and in all aspects of Prop. 65 compliance and risk management. We provide tailored Proposition 65 services to a wide range of industries, including food and beverage, personal care, consumer products, chemical products, e-vapor and tobacco products, household products, plastics and rubber, and retail distribution.
DEA Delays Final Buprenorphine Rule
The Department of Health and Human Services (HHS) and the Drug Enforcement Administration (DEA) have delayed the effective date of the final rule regarding telemedicine prescribing of buprenorphine (the final buprenorphine rule) to March 21, 2025, and have requested public comments on the rule. In its final rule delaying the effective date, the DEA reiterates that the delay in effective date will not delay or limit the ability of practitioners covered by the final buprenorphine rule to prescribe via telemedicine due to the current telemedicine prescribing flexibilities in place through December 31, 2025.
A Brief History
On January 17, 2025, in anticipation of the change of administration, the DEA and HHS finalized and published the final buprenorphine rule, which establishes a permanent pathway for the telemedicine prescribing of buprenorphine for opioid use disorder (OUD). The final buprenorphine rule was set to take effect February 18, 2025. (See our discussion on the requirements of the final buprenorphine rule here.) On January 20, 2025, the Trump administration issued the Regulatory Freeze Pending Review Presidential Memorandum authorizing HHS and the DEA to delay until March 21, 2025, the effective date of the final buprenorphine rule for the purpose of reviewing any questions of fact, law, and policy the rule may raise and to open a comment period to gather input from interested parties.
Make Your Voice Heard
Stakeholders are encouraged to participate in the comment process and share their insights on the final buprenorphine rule. The DEA is soliciting comments on the extension of the effective date of the final buprenorphine rule and whether the effective date should be further extended to address issues of fact, law, and policy raised by the rule. Comments may be submitted until 11:59 p.m. ET February 28, 2025. Stakeholders may submit comments electronically here or via regular or express mail to the following address:
Drug Enforcement AdministrationAttn: DEA Federal Register Representative/DPW8701 Morrissette Drive, Springfield, VA 22152
All correspondence, including attachments, must include a reference to “Docket No. DEA-948”.
Additionally, those with concerns about the final buprenorphine rule can share their feedback by contacting their local Congressperson or the White House.
Opportunity for Clarity
Because so much time had passed since the proposed buprenorphine rule was introduced in March 2023, its finalization in January caught many stakeholders by surprise. This additional comment period is a welcome opportunity for the telemedicine industry to seek clarity on several key issues regarding the final buprenorphine rule.
One concern is whether practitioners may continue to rely on the existing telemedicine flexibilities through the end of year if the final buprenorphine rule takes effect before the flexibilities expire, or if they will need to comply with the additional requirements of the rule once it takes effect. Additionally, stakeholders have raised concerns about the DEA’s shift from the originally proposed 30-day supply to a six-month initial supply. Although a step in the right direction to increase the supply, six months seems like an arbitrary choice to OUD telehealth providers who foresee a potential disruption in patient care depending on the available pathways for telemedicine prescribing after the initial supply.
To help initiate discussions, ATA Action has submitted a letter to the DEA seeking further clarification on several aspects of the final buprenorphine rule. We will continue to monitor developments regarding the final buprenorphine rule, including any further extensions of its effective date.
Traumatic Injuries and Cardiovascular Health: Risks and Long-Term Effects
When we think about traumatic injuries, broken bones or cuts often come to mind. However, the impact of these injuries goes beyond the immediate physical damage. One area that can be surprisingly affected is cardiovascular health. We’ll discuss how traumatic injuries can influence heart health and what long-term effects might arise.
The Connection Between Trauma and Heart Health
Research shows that traumatic injuries can cause significant damage to the body and lead to changes in cardiovascular health. Below are ways that trauma is linked to heart health:
1. Stress Response
When you experience trauma, your body goes into a “fight or flight” mode. This releases stress hormones like adrenaline and cortisol. Even though this reaction is helpful in the short term, prolonged stress can lead to high blood pressure and increase the risk of heart disease over time.
2. Inflammation
Injuries trigger inflammation, a part of the body’s healing process. Chronic inflammation can be harmful, however. This can lead to the development of plaques in the arteries, narrowing them and increasing the risk of heart attack or stroke.
3. Physical Inactivity
After a traumatic injury, many people experience limited mobility, which ultimately leads to physical inactivity. Being less active can lead to weight gain and reduced heart efficiency, negatively impacting cardiovascular health.
