This Week in 340B: June 3 – 9, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation. Get more details on these 340B cases and all other material 340B cases pending in federal and state courts with the 340B Litigation Tracker.
Issues at Stake: Rebate Model; Contract Pharmacy; HRSA Audit Process; Other
In one case against the government related to rebate models, the intervenor defendants filed their reply.
In one case against the government related to rebate models, the plaintiff filed an emergency motion to consolidate and expedite.
In one contract pharmacy case, amici filed an amicus curiae brief in support of defendants’ motion to dismiss.
In a case by a covered entity challenging the government’s decision to allow a manufacturer’s audit, the drug manufacturer filed a motion for leave to file an amicus brief.
In four cases challenging state laws in Tennessee and Utah governing contract pharmacy arrangements:
Tennessee: A group of amici filed an amicus curiae brief in support of the defendant’s opposition to plaintiff’s motion for preliminary injunction.
Utah: The plaintiff in one case filed a motion for preliminary injunction and in two other cases, two separate groups of amici filed amicus curiae briefs.
A 340B covered entity filed two separate complaints against two different insurance companies alleging breach of contract.
HealthBench: Advancing the Standard for Evaluating AI in Health Care
The Evolution of Health Care AI Benchmarking
Artificial Intelligence (AI) foundation models have demonstrated impressive performance on medical knowledge tests in recent years, with developers proudly announcing their systems had “passed” or even “outperformed” physicians on standardized medical licensing exams. Headlines touted AI systems achieving scores of 90% or higher on the United States Medical Licensing Examination (USMLE) and similar assessments. However, these multiple-choice evaluations presented a fundamentally misleading picture of AI readiness for health care applications. As we previously noted in our analysis of AI/ML growth in medicine, a significant gap remains between theoretical capabilities demonstrated in controlled environments and practical deployment in clinical settings.
These early benchmarks—predominantly structured as multiple-choice exams or narrow clinical questions—failed to capture how physicians actually practice medicine. Real-world medical practice involves nuanced conversations, contextual decision-making, appropriate hedging in the face of uncertainty, and patient-specific considerations that extend far beyond selecting the correct answer from a predefined list. The gap between benchmark performance and clinical reality remains largely unexamined.
HealthBench—an open-source benchmark developed by OpenAI—represents a significant advancement in addressing this disconnect, designed to be meaningful, trustworthy, and unsaturated. Unlike previous evaluation standards, HealthBench measures model performance across realistic health care conversations, providing a comprehensive assessment of both capabilities and safety guardrails that better align with the way physicians actually practice medicine.
The Purpose of Rigorous Benchmarking
Robust benchmarking serves several critical purposes in health care AI development. It sets shared standards for the AI research community to incentivize progress toward models that deliver real-world benefits. It provides objective evidence of model capabilities and limitations to health care professionals and institutions that may employ such models. It helps identify potential risks before deployment in patient care settings. It establishes baselines for regulatory review and compliance, and perhaps most importantly, it evaluates models against authentic clinical reasoning rather than simply measuring pattern recognition or information retrieval. As AI systems become increasingly integrated into health care workflows, these benchmarks become essential tools for ensuring that innovation advances alongside trustworthiness, with evaluations of safety and reliability that reflect the complexity of real clinical practice.
HealthBench: A Comprehensive Evaluation Framework
HealthBench consists of 5,000 multi-turn conversations between a model and either an individual user or a health care professional. Responses are evaluated using conversation-specific rubrics created by physicians spanning 48,562 unique criteria across seven themes: emergency referrals, context-seeking, global health, health data tasks, expertise-tailored communication, responding under uncertainty, and response depth. This multidimensional approach allows for nuanced evaluation across five behavioral axes: accuracy, completeness, context awareness, communication quality, and instruction following.
By focusing on conversational dynamics and open-ended responses, HealthBench challenges AI systems in ways that mirror actual clinical encounters rather than artificial testing environments—revealing substantial gaps even in frontier models and providing meaningful differentiation between systems that might have scored similarly on traditional multiple-choice assessments.
Physician-Validated Methodology
Developed in collaboration with 262 physicians across 26 specialties with practice experience in 60 countries, HealthBench grounds its assessment in real clinical expertise. These physicians contributed to defining evaluation criteria, writing rubrics, and validating model grading against human judgment. This physician-led approach aimed to develop benchmarks that reflect real-world clinical considerations and maintain a high standard of medical accuracy.
Notably, when physicians were asked to write responses to HealthBench conversations without AI assistance, their performance was weaker than that of the most advanced models, though physicians could improve responses from older models. This suggests that HealthBench’s evaluation approach captures dimensions of performance that go beyond memorized knowledge and may better reflect the nuances of human interactions, communication, and reasoning required in clinical practice.
Behavioral Health Law Ledger | June 2025
The June 2025 issue of Greenberg Traurig’s quarterly Behavioral Health Law Ledger explores two behavioral health legal developments: the Trump administration’s pause on enforcement of a Final Rule intended to strengthen equitable coverage between mental and physical health benefits; and a partnership between the NIH and CMS aimed at researching and providing data on the root causes of autism.
Trump Administration Pauses Enforcement of Mental Health Parity Final Rule
As previously reported in the Ledger, in September 2024, the U.S. Departments of Labor, Treasury, and Health and Human Services (the Departments) sought to strengthen the requirements under the 2008 Mental Health Parity and Addiction Equity Act (MHPAEA), which mandates equitable coverage by health benefit plans between mental health benefits and physical health benefits. The Departments co-released the Final Rule on the Requirements Related to the Mental Health Parity and Addiction Equity Act (the Final Rule), which required health plans and health insurers to reevaluate the impact of nonquantitative treatment limitations (NQTLs) on access to mental health or substance use disorder (MH/SUD) benefits relative to comparable availabilities of medical and surgical benefits, effective Jan. 1, 2025. NQTLs are non-numerical limits of benefits and include mechanisms such as medical management techniques and prior authorization requirements. On an operational level, the Final Rule intended to close loopholes in MHPAEA that health insurers and health plans have used to deny patients’ covered MH/SUD treatments.
However, the Trump administration recently stated in a court filing that it does not intend to enforce a key regulation on mental health parity while it considers next steps, which could include modifying or rescinding the Final Rule in its entirety.
In January 2025, the ERISA Industry Committee (ERIC), an organization that represents large employers that provide benefits, including health plan benefits, filed a lawsuit in the U.S. District Court for the District of Columbia against the Departments challenging the Final Rule on several grounds, including that the Departments exceeded their authorities in enacting the Final Rule, and asserting that the Final Rule’s provisions are arbitrary and capricious and contrary to law.
Rather than defend the Department’s rulemaking authority, the Department of Justice (DOJ) filed a Motion for Abeyance, seeking to stay the litigation while the Departments “reconsider the [Final] Rule at issue in this litigation, including whether to issue a notice of proposed rulemaking rescinding or modifying the regulation.” The DOJ’s motion goes on to state that “the Departments do not intend to enforce parts of the [Final Rule],” thereby deeming abeyance of the litigation pending the Department’s reconsideration process appropriate. The court granted the DOJ’s motion and ordered the parties to the litigation to file a joint status report Aug. 7, 2025, and every 90 days thereafter to report on the Department’s reconsideration of the Final Rule at issue in the pending litigation. The Departments subsequently issued a non-enforcement policy statement May 15, 2025, further stating that “[t]he Departments will not enforce the 2024 Final Rule or otherwise pursue enforcement actions, based on a failure to comply that occurs prior to a final decision in the [ERIC] litigation, plus an additional 18 months.”
