HMA Weekly Roundup

HHS Issues Immediate Policy Shift on Federal Benefit Eligibility Under PRWORA

On July 10, 2025, the US Department of Health and Human Services (HHS), Department of Labor, Department of Justice, Department of Education, and US Department of Agriculture (USDA) issued notices that significantly reinterpret the definition of “federal public benefit” used in Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). These changes are effective immediately upon publication in the Federal Register, though agencies have opened 30-day public comment periods to solicit feedback.

In this article, Health Management Associates (HMA) experts explain two of these notices—those from HHS and USDA—based on what we know and outstanding issues that organizations should expect to arise in the coming months.

Programs Affected by HHS’s Revised Interpretation

The notice changes HHS’s 1998 interpretation of PRWORA and will have sweeping implications for service delivery across the country. It does this by reversing the classification of many long-standing programs to be “Federal public benefits;” until now, these programs had been specifically excluded from that definition. People with Unsatisfactory Immigration Status are not permitted to access these benefits. People classified as such include those who are undocumented, but also several categories of people lawfully in the United States, such as holders of H1B and J-1 visas, as well as some lawful permanent residents (green card holders — only for the purposes of eligibility for certain programs).

Programs newly subject to these restrictions include:

• Head Start
• Certified Community Behavioral Health Clinics (CCBHCs)
• Community Mental Health Services Block Grant
• Community Services Block Grant (CSBG)
• Health Center Program (Community Health Centers/FQHCs)
• Health Workforce Programs (including grants, loans, scholarships, and loan repayments)
• Services administered by the Substance Abuse and Mental Health Services Administration (SAMHSA)
• Title IV-E programs (Educational and Training Voucher Program, Kinship Guardianship Assistance Program and Prevention Services Program)
• Title X Family Planning

Organizations that receive federal or pass-through federal funding may now be required to assess immigration status as a condition of service delivery—something many have never done before. This shift raises significant operational, ethical, and mission-aligned challenges for hospitals, community health centers, behavioral health providers, and human services organizations. PRWORA does include language exempting 501(c)(3) charitable organizations from being required to verify immigration status, but as the administration notes in its announcement, they are not barred from doing so. This will be an area to watch.

USDA Interpretation

The USDA’s notice similarly identifies all 16 programs the Food and Nutrition Services (FNS) administers as meeting the definition of “Federal public benefit” used in Title IV of PRWORA. These programs include:

• Supplemental Nutrition Assistance Program (SNAP)
• Nutrition Assistance Program for Territories
• Food Distribution Program on Indian Reservations (FDPIR)
• Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
• National School Lunch Program, School Breakfast Program, and Summer Food Service Program
• Child and Adult Care Food Program

The notice, however, states that there is a difference between defining a program as a federal public benefit and applying other provisions of PRWORA to those programs. The USDA’s notice clarifies that providers of non-exempt benefits must verify that applicants have a qualified immigration status for purposes of PRWORA but does not address how verification should be implemented or how exceptions should be applied.

What We Know—and Don’t Know

Though the list of affected programs is extensive, many critical implementation details remain uncertain. Both agencies acknowledge that further guidance will be needed to clarify how these changes will be operationalized.

Organizations should expect additional updates and further clarifications from federal agencies in the coming months. Legal challenges to these changes are almost certainly forthcoming.

Looking Ahead

These policy changes are both significant and still evolving. They will affect how and where services are delivered, as well as whether people choose to access the services at all.

During this period of uncertainty, frequent and transparent communication is essential. Deploy information and updates in multiple formats —written, verbal, visual—to reach diverse audiences, including your organization’s staff and other stakeholders in your community. When policy is fluid and changing rapidly, authentic messaging about what is known and what remains unclear will position your organization as an honest broker and trusted partner.

HMA experts are tracking these and related developments. For questions and to discuss the impact of these policies on your organization, contact our featured experts Warren Brodine and Amanda Maynord.