4. Psychological Effects
Trauma can also lead to mental illnesses, such as anxiety and depression. These conditions can further affect heart health by increasing the likelihood of unhealthy behaviors, including poor diet, smoking, or lack of exercise.
Long-Term Effects on Cardiovascular Health
The long-term consequences of traumatic injuries on heart health can vary from person to person. Some potential effects include:
1. Increased Risk of Heart Disease
Individuals with a history of severe traumatic injuries may have a higher risk of developing cardiovascular diseases later in life. This can occur due to factors like obesity, smoking, and a sedentary lifestyle.
2. Hypertension
Chronic stress and inflammation can lead to high blood pressure, a large risk factor for heart disease. Managing blood pressure after a traumatic event is essential for long-term heart health.
3. Metabolic Changes
Trauma can influence metabolism, leading to conditions like insulin resistance or diabetes, which are known risk factors for heart issues.
Conclusion
Traumatic injuries can have wide-ranging effects, particularly on cardiovascular health. Understanding these risks allows us to take steps in managing our heart health after experiencing such events. By focusing on recovery, maintaining a healthy lifestyle, and seeking support, we can help protect our hearts for the long haul.
Michigan’s Earned Sick Time Act: What Employers Should Know
As of today, Michigan’s Earned Sick Time Act (ESTA) is slated to take effect this Friday, February 21, 2025. Guidance on the Act as written is available on the Michigan Department of Labor and Economic Opportunity Wage and Hour Division’s website or in Varnum’s recent advisory on Common Questions from Employers regarding ESTA.
However, both the Michigan House of Representatives and the Michigan Senate have proposed amendments to ESTA that, if enacted, would significantly revise the Act. Both sets of proposed amendments differ substantially from each other. The provisions of these competing sets of legislative amendments have been summarized in a recent advisory. So far, the Michigan House has passed its proposed amendments and sent them to the Michigan Senate for consideration. The Michigan Senate has held hearings on its own set of proposed amendments but has not passed its amendments – or the House’s proposed amendments – as of yet.
Governor Gretchen Whitmer has urged both House and Senate leaders to reach a compromise on the proposed changes prior to ESTA’s effective date of February 21. She has also called for a delay in the Act’s implementation date until July 1, 2025, to give the legislature time to work out a compromise and Michigan businesses time to comply. Both House Speaker Matt Hall and Senate Democratic Majority Leader Winnie Brinks have expressed a commitment to reaching a compromise by the February 21 deadline, but a compromise on the ESTA amendments may not be possible by the end of this week due to the significant differences between the competing legislative proposals.
Given this present uncertainty, employers should be prepared to comply with the current form of ESTA on Friday, February 21, 2025, but should refrain from formally rolling out any changes to the policy prior to Friday in the event the Michigan legislature does act before that date.
Texas Federal Court Pauses CFPB Rule Banning Medical Debt from Credit Reports
On February 6, a judge for the United District Court for the Eastern District of Texas issued a 90-day stay on the CFPB’s final rule prohibiting the inclusion of medical debt in consumer credit reports, delaying the rule’s effective date from March 17 to June 15.
The CFPB’s rule (which we previously discussed here and here) seeks to prohibit consumer reporting agencies from including these unpaid medical bills in credit reports and prohibit lenders from considering medical debt when making credit decisions. The pause follows a legal challenge (previously discussed here) from industry trade associations, contending that the rule exceeds the CFPB’s authority under the Fair Credit Reporting Act (FCRA).
Putting It Into Practice: The 90-day delay temporarily halts implementation of the CFPB’s rule, however its future remains uncertain under new CFPB leadership. The rule would have been effective 60 days after publication in the Federal Register. However, the Bureau’s first Acting Director, Scott Bessent “suspend[ed] the effective dates of all final rules that have been issued or published but that have not yet become effective. Any formal changes to the rules would require adherence to the Administrative Procedure Act (APA) through formal notice-and-comment rulemaking. The rule is also subject to a challenge under the Congressional Review Act. Consumer reporting agencies should continue to monitor these developments closely, as the litigation could lead to further delays or a potential invalidation of the rule.
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Robert F. Kennedy, Jr. Confirmed as HHS Secretary
On 13 February 2025, President Trump announced that he is directing the US Commerce Secretary and US Trade Representative to report to him by 1 April 2025 on specific tariffs the United States should impose to address bilateral trade deficits with countries that maintain higher tariffs on US exports than the level of tariffs that the United States imposes on their products. These “reciprocal” tariffs are expected to be finalized soon after the Commerce and USTR reports are finalized, but the date on which they may be implemented has yet to be announced.