CMS Announces Data Bank Dedicated to Researching Autism
On May 7, 2025, the Centers for Medicare & Medicaid Services (CMS) announced a new partnership with the National Institutes of Health (NIH) to build a data bank aimed at researching the root causes of autism and providing public transparency.
Although much of the specifics are yet to be unveiled, this pilot research program will begin with CMS and NIH establishing a data use agreement under CMS’ Research Data Disclosure Program focused on Medicare and Medicaid beneficiaries with autism spectrum disorder (ASD) diagnoses. Researchers then intend to study ASD diagnosis trends over time, as well as studying health outcomes connected to specific medical and behavioral intervention strategies and techniques. The database will also be used to study access to care and care disparities demographically and geographically, as well as ASD’s “economic burden on families and health care systems.”
NIH Director Dr. Jay Bhattacharya said in the announcement of the initiative that “[l]inking CMS claims data with a secure real-world NIH data platform…will unlock landmark research into the complex factors that drive autism and chronic disease—ultimately delivering superior health outcomes to the Americans we serve.” CMS Administrator Dr. Mehmet Oz added, “This joint effort aligns with our shared goal of fostering innovation to improve American’s lives while safeguarding patient privacy.”
CMS Doubles Down on Medicare Advantage Recoupment: Announces Aggressive RADV Strategy to Reclaim Billions
On May 21, 2025, the Centers for Medicare & Medicaid Services (CMS) announced[1] an aggressive plan (Plan) to expand its efforts to address fraud, waste, and abuse in Medicare Advantage (MA).
By engaging with enhanced technology and significantly expanding its workforce, CMS states that it intends to audit every eligible MA contract for Payment Years (PY) 2018 through 2024 and recover on all prior audits conducted by CMS and the Office of Inspector General (OIG). Historically, CMS has only selected a small subset of contracts (approximately sixty) for each PY audited. CMS is currently completing PY2018 Risk Adjustment Data Validation (RADV) audit but has yet to issue findings or payment recovery demands for any audit completed. CMS has similarly not taken material action regarding the so called “OIG audits”.
Background
CMS Audit Methodology. CMS officially launched its RADV audit program in 2008. The audit methodology employed by CMS has evolved over the years through various rule making efforts and sub-regulatory issuances. CMS’s proposed rule in 2010 set forth an audit methodology to review a risk stratified 201-member sample, where all risk adjusted Hierarchical Condition Categories (HCCs) for each member would be reviewed and checked for errors.[2] Finalizing this methodology in 2012[3], CMS then conducted audits on PY2012 and 2013 utilizing this approach. The presumption was that CMS would extrapolate and recoup such amounts. However, CMS did not issue final agency actions requiring substantial repayments or extrapolation.
In 2018, CMS proposed certain revisions to its RADV rule including adjustments to its methodology and payment calculation.[4] As to methodology, CMS suggested a shift to focus on “sub-cohorts” of members. While the industry waited for CMS to finalize the proposed rule, CMS rolled out audits for PY2014 and 2015 that focused on specific disease cohorts, diabetes and chronic kidney disease respectively. This cohort focused methodology was a significant departure from the macro audit universe of “all HCCs” envisioned by the earlier audits. CMS finalized its proposed rule in February of 2023, but chose not to align with any one specific methodology, stating it had discretion to apply the methodology of choice for identifying eligible contracts and determining audit focus.[5] For the most recent round of RADV audits, on PY2018, CMS focused on a new sub-cohorts of members, either (1) Version A – enrollees ranked in the top decile of one or both of CMS’s “improper payment predication models” or (2) Version B – enrollees who had all of their HCCs submitted by the MA Organization (MAO) derived from a linked or unlinked chart review. Below are the methodologies applied over the years. Of note, CMS has not yet conducted RADV audits on PYs 2009 -2010, PY2016 and PYs 2018-2024 DOS. MAOs have been subject to CMS’s ping pong and ever shifting sands regarding its RADV audits for more than a decade now without a reliable understanding of how CMS intends to approach, implement and ultimately collect on RADV.
Payment Years
Audit Methodology
2007
Risk Stratified 201 Member Sample
2011
Risk Stratified 201 Member Sample
2012
Risk Stratified 201 Member Sample
2013
Risk Stratified 201 Member Sample
2014
Disease Cohort
2015
Disease Cohort
2017
Version A – Improper Payment Model
Version B – Chart Review
OIG Audit Methodology. Congress tasked OIG with the oversight of agency programs and operations, including CMS and its Medicare Advantage Program.[6] OIG has interpreted this responsibility as granting them the authority to audit MAO-specific risk adjustment data. After an early effort to audit 2007 DOS using an analogous methodology to CMS’s original 201-risk stratified member sample, OIG more recently shifted to a targeted audit of what it deems as “high-risk” diagnosis codes. For example, OIG has focused on acute myocardial infarction (heart attack) or cerebral vascular accident (stroke) diagnoses that originate from an office visit without a corresponding hospital visit and various cancer diagnoses without specific contemporaneous treatment identified in claims. Based on publicly available information, OIG has completed over 30 audits on MA contracts for 2015 through 2018 DOS.[7]
Audit Recoveries. CMS has not yet finalized or recovered on any CMS RADV or OIG audit. Some delay may be attributed to the fact that CMS recently finalized payment recovery related rules in 2023[8], in which CMS purports to grant itself the broad discretionary authority to extrapolate error rates on both CMS and OIG audits for PY 2018 and beyond. In 2024[9], it finalized a rule establishing clarity on the timing of the audit appeals process related to coding determinations and payment error calculations.
Current Plan and Potential Challenges
CMS’s current Plan is not only focused on addressing the backlog of audits, but on audit expansion and recovery efforts from prior audits.
Backlog of Audits. Audits for DOS 2018 through 2024 DOS remain outstanding. Given prior notice, it does not appear that CMS will review any PYs prior to 2018.[10] To address the backlog, CMS outlined certain key elements of the Plan – to utilize “enhanced technology” to review medical records and expand its workforce of medical coders. However, as the risk adjustment industry knows, the audit process is much more complex than a simple date of service (DOS) medical record review, as annual records for a given member are determinative, not necessarily a single encounter. Moreover, given the complexities inherent in a macro-population based payment, to initiate a RADV audit, CMS must: (1) ensure the data universe is accurate; (2) identify a sampling frame and sample; (3) conduct the audit through medical record review; and (4) calculate a payment error amount that reflects a complex series of rates and factors that vary from plan to plan.
Data Accuracy. To ensure the data is accurate, CMS must account for all code corrections submitted by an MAO over the years through a reconciliation process. Unlike the submission deadline for adding additional codes, MAOs can submit delete files to CMS for diagnosis codes it has identified as not validated at any time. CMS does not act with immediacy in recouping these codes. By way of example, for 2020 DOS codes, an MAO may have sent in corrections (i.e. deletes) to CMS in 2022 and again in 2023, through the delete / overpayment process. However, to date, CMS has not recouped these amounts. CMS typically processes this data and reconciles any associated payment adjustments one time before the roll out of a new PY RADV audit, not each time there is a delete submitted. CMS will typically notify MAOs of the intent to “re-run” the relevant PY, providing a deadline for the MAO to submit any deletes for purposes of data accuracy and payment adjustment. CMS has issued two such notices in the last year regarding 2017 and 2018 DOS for PYs 2018 and 2019.[11]
Based on what many speculate are real-world resources constraints, CMS has slowly and methodically reconciled about one PY each year. Assuming resources remain the same, it would be a Herculean task to process corrections and reconcile payment for six years of deletes before September. It appears CMS took this into consideration with its most recent HPMS memo, issued on May 30, 2025, where it announced the deadlines for RA data submissions only for the purposes of “RADV Sampling” for PY 2020 through 2024.[12] CMS made clear that it would not be making related payment adjustments at this time based on deletes submitted by the deadline and, instead, plans to issue additional notices for PY reruns at a later time. Submission deadlines for RADV sampling purposes are outlined below.