CMS Proposes New Ambulatory Specialty Model, Provides Details About Cell and Gene Therapy Model

Specialty model will focus on upstream management of lower back pain and congestive heart failure in traditional Medicare

This week, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (MPFS) proposed rule, which introduces a new mandatory Ambulatory Specialty Model (ASM), and announced updates on the Cell and Gene Therapy Access Model. These developments reflect CMS’s continued focus on value-based care, chronic condition management, and new payment strategies.

Specialists will be financially accountable for the upstream management of low back pain and congestive heart failure in traditional Medicare. The model is designed to reduce costs and improve healthcare quality through performance-based payment adjustments and enhanced care coordination. The proposal is open for public comment, and CMS may revise model parameters before finalizing the rule later this year.

In this article, Health Management Associates (HMA) experts break down the ASM model’s goals and design features and explains developments in CMS’s Cell and Gene Therapy Access Model. HMA experts are reviewing the CY 2026 MPFS and the CY 2026 Hospital Outpatient Prospective Payment System proposed rules and will highlight key policy provisions in a forthcoming article.

ASM Focus on Chronic Care

CMS estimates that more than two-thirds of traditional Medicare beneficiaries have at least one chronic condition. CMS states that spending on heart failure comes to $10‒$13 billion annually, while annual costs associated with low back pain are $6‒$8 billion. A lack of coordinated care can impede patients’ ability to manage their health and result in low-value care like unnecessary procedures and avoidable hospitalizations that run up costs without improving healthcare outcomes. The ASM will test how incentives such as payment adjustments to providers can encourage preventive care, earlier diagnosis, and better disease management.

Program Goals

The ASM is designed to encourage collaboration and communication between patients’ primary care providers and specialists who treat low back pain and heart failure. According to CMS, improved coordination will lead to the following:

• Better patient outcomes and reduced disease progression
• Decreased spending on low-value care experiences, such as unnecessary hospitalizations and procedures
• Ensure providers are evaluated based on performance measures that are linked to the care they offer their patients
• Optimize data transparency to allow providers to compare their performance with their peers when being measured on patient-centered outcomes

Performance will be assessed based on the Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs) across four factors:

1. Improving outcomes, such enhancing patients’ functional status or controlling their blood pressure
2. Lowering costs, especially through reduced provision of unnecessary services
3. Increasing patient engagement through clinical care processes
4. Expanding interoperability and data communication through certified electronic health record technology

Though based on the MIPS MVPs, the ASM will enhance the focus of performance measures, thereby simplifying reporting and allowing for comparisons across different providers and regions.

Table 1. ASM Model Payments, Participants, and Timeline

Cell and Gene Therapy Model

On July 15, 2025, CMS announced the participants in the Cell and Gene Therapy (CGT) Access Model. A total of 33 states, plus the District of Columbia and Puerto Rico, will participate in this model, which has the federal government negotiating outcomes-based agreements with CGT manufacturers of sickle cell disease treatments. Participating states represent approximately 84 percent of Medicaid beneficiaries with the condition. Under the model, participating states receive guaranteed discounts and rebates from participating CGT manufacturers if the therapies fail to deliver their promised therapeutic benefits. States also have the option of receiving federal support of up to $9.55 million each to assist with implementation, outreach, and data tracking. States may choose when to begin their participation between January 2025 and January 2026. CMS indicated it may modify the model in the future to cover other diseases with high-cost, high-impact therapies.

Connect with Us

The ASM introduces opportunity and financial risk for specialists, hospitals, and health systems. Providers should consider strategies and tactics that will strengthen their collaboration with primary care teams to manage the chronic conditions addressed in the ASM model, which may require workflow redesign and new communication protocols. Providers also should consider whether they will need to make investments in data infrastructure and reporting to meet their performance quality goals.

HMA’s Medicare team—including actuaries, data analysts, and policy experts—helps organizations model, understand, and navigate the impact of proposed frameworks and policy changes, quantify risk, and more, so organizations can improve both financial performance and patient outcomes.

For details about these model announcements or the new proposed rules, contact the HMA Medicare team tracking these policies—Amy Bassano, Rachel Kramer, and Kevin Kirby.