Key points to remember concerning this latest tariff announcement are:
There will be no additional tariffs immediately as a result of this latest announcement.
US trade agencies (primarily Commerce and USTR) are to study tariffs imposed by other countries on US exports and recommend whether the United States should impose comparable tariffs against US imports from those countries.
Value-Added Tax and other tax regimes that US trading partners use but the US does not are potentially going to be included in the tariff rate calculations for those countries. Also potentially addressed will be distortions in exchange rates caused by currency policies of some countries and “non-tariff barriers” such as regulatory requirements (e.g., country-specific product standards) that are found to restrict market access opportunities for US exporters.
The US trade agencies must provide their recommendations to the president by 1 April 2025, the same date as originally set in the “America First Trade Policy.”
Thereafter, the US trade agencies are to use their respective statutory authorities (e.g., Section 232, 301, etc.) to impose relevant and necessary remedies such as tariffs, quotas, or other measures. Such remedies are likely to be in addition to the 10% tariffs on imports from China and 25% tariffs on imports of steel and aluminum that President Trump announced earlier this month. They are also likely to include new Section 232 tariffs on semiconductors, autos, and pharmaceuticals.
On its face, the Executive Order applies to all countries, but we may see exemptions for some (e.g., Australia) with which the United States maintains relatively balanced trade in goods.
Overall, this latest trade action signals the form that eventual additional US trade measures may take – e.g., tariffs and quotas under existing statutory authorities – as well as, most importantly, that there will be a process and longer time horizon for interested parties to comment before such measures go into effect. Companies and investors with interests impacted by these issues should use this time to prepare data and other analyses and advocacy to support their interests.
McDermott+ Check-Up: February 14, 2025
THIS WEEK’S DOSE
Senate Confirms RFK Jr. as HHS Secretary. He was approved by a vote of 52 – 48. Sen. McConnell (R-KY) joined all Democrats in voting no.
House, Senate Budget Committees Hold Budget Resolution Markups. The House and Senate must pass a unified budget resolution for reconciliation to move forward.
Sen. Tina Smith (D-MN) Announces She Won’t Run for Reelection. This announcement comes on the heels of Sen. Gary Peters’ (D-MI) announcement that he also will not run for reelection.
House Ways & Means Health Subcommittee Holds Hearing on Modernizing Healthcare. Members and witnesses expressed concerns regarding the healthcare system.
House Oversight Healthcare Subcommittee Examines Welfare Programs. Members expressed differing views on the state of US welfare programs, including Medicaid.
House Oversight DOGE Subcommittee Holds First Hearing. The hearing discussed improper payments and fraud, with healthcare mentions focused on Medicaid.
Senate Aging Committee Examines How to Optimize Longevity. The hearing focused on how Americans can live longer, healthier lives.
Trump Nominates Additional Healthcare Personnel. The Trump administration’s US Department of Health and Human Services (HHS) and healthcare personnel continue to fill out, including a nomination for US Drug Enforcement Administration administrator.
NIH Issues Guidance Capping Indirect Costs. A federal court subsequently granted a temporary restraining order.
President Trump Issues EO to Reduce Federal Workforce. The executive order (EO) aims to drastically cut the federal workforce, including at HHS.
Legal Challenges Continue Against Trump Administration Actions. Lawsuits have been filed over health agency webpages, the federal funding freeze, and federal employee buyouts.
CONGRESS
RFK Jr. Confirmed as HHS Secretary. In a 52 – 48 Senate vote, Robert F. Kennedy (RFK) Jr. was confirmed as the next HHS secretary. All Democrats voted no, and Sen. McConnell (R-KY) was the only Republican to join them. He issued a statement explaining that he believed RFK Jr. spreads conspiracy theories and is unfit to lead HHS. Sen. McConnell also voted no on the confirmation of Tulsi Gabbard as the director of national intelligence, and on Pete Hegseth as secretary of the US Department of Defense. With RFK Jr. now officially leading HHS, we are especially attuned to the likelihood of new healthcare EOs and other administrative actions. On the same day as RFK Jr.’s confirmation, President Trump signed an EO establishing a Make America Healthy Again Commission.
The Senate will now move forward on the confirmation process for Mehmet Oz, MD, to be administrator of the Centers for Medicare and Medicaid Services (CMS). The Senate Finance Committee confirmation hearing could be scheduled as soon as early March.