Payment Year
RA Delete Submission Deadline for RADV Sampling
2020
June 16, 2025
2021
June 23, 2025
2022
June 30, 2025
2023
July 8, 2025
2024
July 15, 2025
Construction of Sample/Sampling Frame. Once the data is reconciled to ensure diagnoses already deleted are removed from any potential RADV universe, CMS will determine the sampling frame and resultant sample which will depend on audit focus, and now, on audit size. Recently, CMS has focused on a 30/35-member sample, with an even higher number of HCCs audited depending on the audit methodology imposed. While not stated clearly, CMS noted in its Plan to increase “from auditing 35 records per health plan per year to between 35 and 200 records per health plan per year…based on the size of the health plan” [sic]. We assume CMS meant to say “members” or “diagnosis codes”, instead of “health records”. As any MAO in the industry who has participated in prior RADV audits knows, a plan typically submits between 3-5 medical records for every HCC audited, this can result in 100s of records for CMS to review for a single 30-member sample. CMS might be severely underestimating the work it will incur if sampling 200 members and related HCCs per year for 6 years. Regardless, it does appear that CMS intends to create more statistically appropriate samples based on plan size.
Medical Record Review. Two key elements, as noted above, spoke specifically to medical record review with enhanced technology and an increase in coder specific workforce. The technology mentioned by CMS appears to be an AI-driven program that will quickly identify “unsupported codes” and flag where diagnoses are supported. While these efficiencies may be helpful, without appropriate manual oversight, the program may not flag supporting documentation that a coder might have deemed acceptable for RADV purposes.
CMS also intends to increase its coder workforce by 50x (from 40 to over 2,000 coders) in the next three months. To achieve this seems near impossible. Unless CMS intends to significantly expedite the government contracting process with external vendors, it is going to be difficult for CMS to recruit 2,000 coders who are appropriately trained in risk adjustment medical documentation, in an industry already plagued by shortages, by September of this year. Any apparent quick fix may lead to numerous appeals regarding coding determinations depending on the reliability of the applied technology and the level of expertise of coders hired by CMS.
Audit Expansion. CMS intends to not only expand the audit sample, depending on size of the plan, but also plans to audit all eligible MA plans, approximately 550 contracts, for each year, again assisted with the enhanced technology CMS has put in place. Historically, all MAOs have participated in the annual national RADV audits where CMS audits the HCCs associated with 1-2 members for each contract. For the contract-level RADVs, only a sample of contracts have been selected, typically landing somewhere around 60 MAO contracts. Not only is every MAO going to receive an audit notice but will be subject to an audit for each PY between 2019 and 2024 with a sample between 30 and 200 members.
In the past, CMS has provided plans approximately five months to collect, review and submit medical records for the 30-member sample for one PY. CMS’s commitment to “complete all remaining RADV audits for PY 2018 to PY 2024 by early 2026”, is going to place significant strain not only on CMS but more importantly on the MAOs. An MAO, typically subject to 30-member sample for one PY, could now be subject to 1200-member sample (200 members x 6 years) in that same 5-month period.
Recovery Efforts. CMS also noted in its Plan that it intends to recover uncollected payments identified in past audits, even collaborating with OIG to do so for its audit findings. To initiate this process, CMS must first issue its results on all prior CMS RADV audits, which they have yet to do. Once issued, MAOs will have an opportunity to appeal either or both the coding determinations and payment calculation. The appeals process alone could take months to years, depending on how quickly CMS responds, and may still not lead to a final satisfactory resolution. That combined with a lack of transparency on audit methodology and the imposition of extrapolation on PY 2018 forward will lead to disputes that will need to be resolved through litigation. These are all roadblocks to CMS recovering in any expedited manner on past audits.
While OIG has issued findings as to coding determinations and payment calculations, CMS will still need to issue a final agency action to the MAOs regarding the results. Many MAOs continue to disagree with OIG’s coding methodology and, assuming similar appeal rights are granted, will be appealing both the coding determinations and payment calculations.[13] Given the chance that CMS may also extrapolate OIG findings for PY2018 and beyond, this dispute will likely also lead to litigation.
RADV Preparedness – What Should MAOs Do
While CMS’s ability to scale its audit operations so dramatically remains to be seen, the agency’s strategic intent under the current administration is clear: aggressive enforcement to find and deter MA fraud, waste, and abuse. Even if CMS does not move with the speed and ferocity it is promising, MAOs need to consider how best to prepare its organization for these impending audits, particularly if the MAO has not been subject to any recent RADV audits.
Build a RADV Team: Internal resources, external vendors and counsel should be considered now. Although every MAO approaches RADV response differently, some opting to proceed using internal resources, others offloading much of the laboring ore to attorneys and consultants, a plan should be in place now. MAOs should also consider ensuring that their rights are preserved for challenges to RADV findings, or possible litigation.
Comply with Submission Deadlines: CMS issued submission deadlines for the purposes of creating the RADV Sampling for PYs 2019 through 2024. To the extent the MAO is aware of any known unsupported diagnosis codes, it should submit these codes to CMS by the submission deadline. If the MAO misses the deadline, these codes may be included in the sampling frame and sample, which could result in a greater financial impact to the MAO than just the delete.
Review Internal Processes and Identify Gaps: A response to RADV audits will require engagement with various departments such as data analytics, provider engagement, record retrieval, coding, submissions, actuarial services, etc. Depending on the size of the plan, MAOs will need to consider if they have the resources and operations to effectively respond to the proposed CMS audits in a timely fashion. MAOs must also keep in mind the intended completion of these audit efforts aligns with submission deadlines for 2024 DOS and all related efforts to meet that important deadline.
Resurrect Prior CMS and OIG RADV Audits: Although unclear as to when CMS will start to issue final agency actions for prior audits, it is not beyond CMS to issue them simultaneously with audit notices. MAOs should resurrect and refamiliarize itself with either its internal findings on the CMS RADV audits and the internal and OIG findings and payment calculations for OIG audits. MAOs will have 60 days to appeal coding determinations or payment calculations. If appealing a coding determination, the MAO must wait until that is resolved before appealing the new payment calculation based on the outcome of the prior appeal.
Even if CMS does not move as swiftly as planned, it is clear all MAOs will be dealing with several audits over the next few years either through audit response, the administrative appeals process or in litigation, as CMS makes every effort to catch up and finally collect on recoveries for the government’s efforts.
ENDNOTES
[1] See Press Release, Ctrs. for Medicare & Medicaid Servs., CMS Rolls Out Aggressive Strategy to Enhance and Accelerate Medicare Advantage Audits (May 21, 2025).
[2] See Ctrs. for Medicare & Medicaid Servs., Request for Comment: RADV Sampling & Payment Error Calculation Methodology (Dec. 20, 2010).
[3] See Ctrs. for Medicare & Medicaid Servs (February 24, 2012), Notice of Final Payment Error Calculation Methodology for Part C Medicare Advantage Risk Adjustment Data Validation Contract-Level Audits.
[4] 83 FR 55039.
[5] 88 FR 6644.
[6] Inspector General Act of 1978, as amended, (5 U.S.C. App. 3).
[7] See U.S. Dep’t of Health & Human Servs., Office of Inspector Gen., Medicare Advantage Risk-Adjustment Data – Targeted Review of Documentation Supporting Specific Diagnosis Codes, W-00-20-35079 (2025).
[8] 88 FR 6643.
[9] 88 FR 30448.
[10] See 88 FR 6643 (CMS will not extrapolate RADV audit findings for PYs 2011 through 2017).
[11] See Memo, Ctrs. for Medicare & Medicaid Servs, Rerun of Payment Year (PY) 2018 (August 29, 2024); Memo, Ctrs. for Medicare & Medicaid Servs, Medicare Advantage/Prescription Drug System (MARx) April 2025 Payment – INFORMATION (February 28, 2025).
[12] See Memo, Ctrs. for Medicare & Medicaid Servs., Deadlines for the Submission of Risk Adjustment Data for Risk Adjustment Data Validation Sampling (May 30, 2025).
[13] See 42 CFR 422.311(c).
Oregon Governor Signs S.B. 951, Representing the Nation’s Most Onerous Restriction on the Friendly PC Model
Over the past 3 years, as chronicled in several Proskauer alerts, an increasing number of states have sought to regulate physician practice management (“PPM”) and private equity transactions in the health care sector, including California, New York, Washington, and Illinois.
The regulation of health care transactions remains an evolving area of the law, drawing continued interest from state lawmakers and interest groups in a number of states.
Most recently, on June 9, 2025, Oregon Governor Tina Kotek signed S.B. 951 into law (“Oregon Law”), which imposes significant restrictions on the traditional PPM structure, pursuant to which a management services organization (“MSO”) enters into an exclusive and long-term management services arrangement (“MSA”) with a friendly physician-owned professional entity (“Friendly PC”). The Oregon Law is substantially similar to H.B. 4130, which was introduced and analyzed on this blog last year.
While other states have sought to regulate healthcare transactions primarily through transaction review mechanisms, Oregon’s Law takes a more aggressive approach by codifying direct restrictions on the corporate practice of medicine. The enactment of this law may prompt lawmakers in other states to adopt similar strategies—shifting from oversight of transactions to imposing substantive limitations on Friendly PC-MSO relationships.
The Oregon Law Contains a Number of Provisions That Target the PPM/Friendly PC Model
Subject to a few limited exceptions, the Oregon Law would materially impact the traditional PPM/Friendly PC model by strengthening and codifying new restrictions related to the corporate practice of medicine, largely contained in §1(2)(a) of the Oregon Law.
S.B. 951 §1(2)(a) Provision
Impact and Considerations
An MSO, and any shareholder, director, member, manager, officer or employee of an MSO, may not: (A) “own or control… a majority of shares” in a Friendly PC; (B) serve as a director, officer, employee or contractor of a Friendly PC; or (G) acquire or finance the acquisition of the majority of shares of a professional medical entity. See S.B. 951 § 1(2)(a)(A), (B), and (G).
The Oregon Law appears designed to restrict the use of nominee owners. The Oregon Law largely requires Friendly PC owners and practicing physicians to have an arms-length relationship with an MSO.
However, certain exceptions exist, including for physicians whose ownership in the MSO “is incidental and without relation to the individual’s compensation” with the MSO. See S.B. 951 § 1(3)(b).
An MSO, and any shareholder, director, member, manager, officer or employee of an MSO, may not enter into an agreement to control or restrict the sale or transfer of a Friendly PC’s interest or assets. See S.B. 951 § 1(2)(a)(D).
The Oregon Law will generally invalidate certain succession planning arrangements, such as Succession Agreements or Stock Transfer Restriction Agreements, which are currently disfavored in some states but some version of which are utilized in most Friendly PC structures. Section 1(2)(b) of the Oregon Law, however, sets forth limited conditions under which a Friendly PC may enter into a succession planning agreement. The conditions are for-cause conditions; for example, revocation of a Friendly PC owner’s medical license or upon the owner’s death.
Importantly, the Oregon Law permits a succession planning agreement to be triggered upon “the professional medical entity’s breach of a contract for management services” with an MSO. Although the Oregon Law does not permit succession planning conditions that are purely at the MSO’s discretion, the foregoing provision may provide MSOs, and their investors, some comfort.
An MSO, and any shareholder, director, member, manager, officer or employee of an MSO, may not exercise “de facto control” of over the administrative, business or clinical operations of a Friendly PC “in a manner that affects the professional medical entity’s clinical decision making or the nature or quality of medical care.” See S.B. 951 § 1(2)(a)(H). The Oregon Law explicitly defines several methods by which such loss of “control” might be actualized. These include, but are not limited to: determining staffing levels; advertising the PC under a name of an entity that is not the PC; controlling diagnostic coding decisions, determination of clinical standards, protocols; establishing policies for patient care and/or billing and collection; setting pricing for clinical services; and entering third-party contracts or payor arrangements.
These restrictions represent a significant departure from the latitude typically granted in dividing roles and responsibilities between the Friendly PC and MSO. For example, PPM/Friendly PC arrangements typically bifurcate non-clinical roles assumed by an MSO and the clinical roles assumed by the Friendly PC. The Oregon Law appears to make physician compensation and scheduling, terms that may typically be set with the consent or input of the MSO, the exclusive purview of the Friendly PC.
Certain MSOs Are Exempt from the Oregon Law’s Requirements
Notably, certain MSOs are exempt from the above requirements. For example, the restrictions do not apply to MSOs that are majority-controlled by the Friendly PC (See S.B. 951 § 1(3)(c)), MSOs that contract with telemedicine practices with no physical location in the state (See S.B. 951 § 1(4)(a)), hospital affiliates, behavioral health service providers or Program of All-Inclusive Care for the Elderly (“PACE”) organizations. See S.B. 951 § 1(3)(e).
The Oregon Law Includes a Blue Pencil Provision That Invalidates Non-Compliant MSA Terms
Last year’s proposed bill would have granted the Oregon Secretary of State the power to “administratively dissolve” a PC or limited liability company that violated the provisions of the bill. Such remedies, however, did not make their way into S.B. 951.
Instead, the Oregon Law, as enacted, contains a “blue pencil” provision that sets forth “a provision that authorizes or implements, or purports to authorize or implement, an act or practice that violates a prohibition set forth in subsection (2)(a) of this section is void and unenforceable.” See S.B. 951 § 1(5)(a).
The Oregon Law Imposes Restrictions on Non-Compete Agreements in the Healthcare Sector
Section 7 of the Oregon Law voids non-compete agreements that “restrict the practice of medicine” or the “practice of nursing.” See S.B. 951 § 7(2)(a). Although the Oregon Law contains certain exceptions, the exceptions appear designed to exclude non-competes utilized between an MSO and Friendly PC. For example, a non-compete may be entered into between a professional entity and a shareholder of the professional entity, provided that the professional entity “does not have a contract for management services with a management services organization.” See, e.g., S.B. 951 § 7(2)(b)(C)(i).
Effective Date and Applicability
The Oregon Law will take effect immediately, with the following effective dates for certain sections:
January 1, 2026: MSOs and Friendly PCs formed on or after the Oregon Law’s effective date will become subject to Section 1 of the Oregon Law, which contains the Friendly PC / MSO restrictions.
January 1, 2029: MSOs and Friendly PCs formed before the Oregon Law’s effective date will become subject to Section 1 of the Oregon Law, which contains the Friendly PC / MSO restrictions.