House, Senate Budget Committees Hold Budget Resolution Markups. As a first step toward reconciliation, the House and Senate must pass a unified budget resolution. That process began in earnest this week when the Senate Budget Committee passed a budget resolution on a party-line vote that would bring forth a smaller reconciliation package to include immigration, defense, and energy policies. This approach is of interest to those in healthcare, because health programs could become part of the policies that help pay for this package if it moves forward. Senate Finance Chairman Crapo (R-ID) has said that the Finance Committee would likely rescind the Biden administration’s nursing home staffing regulation, which the Congressional Budget Office has scored as saving $22 billion, as his committee’s contribution to the effort.
The House Budget Committee is taking a very different approach. On February 13, it held a markup of its budget resolution, with the goal of passing one large reconciliation bill this year to address all priorities, including immigration, energy, defense, and tax cut extensions. This differs from the Senate’s intention to pass two separate reconciliation bills. The House budget resolution includes directions to the House Energy and Commerce Committee to find at least $880 billion in savings, which would likely include Medicaid reforms. The resolution passed by a party-line vote and included two Republican-led amendments. Notably, one amendment, intended to secure votes from members of the Freedom Caucus, would decrease the amount of tax cuts that could be included if $2 trillion in spending is not cut.
Senator Tina Smith (D-MN) Announces She Won’t Run for Reelection. Sen. Smith sits on the Senate Finance and HELP Committees and is active on healthcare issues. This announcement comes on the heels of Sen. Peters’ (D-MI) recent announcement that he also won’t run for reelection. These two key Democratic seats will be open for the 2026 midterm elections. Democrats and Republicans will both work to recruit top-tier candidates to enter these races.
House Ways & Means Health Subcommittee Holds Hearing on Modernizing Healthcare. The hearing included a panel of experts who discussed ways to promote healthy living, including wellness programs, early screenings, and flexible healthcare options (such as health savings accounts and individual coverage health reimbursement arrangements for small business owners). Democrats focused their questions on the recent National Institutes of Health (NIH) guidance capping indirect costs and the impact it would have on future treatments and cures, while Republicans focused on the cost of chronic conditions and their impact on the US healthcare system.
House Oversight Healthcare Subcommittee Examines Welfare Programs. During the hearing, witnesses discussed their views on safety net and welfare programs, including Medicaid, housing benefits, and nutrition programs. Republicans expressed concerns about the growth of these programs. They specifically discussed fraud, waste, and abuse in Medicaid, citing concerns over continuous enrollment and spending on illegal immigrants. They raised policies such as Medicaid block grants and work requirements as potential solutions. Democrats expressed their views that more barriers to accessing benefits should not be added, and some shared their personal experiences with welfare programs.
House Oversight DOGE Subcommittee Holds First Hearing. The newly formed subcommittee is chaired by Rep. Green (R-GA), and Rep. Stansbury (D-NM) is the ranking member. The first hearing included a panel of witnesses who discussed improper payments and fraud in federal programs. Republicans emphasized tackling waste and improper payments in federal programs, particularly Medicaid and Medicare, while Democrats highlighted the negative impact of proposed cuts on low-income and working-class people.
Senate Aging Committee Examines How to Optimize Longevity. Witnesses at the hearing discussed their concerns regarding the rise in chronic conditions and how a focus on healthy lifestyles – including eating a good diet, exercising regularly, and taking preventive efforts – could increase lifespans and improve health outcomes among older Americans. Democrats emphasized the importance of addressing social determinants of health, such as access to affordable healthcare, stable housing, financial security, and walkable communities. Republicans focused on the inefficiency of the current healthcare system, which they believe is reactive rather than preventive, and the need for more longevity-focused care.
ADMINISTRATION
Trump Nominates Additional Healthcare Personnel. President Trump nominated Gary Andres, former staff director for key House healthcare committees, and Gustav Chiarello III, an antitrust lawyer, as HHS assistant secretaries. President Trump nominated Michael Stuart, a West Virginia state senator, to be the HHS general counsel. Trump nominated Terry Cole, the secretary of public safety and homeland security for the commonwealth of Virginia, to be administrator of the US Drug Enforcement Administration, after his first pick Chad Chronister withdrew in December 2024. These nominees will all need to be confirmed by the Senate. Tom Engels returned to the Health Resources & Services Administration, a role he held for two years in the first Trump administration. Peter Nelson, formerly with the Center for American Experiment, will lead the Center for Consumer Information and Insurance Oversight, which has jurisdiction over the Affordable Care Act. These last two positions do not require Senate confirmation, and the individuals are now working in these roles.