In addition, Sections 5, 7 and 8 of the Oregon Law (concerning restrictive covenants) will apply to “contracts that a person enters into or renews on and after the effective date [of the Oregon Law].” See S.B. 951 § 9. As such, although existing arrangements are grandfathered, contracts with evergreen or auto-renewal provisions may become subject to the new restrictions upon renewal.
Connecticut Governor Signs Bill Codifying the Right of Minors to Consent to Reproductive Health Care Services
On June 9, 2025, Connecticut Governor Ned Lamont signed into law Public Act No. 25-28, “An Act Concerning Access to Reproductive Health Care” (the Act). The Act codifies under Connecticut state law the ability of minors to access reproductive health care services without the need to obtain parental consent, including services related to pregnancy and pregnancy prevention. While minors were previously not explicitly prohibited from receiving such services without parental permission, state law was silent on the issue. The Act now provides an assurance to minors and to health care providers that minor patients in Connecticut are permitted to consent to certain reproductive health care services without the involvement of a parent or guardian.
The Act is effective as of its passage, and includes the following specific provisions:
Minor Consent for Reproductive Health Care
Individuals under the age of 18 in Connecticut may now give consent for services, examination, or treatment related to pregnancy and pregnancy prevention without the consent or notification of the minor’s parent or guardian. The services that the Act allows a minor to consent to without parental/guardian consent or notification are all services, examinations, or treatment related to pregnancy and pregnancy prevention, which include but are not limited to contraceptive counseling and services, prenatal care, and appropriate care and pain management during labor and delivery (including without limitation epidural administration). However, the Act expressly carves out and does not include an allowance for a minor to consent to sterilization thereunder.
Privacy Protections
The Act provides that if a minor patient consents to contraceptive or pregnancy-related care, physicians and other health care providers are prohibited from sharing information about such services with the minor’s parent or guardian without the minor patient’s express consent, including by sending a bill for the services to the parent or guardian. This privacy protection under the Act aligns with federal privacy regulations under HIPAA, which stipulate that where a minor patient is permitted by state law to consent to a health care service, health information related to such service cannot be disclosed to the minor’s parent or guardian without the patient’s authorization.
Provider Reporting Obligations Remain
The Act expressly states that it does not affect a physician’s or other health care provider’s reporting obligations under state law, such as mandatory reporting to the Connecticut Departments of Public Health or Children and Families.
No Parental Liability for Cost of Services
The Act further states that where a minor patient consents to reproductive health care under the Act, and the minor’s parent or guardian is not informed of the provision of such care, the parent or guardian will not be liable for the costs of such care.
Takeaways
The Act is likely to provide welcome clarity for health care providers and facilities in the state, as well as for minor patients, as to when minors are permitted to consent to treatment and services related to reproductive health care.
The Act also expands the circumstances recognized under Connecticut law in which a minor patient may consent to the receipt of certain treatment or services, which prior to the Act’s passage included without limitation treatment of sexually transmitted diseases, alcohol and drug treatment, HIV testing and HIV/AIDs treatment, abortion and abortion counseling, and outpatient mental health treatment if certain criteria are met.
Illinois Senate Bill 328 May Impact Foreign Corporations in Toxic Tort Cases
Amid the waning hours of its spring legislative session, the Illinois General Assembly passed a bill which, if the governor signs, would significantly expand Illinois courts’ jurisdictional reach to foreign corporations in toxic tort litigation.
Senate Bill 328’s New Rules of General Jurisdiction
Senate Bill 328 would amend Illinois statutes governing general personal jurisdiction and the transaction of business in the state. These amendments may impact foreign corporations doing business in Illinois.
For foreign corporations registered to transact business in Illinois, Senate Bill 328 would create a quid pro quo: In exchange for the benefits of doing business in Illinois, a foreign corporation that registers in Illinois and thus “obtains or continues to maintain the right to transact business in the State consents to the exercise of general jurisdiction by [Illinois] courts.” This consent occurs upon registering in Illinois or, for a company already registered, upon the next filing deadline for its annual report.
For foreign corporations not registered to transact business in Illinois, they are “deemed to have consented to general jurisdiction . . . to the same extent as if [they] were registered.” This consent begins when a foreign corporation begins transacting business in Illinois.
These changes would apply only to foreign corporations sued in actions alleging injury or illness resulting from exposure to a toxic substance when the court has specific, personal jurisdiction over at least one co-defendant. The Uniform Hazardous Substances Act of Illinois defines a “toxic” substance as “any substance (other than a radioactive substance) which has the capacity to produce bodily injury or illness to man through ingestion, inhalation, or absorption through any body surface.” 430 ILCS 35/2-5.
The Potential Reach of Senate Bill 328’s Amendments
Senate Bill 328 would expand Illinois courts’ jurisdiction over foreign corporations in toxic tort litigation. General jurisdiction is broad, potentially subjecting a foreign corporation to Illinois courts even for claims unrelated to its acts in Illinois. In Mallory v. Norfolk Southern Railway Co., 600 U.S. 122 (2023), the U.S. Supreme Court upheld the constitutionality of a similar consent-based jurisdiction statute enacted in Pennsylvania.
Understanding Senate Bill 328 proves especially important for corporations that distribute substances that the Uniform Hazardous Substances Act defines as toxic. A foreign corporation registered to do business in Illinois may be subjected to a lawsuit in Illinois, regardless of where the corporation is headquartered or domiciled.
Nevertheless, these amendments have limits. The amendments apply only to foreign corporations in actions alleging injury or illness resulting from exposure to a toxic substance. In addition, the amendments require the presence of a co-defendant subject to Illinois personal jurisdiction. In toxic tort cases, however, plaintiffs commonly sue multiple defendants, and national companies with branches and customers in many states face the possibility that these amendments may open the Illinois courthouse doors to a lawsuit. Consent to general jurisdiction also terminates depending on whether the foreign corporation is registered in Illinois. For foreign corporations registered in Illinois, their consent terminates only upon their formal withdrawal from the state. For foreign corporations not registered in Illinois, their consent begins upon transacting business in Illinois and remains effective for 180 days following the commission of every act transacting business in the state.
Despite these limits, Senate Bill 328 would expand personal jurisdiction for corporations dealing in toxic substances. It will be sent to Gov. Pritzker for signature. If he does not act within 60 days of receiving it, Senate Bill 328 will automatically become law.
Decree for the Promotion of Pharmaceutical Investment and the So-Called “Plant Requirement”
On June 2, 2025, the “DECREE to promote investment within the national territory to strengthen the development of the pharmaceutical industry and the production of health products, as well as the development of national scientific research” was published in the Official Gazette of the Federation.
This decree outlines new provisions applicable to consolidated public procurement procedures for medicines and medical devices, which will begin to be implemented in 2026 for deliveries in 2027.
The Decree aims to consolidate a strong and self-sufficient pharmaceutical industry by promoting national investment in the production of health products (medicines and medical devices) and fostering scientific research and the development of innovative products in the country.
In summary, the Decree establishes the following:
The Ministry of Health must promote the participation of companies with national investment in the production chain or those initiating the installation of related infrastructure (factories, laboratories, warehouses), as well as those conducting scientific research or innovation in health. In this regard, the Ministry of Health must issue the corresponding guidelines within 90 days following the publication of the decree.
COFEPRIS will implement measures to expedite procedures related to sanitary registrations, research protocols, import permits, and export certificates to facilitate national manufacturing.
In public procurement procedures for generic medicines, the points and percentage criterion will be applied, favoring those who demonstrate national investment in the production chain or scientific innovation activities.
A “Pharmaceutical Investment Promotion Committee” must be created, which will be formed of representatives from the Ministries of Health, Economy, and Anticorruption, and will be chaired by the Ministry of Health.