NIH Issues Guidance Capping Indirect Costs. Late on February 7, the NIH issued guidance capping indirect cost rates for NIH award recipients at 15%. Indirect costs support grantees’ overhead and administrative costs. The guidance stated that the policy would apply to any new grants issued and to future expenses for existing grants from February 10 onward. As a justification, the NIH stated that the average indirect cost rate has been around 27% and that many organizations’ rates are higher, reaching 50% or 60%. Stakeholders issued statements opposing the policy, including hospitals, the Association of American Medical Colleges (AAMC), and lawmakers from both parties, including Sen. Collins (R-ME), the chair of the Senate Appropriations Committee.
On February 10, when the policy was supposed to go into effect, a group of 22 Democratic state attorneys general filed a federal lawsuit arguing that the change is illegal since Congress passed legislation in 2018 to prevent changes to indirect cost rates. The court granted a temporary injunction the same day, blocking the policy from going into effect in the 22 states that filed suit. AAMC subsequently joined the suit, and on February 11 the judge broadened the injunction to apply nationwide. The American Council on Education, the Association of American Universities, and the Association of Public and Land-grant Universities filed an additional federal lawsuit on February 10. This is an ongoing issue, but it is worth noting that lawmakers could advance a similar indirect costs cap in future appropriations bills or in reconciliation.
President Trump Issues EO to Reduce Federal Workforce. The EO requires agencies to implement a workforce optimization initiative, stating:
Each agency can hire no more than one employee for every four employees that depart.
Agency heads, in consultation with their DOGE team lead, must develop a hiring plan that meets the following requirements:
New career appointment hiring decisions must be made in consultation with the agency’s DOGE team lead.
If the DOGE team lead determines that a career appointment vacancy should not be filled, that vacancy may not be filled unless the agency head decides otherwise.
DOGE team leads must provide the DOGE service administrator with a monthly hiring report.
Agency heads should prepare for large-scale reductions in force, particularly in offices that perform functions not mandated by statute and include employees working in DEI initiatives.
Agency heads must submit a report identifying statutes that establish the agency, or subcomponents of the agency, as required entities. Of note, the authorization for NIH expired after 2020 and has not been reauthorized by Congress, although appropriations have continued.
COURTS
Legal Challenges Continue Against Trump Administration Actions. Lawsuits continue to be filed against actions taken by the Trump administration, including EOs and other administrative actions. In addition to the lawsuits against the NIH indirect costs guidance noted above, lawsuits have been filed in relation to the following:
Health Agency Webpages. On February 11, a federal judge issued a temporary restraining order directing HHS agencies, such as the Centers for Disease Control and Prevention and the US Food and Drug Administration, to restore certain health data on their websites.
Federal Funding Freeze. In late January, a judge blocked Office of Management and Budget (OMB) guidance ordering agencies to pause federal funding that didn’t comply with certain Trump EOs, and OMB subsequently rescinded the guidance. On February 10, a federal judge who previously ruled on the matter granted an additional motion stating that the Trump administration was violating the previous decisions and ordering agencies to restore funding.
Federal Employee Buyout. In the original deferred resignation offer, federal employees had until February 6 to make a decision. The federal judge who originally issued an order to extend the deadline issued an additional extension but then dissolved the temporary restraining order, putting the buyout back in place.
Gender Affirming Care EO. In response to a lawsuit filed by the PFLAG National, GLMA, and transgender individuals and their families, a federal judge on February 13 entered a 14-day nationwide temporary restraining order that prohibits the defendants from “conditioning or withholding federal funds on the fact that a healthcare entity or health professional provides gender affirming medical care to a patient under the age of nineteen.”
QUICK HITS
GAO Publishes Report on Medicaid Enrollment of Individuals Formerly in Foster Care. In response to a request from Senate Finance Committee Ranking Member Wyden (D-OR), the Government Accountability Office (GAO) report summarized efforts by states to enroll children who age out of foster care.
Democratic Healthcare Leaders Urge OIG to Investigate DOGE Access to Sensitive Health Information. House Energy & Commerce Committee Ranking Member Pallone (D-NJ), Senate Finance Committee Ranking Member Wyden, and House Ways & Means Committee Ranking Member Neal (D-MA) requested that the HHS Office of Inspector General (OIG) review actions taken by DOGE when accessing data at CMS and HHS. They also wrote a letter to the acting HHS secretary and acting CMS administrator seeking responses to questions about the DOGE access.
Republicans on Energy & Commerce Committee Announce Data Privacy Working Group. The group includes Vice Chair Joyce (R-PA) and Reps. Griffith (R-VA), Balderson (R-OH), Obernolte (R-CA), Fry (R-SC), Langworthy (R-NY), Kean (R-NJ), Goldman (R-TX), and Fedorchak (R-ND), and aims to explore a legislative framework on data privacy.
CMS Announces Reduction in Marketplace Navigator Funding. For the next four years, navigators will receive $10 million per year, which is a cut from $98 million in 2024. This matches the funding provided in the first Trump Administration. Read the press release here, where CMS notes this will allow the agency to focus on more effective strategies to improve Exchange outcomes and reduce premiums.
NEXT WEEK’S DIAGNOSIS
The House is in recess next week. The Senate will be in session following the President’s Day federal holiday on Monday. The Senate is expected to continue working on confirmations for cabinet secretaries and may also take up the budget resolution reported by the Senate Budget Committee. The Senate Homeland Security & Governmental Affairs Committee will hold a nomination hearing for Deputy Director of OMB nominee Dan Bishop, and the Senate Judiciary Committee will markup the HALT Fentanyl Act, which passed the House in a bipartisan vote earlier this month.
New York Proposes Expansion of Disclosure Requirements for Material Health Care Transactions
Governor Kathy Hochul released the proposed Fiscal Year 2026 New York State Executive Budget on January 21, 2025 (FY 26 Executive Budget). The FY 26 Executive Budget contains an amendment to Article 45-A of New York’s Public Health Law (hereinafter, the Disclosure of Material Transactions Law), which has been in effect since August 1, 2023. The law currently requires parties to a “material transaction” to provide 30 days pre-closing as well as post-closing notice to the New York State Department of Health (DOH). Since the law has taken effect, DOH has received notice of 9 material transactions, the details of which are listed on its website. If enacted, the amendment will change the reporting parties’ notice requirement, extend waiting periods, and increase DOH’s oversight of material health care transactions.
Existing Pre-Closing Notice Requirements
The Disclosure of Material Transactions Law currently requires a written notice to be submitted to DOH at least 30 days prior to the proposed material transaction’s closing. A transaction will be considered “material” if any of the below occur, whether in a single transaction or through a series of related transactions during a rolling 12-month period that results in a health care entity increasing its gross in-state revenues by $25 million or more:
A merger with a health care entity;
An acquisition of one or more health care entities, including, but not limited to, the assignment, sale, or other conveyance of assets, voting securities, membership, or partnership interest or the transfer of control (which is presumed if any person, directly or indirectly, owns, controls, or holds with the power to vote, 10% or more of the voting securities of a health care entity);
An affiliation or contract formed between a health care entity and another person; or
The formation of a partnership, joint venture, accountable care organization, parent organization, or management service organization for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health care providers.
The law requires all “health care entities”, defined under Article 45-A of New York’s Public Health Law to include physician practices or groups, management services organizations or similar entities that provide all or substantially all administrative or management services under contract with at least one physician practice, provider-sponsored organizations, health insurance plans, and any other health care facilities, organizations, or plans that provide health care services in New York (except for insurers or pharmacy benefit managers regulated by the New York State Department of Financial Services), to submit the notice to DOH. Such notice must include:
The names of the parties to the transaction and their current addresses;
Copies of any definitive agreements governing the terms of the material transaction, including pre- and post-closing conditions;
Identification of all locations where each party provides health care services and the revenue generated in the state from such locations;
Any plans to reduce or eliminate services and/or participation in specific plan networks;
The closing date of the transaction;
A brief description of the nature and purpose of the proposed transaction;
The anticipated impact of the material transaction on cost, quality, access, health equity, and competition in the markets the transaction will impact, which may be supported by data and a formal market impact analysis; and
Any commitments by the health care entity to address anticipated impacts.
Change to Pre-Closing Notice Requirement
The proposed amendment to the Disclosure of Material Transaction Law would modify the timing and content requirements of the required notice to DOH. First, the written pre-closing notice would need to be submitted to DOH at least 60 days prior to the closing of the proposed transaction, as opposed to 30 days under the current law. Second, the written pre-closing notice would require:
A statement as to whether any party to the transaction, or a controlling person or parent company of such party, owns any other health care entity which, in the past three years has closed operations, is in the process of closing operations, or has experienced a substantial reduction in services; and if so,
A statement as to whether a sale-leaseback agreement, mortgage, lease payments, or other payments associated with real estate are a component of the proposed transaction. If so, the parties shall provide the proposed sale-leaseback agreement or mortgage, lease, or real estate documents with the notice.