The committee’s objective is to analyze investment proposals, considering the estimated amount of public procurement, investment level, productive capacity, and degree of research in Mexico; it will also be responsible for facilitating dialogue with the industry.
Finally, the committee’s decisions on investments will be formalized in action coordination agreements between the government and interested companies, including production plants, laboratories, and scientific innovation initiatives.
Unlike the previous scheme in effect until 2008, when Article 168 of the Health Law Regulations required a manufacturing sanitary license in Mexico as a condition to obtain a marketing authorization, implying the presence of a production plant in the country, the new decree does not reestablish this “plant requirement” as an obligation to obtain a marketing authorization and eventually commercialize the medicines. However, it incorporates, adapts, and includes it in the Decree as a preferential criterion in public procurement procedures, so having a plant or investment in the national territory is not mandatory but provides advantages in public procurement procedures. It is important to note that this plant requirement established in Mexican regulation was repealed in 2008 due to a dispute arising from non-compliance with a free trade agreement between Mexico and a neighboring Central American country.
Although this measure aims to encourage national investment and strengthen the pharmaceutical industry, it may generate legal uncertainty and is inherently discriminatory and restrictive. The lack of specific and targeted guidelines contradicts the principles of fair competition, equality, and non-discrimination established in the Constitution and international treaties.
Therefore, we consider that the Agreement is subject to challenge upon its entry into force, as it contravenes various constitutional provisions, as well as several provisions and international treaties signed with Mexico’s trading partners, which include the principle of national treatment in these international instruments.
Thus, the guidelines issued by the Ministry of Health to ensure transparency, objectivity, and proportionality will be essential to avoid creating indirect barriers that affect the legality and effectiveness of public procurement processes in the health sector. We will remain vigilant.
Measles in 2025: Prevention, Prophylaxis, and Workplace Policies
Measles has seen a resurgence in the United States in 2025, with significant outbreaks reported, particularly in Texas and New Mexico. As of June 3, 2025, the Johns Hopkins Bloomberg School of Public Health’s U.S. Measles Tracker reported there were 1,151 confirmed cases of measles in the United States. Most cases are among unvaccinated children and adolescents, and there have been multiple deaths associated with the outbreaks. The majority of outbreaks have occurred in close-knit communities with low vaccination coverage, and frequent travel among these communities has facilitated the spread of the virus. Despite these outbreaks, the overall risk for widespread measles transmission in the United States remains low due to generally high immunization rates and robust public health response systems.
Quick Hits
The CDC recommends that employers immediately notify health authorities if an employee is exposed to measles.
The CDC also recommends employers exclude exposed employees without immunity from the workplace from day five to day twenty-one after exposure.
Employers may want to support exposed employees with leave options and ensure thorough cleaning of affected areas.
Measles is highly contagious, transmitted via airborne droplets, and can remain infectious in the air and on surfaces for up to two hours after an infected person leaves an area. Infected individuals are contagious from four days before to four days after the onset of rash. Complications can be severe, including pneumonia, encephalitis, and death, especially in young children and immunocompromised individuals.
CDC Guidance Related to Measles in the General Population
The Centers for Disease Control and Prevention (CDC) recently reported that it received sixty-two reports of people with measles traveling on airplanes since the beginning of the year. It investigated fifty cases of travelers flying into the United States or domestically and found “only one situation” in which measles appeared to have been transmitted during air travel. While droplet precautions, much as was the case with COVID-19, can prevent the spread and transmission of measles, it does not appear that there is significant concern with air travel.
The CDC offers a number of recommendations related to measles in the general population, including:
Vaccination: The CDC emphasizes that the measles-mumps-rubella (MMR) vaccine is the most effective tool for preventing measles and its complications. All U.S. residents, especially those planning international travel, should be up to date on their MMR vaccinations. Two doses of MMR vaccine provide about 97 percent protection.
Clinical Vigilance: Healthcare providers should be alert for febrile rash illnesses that could be measles, especially in unvaccinated individuals or those with recent travel to outbreak areas.
Isolation and Infection Control: Suspected measles cases should be immediately isolated, ideally in an airborne infection isolation room (AIIR). Healthcare personnel should use appropriate respiratory protection (e.g., N95 respirators) when caring for suspected or confirmed measles patients.
Reporting: Measles is a nationally notifiable disease. Suspected or confirmed cases must be reported to local and state health departments within twenty-four hours.
Post-Exposure Prophylaxis: For individuals exposed to measles who lack evidence of immunity, post-exposure prophylaxis with MMR vaccine (within seventy-two hours) or immunoglobulin (within six days) should be considered.
Supportive Care: There is no specific antiviral treatment for measles; care is supportive, addressing symptoms and complications.
Handling Measles in the Workplace
Employers contemplating how to handle measles in the workplace or exposures of employees to measles, might consider taking the following actions:
Coordination With Health Authorities
As soon as an employer learns that an employee without evidence of immunity (i.e., no documentation of two doses of MMR vaccine, no laboratory evidence of immunity, no history of measles, or not born before 1957) has been exposed to measles, that employer may want to notify its local or state public health department. Public health professionals will provide guidance on next steps, help assess the risk and may initiate contact tracing and broader community protection measures.
Exposed Employees and the Workplace
Exposed employees without presumptive evidence of immunity would likely need to be excluded from the workplace from the fifth day after their first exposure through the twenty-first day after their last exposure, regardless of whether they receive post-exposure prophylaxis. This is to prevent potential transmission during the incubation period, as measles is highly contagious even before symptoms appear.
Post-Exposure Prophylaxis
MMR Vaccine: If the exposure was within the last seventy-two hours, the MMR vaccine can function as post-exposure prophylaxis. This can help prevent or lessen the severity of illness if administered promptly. Exposed employees can consult with their physicians or licensed healthcare providers to determine whether this approach is appropriate.
Immune Globulin: If more than seventy-two hours but fewer than six days have passed since exposure, immune globulin may be administered to reduce the risk or severity of disease, especially for high-risk individuals (e.g., pregnant women, immunocompromised persons, infants). Again, the employees can consult with their physicians or other licensed healthcare providers to determine if this is the right treatment.
Healthcare Workers: Exposed healthcare personnel without evidence of immunity should not return to work even if they receive the MMR vaccine. They should be excluded from work from day five after the first exposure through day twenty-one after the last exposure.
Monitor for Symptoms
The exposed employee will want to monitor for symptoms of measles (fever, cough, runny nose, red/watery eyes, rash) for at least twenty-one days after the last exposure. If symptoms develop, they can contact their healthcare providers before visiting any medical facility to prevent further spread.
Confidentiality and Communication
Employers may want to carefully determine to whom they can disclose the identity of exposed employees. The Americans with Disabilities Act and other laws determine whether employers must keep medical information confidential.
Employers with an exposed employee may notify other employees that a potential exposure has occurred (without identifying the individual) and provide information about measles symptoms, transmission, and the importance of vaccination. Employers can also encourage all employees to verify their immunization status and seek vaccination if needed.
Workplace Precautions and Support
Employees can consider offering leave options, such as leave under their paid sick leave policies or as available under the Family and Medical Leave Act (FMLA), as applicable.
Employers may need to ensure thorough cleaning and disinfection of areas where the exposed employee worked, as the measles virus can remain infectious in the air and on surfaces for up to two hours.
Review and Update Policies
Employers may want to ensure that workplace policies are up to date regarding infectious disease exposures, reporting, and return-to-work criteria. Additionally, employers might use an incident as an opportunity to educate and prepare the workforce.
Recordkeeping
While 29 CFR 1904.5(b)(2)(viii) exempts recording of the common cold and flu, measles is a recordable illness when a worker is infected on the job.
By following these steps, employers can help prevent the spread of measles in the workplace, protect vulnerable employees, and comply with public health and legal requirements.
Trending in Telehealth: May 2025
Trending in Telehealth highlights monthly state legislative and regulatory developments that impact the healthcare providers, telehealth and digital health companies, pharmacists and technology companies that deliver and facilitate the delivery of virtual care.
Trending in May:
• Controlled substances• Mental and behavioral health• Payment parity
A CLOSER LOOK
Proposed Legislation & Rulemaking:
Alaska SB 83, which passed the Alaska Senate, would require health insurers to reimburse healthcare providers for healthcare services provided through telehealth on the same basis and at least at the same rate as for comparable healthcare services provided in-person.
California AB 260, which passed the California State Assembly, would establish protections around access to medication abortion. The bill would require the Department of Health Care Services to update Medi-Cal provider enrollment procedures to allow remote service providers who offer reproductive healthcare services exclusively through telehealth modalities to enroll as Medi-Cal providers using an “administrative location” as their service address. The bill would exempt these administrative locations from certain requirements applicable to in-person locations. It would also permit the use of a cellular telephone as the primary business phone for reproductive healthcare providers. Further, the bill would expand the Medi-Cal definition of asynchronous store and forward to include asynchronous electronic transmissions initiated directly by patients, including through mobile telephone applications, and would authorize Medi-Cal providers to establish a new patient relationship using asynchronous store and forward if the visit is related to reproductive healthcare services. The bill has been referred to the California Senate.
Colorado SB 48 passed both chambers of the Colorado General Assembly. If signed by the governor, the bill would require large group health benefit plans to offer policyholders the option to purchase coverage for US Food and Drug Administration (FDA)-approved anti-obesity medications, including at least one FDA-approved GLP-1 medication. The bill would also require such plans to provide coverage for intensive behavioral or lifestyle therapy and medical nutrition therapy, which may be provided by telehealth as a means of delivery.
Louisiana HB 137 passed both chambers of the Louisiana State Legislature. If signed by the governor, the bill would authorize psychologists and medical psychologists to evaluate a patient via telehealth to execute an emergency certificate. Under an emergency certificate, a person who has a mental illness or a person who is suffering from a substance-related or addictive disorder may be admitted and detained at a treatment facility for observation, diagnosis, and treatment for a period not to exceed 15 days.
New York A 949, which passed the New York State Assembly, would permit the use of telemedicine services for mental and behavioral health issues under the workers’ compensation system. The bill would require in-person visits within 12 months of the first telehealth visit and within six months of the first audio-only telehealth visit, unless the provider determined that an in-person visit was likely to cause disruption or create undue hardship on the patient or family. The bill has been referred to the New York Senate.
Oregon HB 3727, which passed the Oregon House of Representatives, would allow licensed Oregon physicians and physician associates to use telemedicine to treat patients with whom they have an established provider-patient relationship and who are temporarily outside the state if the situation is urgent or emergent, or in order to ensure continuity of care. The bill acknowledges that the treating provider will be subject to the laws regulating the practice of medicine in the jurisdiction where the patient is located at the time of treatment. The exception will satisfy Oregon law, but the practice may not necessarily be permitted in the state in which the patient is located at the time of treatment. The bill has been referred to the Oregon Senate.
South Carolina H 3223, which passed the South Carolina House of Representatives, would provide definitions and requirements concerning the use of telehealth for veterinary services. The bill provides that a veterinarian-client-patient relationship only may be established by an in-person physical exam. It also provides that a veterinarian-client-patient relationship may extend to other licensed veterinarians working out of the same physical practice location as the veterinarian who established the relationship if the other licensed veterinarians have access to and have reviewed the patient’s medical records and the condition is related to a prior medical condition. The bill has been referred to the South Carolina Senate.
Finalized Legislation & Rulemaking Activity:
Georgia HB 567 was signed into law and goes into effect January 1, 2026. The law specifies that a dentist must have a physical office in the state, maintain relationships with in-person referral dentists, and ensure that teledentistry services adhere to existing standards for patient care, including privacy and consent requirements.
Hawaii HB 951 was signed into law and went into effect May 16, 2025. The law allows a physician to prescribe a three-day supply of opiates via telehealth to a patient who has been seen in person by a healthcare provider within the same medical group.
Indiana SB 473 was signed into law and enables prescription of agonist opioids through telehealth services, without an in-person visit, for the treatment or management of opioid dependence. This provision becomes effective July 1, 2025.
Maine LD 239 was signed into law and will go into effect 90 days after the Maine State Legislature adjourns. The law permits retail pharmacies to operate licensed remote dispensing sites and directs the Maine Board of Pharmacy to adopt rules to establish the criteria that a remote dispensing site must meet to qualify for licensure. These rules must meet certain minimum statutory requirements. With regard to telehealth, the rules must authorize a licensed pharmacist to provide supervision, drug regimen review, and patient counseling through telehealth services.
Maryland HB 869 and SB 372 were signed into law and went into effect June 1, 2025. The companion laws amend the definition of “telehealth” to permanently include certain audio-only telephone conversations. They also alter the circumstances under which healthcare practitioners are authorized to prescribe certain controlled dangerous substances for the treatment of pain through telehealth.
Maryland HB 553 and SB 94 were signed into law and go into effect July 1, 2025. Beginning January 1, 2026, the Maryland Medical Assistance Program must provide coverage for self-measured blood pressure monitoring for certain eligible program recipients.
Michigan issued several rules establishing procedures for the practice of telehealth for the following licensed professionals: chiropractors (R. 338.12021 through R. 338.12042), podiatrists (R. 338.8101 through R. 338.8153), speech language pathologists (R. 338.601 through R. 338.645), and doctors of osteopathic medicine (R. 338.111 through 338.143). The rules went into effect in May 2025.
Nevada AB 183 was signed into law and goes into effect October 1, 2025. The law clarifies that the practice of optometry includes optometric telemedicine and that an assistant is authorized to perform the same activities under the direct supervision of a licensed optometrist in any setting where optometric telemedicine is practiced.
Vermont S 30 was signed into law and goes into effect September 1, 2025. Health insurance plans must provide coverage for healthcare services and dental services delivered through telemedicine to the same extent the plan would cover the services if they were provided through in-person consultation. Health insurance plans also must provide the same reimbursement rate for services billed using equivalent procedure codes and modifiers, subject to the terms of the health insurance plan and provider contract, regardless of whether the service was provided in person or through telemedicine.
Compact Activity:
The following states introduced bills to enact licensure compacts:
Dietitian Licensure Compact: Louisiana, Wisconsin.
Occupational Therapy Licensure Compact: Alaska, Michigan, Texas.
Physical Therapy Licensure Compact: Florida.
Physician Assistant Licensure Compact: Connecticut.
Social Work Licensure Compact: Delaware.
The following states issued laws enacting licensure compacts:
Audiology and Speech-Language Compact: Arizona.
Dietitian Licensure Compact: Iowa, Oklahoma.
Social Work Interstate Compact: South Carolina.
Social Work Licensure Compact: New Jersey, Oklahoma.
Why it matters:
States’ focus on payment parity facilitates greater telehealth access. Multiple states, including Alaska and Vermont, are advancing legislation to ensure telehealth services are reimbursed at parity with in-person care. This trend supports broader access to virtual care by incentivizing provider participation and reducing financial barriers for patients.