DOH Preliminary Review
When the Disclosure of Material Transactions Law was initially proposed in the Fiscal Year 2024 Executive Budget (FY 24 Executive Budget), it included not only the notification requirement but also a DOH approval process. Under the FY 24 Executive Budget proposal, each material transaction would be subject to DOH review and approval, including DOH’s consideration of several factors (Review Factors), such as:
If the potential positive impacts of the transaction outweigh any potential negative impacts;
Potential anticompetitive effects of the transaction;
The parties’ financial conditions;
The character and competence of the parties, their officers, and their directors;
The source of funds or assets involved in the transaction; and
The fairness of the exchange.
The amendment to the Disclosure of Material Transactions Law proposed in the FY 26 Executive Budget does not revive the Review Factors. However, it does provide that DOH shall conduct a preliminary review of all proposed transactions and, at its discretion, conduct a full cost and market impact review of the transaction. DOH shall notify the parties of the date the preliminary review is completed, and if DOH requires a full cost and market impact review, it shall notify the parties that such a review is required. The law does not specify a timeframe by which DOH must complete its preliminary review. However, if a full cost and market impact review is required, DOH has the power to delay the transaction until the review’s completion, however, closing cannot be delayed more than 180 days from the completion of the preliminary review. As part of a review, DOH may require the parties to the transaction (including parent and subsidiary companies of the parties) to submit additional documentation and information as necessary. Additionally, DOH may require that the parties to a transaction pay to DOH all actual, reasonable, and direct costs incurred by DOH in reviewing and evaluating the notice. Any information obtained by DOH pursuant to the cost and market impact review may be used by DOH in assessing certificate of need applications submitted by the parties. The proposed amendment to the Disclosure of Material Transactions Law in the FY 2026 Executive Budget does not propose a DOH approval process for material transactions, as initially sought in the FY 24 Executive Budget. However, it does give DOH the power to delay transaction closings until it receives all requested information from the parties.
Five-Year Transaction Reporting Requirement
The proposed amendment would add an annual reporting requirement for five years following the transaction’s closing. Each year on the anniversary of the transaction’s closing, the parties to the material transaction would need to provide a report to DOH so that DOH can assess the impact of the transaction on cost, quality, access, health equity, and competition. In addition, DOH may require any parents or subsidiaries of the parties to the material transaction to submit to DOH within 21 days upon request information needed for DOH to assess the impact of the transaction on cost, quality, access, health equity, and competition.
Implications
The proposed amendment indicates the DOH’s desire to heavily regulate and increase its oversight over health care transactions in New York. Including a cost and market impact review signals that DOH may be trying to move toward a more comprehensive review and approval process similar to the framework implemented in Massachusetts in 2012. For providers and other entities who are currently party to a transaction, or contemplating entering into such a transaction, that would be subject to the Disclosure of Material Transactions Law, it is important to note that these proposed amendments may significantly lengthen the timeline of your transaction. In this case, it may behoove such providers and others to proceed with such transactions sooner rather than later.
We will continue to monitor and report on this proposal and other state legislative efforts to broaden the scope of government review of health care transactions.
Trump Administration Names New Head of White House Pandemic Response Office
The Trump administration has named Gerald Parker to lead the White House Office of Pandemic Preparedness and Response Policy. Parker is a veterinarian and has served in the Departments of Health & Human Services, Homeland Security, and Defense.
Most recently, Parker served as the associate dean for Global One Health at Texas A&M’s College of Veterinary Medicine and Biomedical Sciences. In this role, he advised lawmakers on the U.S. bird flu outbreak that has sickened at least 66 people.
Congress established the White House Office of Preparedness and Response Policy in 2022 as the Covid-19 pandemic began to abate. The office advises the President on pandemic preparedness and response policy, drives interagency strategic coordination and communication in preparation for and response to biological threats, and promotes and supports the development of relevant expertise and capabilities to ensure the U.S. can quickly detect, identify, and respond to such threats.
Recent Federal OSHA Workplace Violence Case Provides a Road Map on General Duty Clause in Workplace Violence Cases
On October 25, 2021, a customer named Jacob Bergquist, with a history of violating the Boise Towne Square Mall’s firearms ban, opened fire at the mall. The shooting in the Idaho mall led to the deaths of a Professional Security Consultants, Inc. (PSC) security officer and a mall patron, with several others injured.
This tragic event prompted the federal Occupational Safety and Health Administration (OSHA) to issue a citation against PSC under the General Duty Clause of the Occupational Safety and Health Act (OSH Act), alleging that the company failed to protect its employees from recognized workplace violence hazards. Specifically, OSHA alleged that the hazard arose when PSC officers were enforcing the mall’s code of conduct provision that prohibited firearms on the premises.