Telehealth Integration Across Diverse Health Domains. From mental healthcare services under workers’ compensation in New York to veterinary services in South Carolina and teledentistry in Georgia, states continue to embed telehealth into a wide range of health services. This diversification continues the shift toward normalizing virtual care across the entire healthcare ecosystem, including rural and emergency contexts.
States are increasingly allowing practitioners to provide telehealth services beyond state borders. By expanding interstate licensure agreements, access to skilled practitioners is improved, particularly in rural and underserved areas. These agreements also boost career prospects and streamline the licensing process across multiple states.
IRS Roundup May 15 – June 2, 2025
Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for May 15, 2025 – June 2, 2025.
IRS GUIDANCE
May 15, 2025: The IRS issued Notice 2025-29, providing guidance on the corporate bond monthly yield curve, corresponding spot segment rates under Internal Revenue Code (Code) § 417(e)(3), and the 24-month average segment rates under Code § 430(h)(2). The notice also provides guidance on the interest rate for 30-year Treasury securities under Code § 417(e)(3)(A)(ii)(II) (for plan years in effect before 2008) and the 30-year Treasury weighted average rate under Code § 431(c)(6)(E)(ii)(I).
May 15, 2025: The IRS issued Revenue Ruling 2025-12, providing prescribed rates for federal income tax purposes for June 2025, including, but not limited to:
Short-, mid-, and long-term applicable federal rates for June 2025 for purposes of Code § 1274(d)
Short-, mid-, and long-term adjusted applicable federal rates for June 2025 for purposes of Code § 1288(b)
The adjusted federal long-term rate and the long-term tax-exempt rate, as described in Code § 382(f)
The federal rate for determining the present value of an annuity, an interest for life, or for a term of years, or a remainder or a reversionary interest for purposes of Code § 7520.
May 19, 2025: The IRS released Internal Revenue Bulletin 2025-21. It includes Revenue Procedure 2025-19, which provides the 2026 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under Code § 223, as well as the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements under Code § 54.9831-1(c)(3)(viii). Revenue Procedure 2025-19 is effective for HSAs for the 2026 calendar year and for excepted benefit health reimbursement arrangements beginning in 2026.
May 22, 2025: The IRS issued a notice to US taxpayers living or working abroad, encouraging them to file their 2024 federal income tax returns by June 16, 2025.
June 2, 2025: The IRS issued Notice 2025-27, providing interim guidance on the application of the corporate alternative minimum tax (CAMT), as well as relief from certain additions to tax for a corporation’s underpayment of estimated tax under Code § 6655. Among other things, this notice also provides an optional simplified method for determining applicable corporation status and waives certain additions to tax under Code § 6655 concerning a corporation’s CAMT liability under Code § 55. The US Department of the Treasury (Treasury) and the IRS also plan on issuing a notice of proposed rulemaking, revising the CAMT proposed regulations in § 2.02(2) of this notice to include a method for determining applicable corporation status.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
TAX CONTROVERSY DEVELOPMENTS
On May 22, 2025, the US Tax Court issued its opinion in Facebook Inc. v. Commissioner.
THE “BIG, BEAUTIFUL BILL”
The “Big, Beautiful Bill” passed the US House of Representatives on May 22, 2025, and is now being deliberated in the US Senate. Changes are expected to be made, as adjustments to the tax-focused reconciliation bill is a key focus of senators.
DOJ Civil Rights Fraud Initiative Will Use the False Claims Act to Target Antisemitism and DEI Programs
At the end of May, the Department of Justice (DOJ) announced the formation of a Civil Rights Fraud Initiative to “utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” In connection with the Initiative, we will see DOJ’s False Claims Act practitioners in the Civil Division and the U.S. Attorneys’ Offices pairing with DOJ’s Civil Rights Division to “identify and root out instances in which recipients of federal funds fail to uphold their basic obligations under federal civil rights laws.”
In particular, the Initiative will focus on companies or institutions that have, in DOJ’s view, tolerated antisemitism or engaged in “divisive” Diversity, Equity, and Inclusion (DEI) policies and efforts.
The new initiative
In some ways, this is a significant development and departure from prior DOJ practice:
The Civil Division (and its U.S. Attorney’s Office partners) and the Civil Rights Division have not done significant work together before. Although this is not the first time DOJ has formed an initiative to target its use of the FCA, this Initiative stretches the FCA into new realms. It relates directly to Executive Order 14173, which was issued on the first day of the current administration. While federal contracts already require compliance with anti-discrimination laws, the Executive Order requires recipients of federal funds to certify that they do not operate or maintain any DEI programs that violate applicable federal anti-discrimination laws. It also directs federal agencies to include terms in every federal contract or grant award that require government contractors to agree that compliance with applicable federal anti-discrimination laws is material to the government’s payment decisions.
Healthcare providers and payors are undoubtedly familiar with FCA challenges related to billing for services performed under certain federal programs. Now, under this Initiative providers and payors may face federal scrutiny not for the specific services performed or the payment received for such services or payments, but for internal HR policies and procedures.
The Initiative’s direct and pronounced call for whistleblowers, particular on a politically sensitive issue, is likely to lead to an increase in qui tam suits, potentially extending beyond healthcare providers and defense contractors to include non-traditional FCA defendants that receive federal funds.
At the same time, much remains unchanged:
The fraud in all FCA cases must still meet the “demanding” [i] test of being material to the government’s decision – meaning the alleged falsehood must have had some impact on the government’s choice to give funds to the defendant. Notwithstanding the language now required to be included within the contract itself, the government still must show that it would refuse payment based on the alleged violation, by making the showing that internal HR practices at a hospital or Medicaid managed care entity, for instance, are material to the provision of or payment for health care services that entity provides. In a concurring opinion a few weeks ago, Justice Thomas argued that exact point: “the contracts in this case were for bridge repairs, not minority hiring.”[ii]
Moreover, liability under the FCA still requires something knowingly “false” in the defendant’s conduct. The Supreme Court previously affirmed that an “honest mistake” is not a knowingly false claim.[iii] Instead, the government must show that the person submitting the claim subjectively believed and knew the claim to be false. Under the Initiative, therefore, the government must show both that: (1) the internal HR policies or DEI initiatives of a health care provider or payor (or other defendant) violated federal anti-discrimination laws; and (2) the healthcare provider or payor knew that those policies and initiatives were in violation of federal law.
What government-sponsored healthcare providers and payors need to know
Any recipient of federal funds is a potential target for an investigation or a qui tam lawsuit. In addition to the government’s own efforts, the traditional FCA bar is likely to heed DOJ’s call to action to find relators.
All providers and payors who receive federal funds, both large and small, should review their workplace policies and procedures for compliance with established law. This includes considering the potential risk that these policies and procedures may be evaluated based on the executive branch’s current interpretation of federal anti-discrimination requirements.
An FCA investigation is a serious matter. The FCA carries significant penalties and has a long statute of limitations, creating the possibility of staggeringly large liability. The government is aided in its search for fraud by incentives to whistleblowers (called relators) to file their own lawsuits on the government’s behalf. Even an investigation that concludes without any adverse findings or actions can be significant. The government can subpoena documents and depose employees, and the process can take months if not years. If you receive a Civil Investigative Demand, a phone call from DOJ, or informal outreach from any government entities, it is important to consider consulting legal counsel.
Footnotes
[i] Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 194 (2016).
[ii] Kousisis v. United States, 605 U.S. —, 145 S.Ct. 1382, 1401-02 (2025) (Thomas, J., concurring).
[iii] United States ex rel. Schutte v. Supervalu Inc., 598 U.S. 739, 752-53 (2023).
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