After a trial before an administrative law judge (ALJ or court) of the Occupational Safety and Health Review Commission (OSHRC or Commission), the judge found for the employer and vacated the citation. The decision is notable as many states across the country draft workplace violence prevention legislation, and states like California implement further workplace violence regulations.
Quick Hits
On December 26, 2024, an OSHRC ALJ issued a decision vacating an OSHA citation alleging that a private security company, whose mall security officer was shot and killed after approaching an armed patron, had committed a serious violation of the OSH Act’s General Duty Clause by failing to implement sufficient safeguards to protect its security officers from a recognized workplace hazard.
The ALJ determined that the specific hazard cited—the shooter—was not legally cognizable under OSHA standards because the hazard was “idiosyncratic in nature” and “unforeseeable.” also found that the company had implemented adequate policies and training to mitigate the risk posed by the general hazard of workplace violence.
The record established that the security company’s training and policies were clear and specific in instructing mall security officers on how to handle workplace violence hazards.
Since OSHA has not promulgated any workplace violence–specific standards, any citations (including the one against PSC) must be cited under the General Duty Clause. The citation focused on PSC’s alleged failure to protect its security officers from the specific hazard posed by the shooter. However, the difficulty in identifying workplace violence hazards was demonstrated by OSHA’s ongoing struggle throughout the trial to clearly articulate the “recognized hazard” to which PSC had allegedly exposed its employees.
The ambiguity of the citation was tackled head-on by the court, which noted in its decision and order that “the Secretary’s cited hazardous condition ha[d] been unclear in this case.” The court pointed out that OSHA initially identified the hazard as the risk of physical assault posed to PSC security officers by “approaching and engaging with an armed repeat offender of the [mall’s] firearms prohibition,” such as Bergquist (or someone like him), who had shown previous warning signs of violence. As a result, OSHA argued, PSC had not taken adequate measures to mitigate the risk, thereby violating the General Duty Clause of the OSH Act. Ultimately, the court concluded that OSHA’s cited hazard was Bergquist, the individual. However, the court also analyzed the general hazard of workplace violence.
In response to the citation, PSC contended that the hazard posed by an unpredictable mass shooter was beyond the scope of the OSH Act. The company argued that OSHA had failed to meet its burden of proof, as the specific hazard cited was idiosyncratic and unforeseeable. At trial, PSC highlighted its existing policies and training programs designed to address workplace violence, including conflict resolution, use of force, and active shooter training. The court noted that “PSC argued that the unpredictable violent acts of a third-party mall customer committing a mass public shooting were hazards beyond the scope of the OSH Act generally and the General Duty Clause specifically.”
Ultimately, the court used the framework outlined in Integra Health Management, Inc., a 2019 decision where the Commission concluded that in cases of workplace violence cited under the General Duty Clause, the secretary of labor “must establish a ‘direct nexus’ between the work being performed by the employer’s employees and the alleged risk of workplace violence.” The court highlighted the Commission’s finding in Integra that “interactions with the general public may not satisfy the direct nexus test.” Using this framework, the court found that the specific hazard cited by OSHA—Bergquist—was not legally cognizable under OSHA standards. The court determined that the hazard was too “idiosyncratic” and “unforeseeable” to be addressed under the General Duty Clause. This was supported by testimony received during the trial from a behavioral threat assessment expert, who noted that Bergquist’s behavior on the day of the shooting would have been unforeseeable because it “was a spontaneous, impulsive, and emotionally based decision to commit violence.”
Additionally, the court considered the more general hazard of workplace violence and found that PSC had implemented adequate policies and training to mitigate such risks.
“Although an armed-patron-turned-murderer’s motives may be idiosyncratic and beyond PSC’s control,” the court noted, “PSC can control how and when its employees make contact with armed patrons to avoid workplace violence.”
In support of that control, the court looked to PSC’s numerous policies and procedures aimed at avoiding workplace violence. Specifically, the court looked to PSC’s written policy on interacting with armed patrons, which prohibited approach if a patron was exhibiting suspicious behavior or appeared to be intoxicated. There were also guidelines on what to do if an armed patron became confrontational or refused to comply with a security officer’s directive.
Unlike OSHA’s struggles with plainly stating the recognized hazard serving as the basis for its citation, PSC’s training and policies were clear and specific in arming PSC security officers with information and safety protocols to handle workplace violence hazards.
Conclusion
This OSHRC decision highlights the complexities and challenges of addressing workplace violence hazards, particularly those posed in public spaces like malls or shopping centers. The employer’s safety policies, training, and best practices, along with effective trial testimony, helped defeat the citation at the trial.