March 12, 2025
This week's roundup:
- In Focus: The Medicaid Pivot: New Developments in Section 1115 Demonstration Policy
- Alaska Releases Medicaid Vision Program RFP
- Idaho Legislature Approves Medicaid Work Requirements, Managed Care Bill
- Illinois Awards D-SNP Contracts to Four Plans
- Nevada Announces Medicaid Managed Care Notice of Intent to Award Five Health Plans
- Trump Administration Proposes to Shorten ACA Enrollment Period, Apply New Restrictions
- House Passes Stopgap Funding Measure Extending Telehealth, Excludes Medicare Rate Increase
- More News Here
In Focus
The Medicaid Pivot: New Developments in Section 1115 Demonstration Policy
This week, our In Focus section examines new federal policy developments affecting Medicaid Section 1115 demonstrations. The Centers for Medicare & Medicaid Services (CMS), on March 4, 2025, rescinded two guidance letters issued by the prior Presidential Administration that defined and provided the framework for state Medicaid programs to cover health-related social needs (HRSNs) using Section 1115 authority.
Though specific Medicaid priorities under the Trump Administration are nascent, Health Management Associates’ federal and state experts are monitoring these developments. This article describes the withdrawn policy, known implications for states with approved and pending proposals, and the imperative to plan for a variety of scenarios and future opportunities.
Background on HRSN Initiative in Section 1115 Demonstrations
CMS-approved Section 1115 demonstrations allow states to pilot alternative methods to improve the accessibility, coverage, financing, and delivery of healthcare services under joint federal-state funded programs, specifically Medicaid and the Children’s Health Insurance Program (CHIP).
Addressing health disparities and promoting integrated care in Medicaid became a key focus of the Biden Administration. In November 2023, CMS introduced a Medicaid and CHIP Health-Related Social Needs Framework, giving state Medicaid agencies the opportunity to address the broader social determinants of health (SDOH) that affect their enrollees, leading to better health outcomes. The agency published an update to the guidance in December 2024. The new initiatives were not intended to replace other federal, state, and local social service programs, but rather to coordinate with those efforts.
Key Takeaways for States
The following critical components of the March 2025 announcement and the present policy landscape should inform state Medicaid agency and stakeholder response and future planning work.
First, this guidance does not affect states with a current, active Section 1115 demonstration, state plan, or 1915 waiver programs that include HRSN. States with HRSN demonstrations will maintain their approved programs; however, states and their partners should prepare for shifts in federal reporting, oversight, and evaluation expectations. Separately, states may wish to re-evaluate their resource allocation and consider adjustments that may be needed to better align with a new federal policy environment.
States seeking any amendment or extension of their demonstration program—even if unrelated to HRSN—should expect this activity to trigger a CMS review of the HRSN component of the 1115. States will need to consider the strategic advantages and necessity of such requests relative to the implications to their HRSN initiative. They also should consider planning for nonrenewal of their HRSN programs in advance of the demonstration’s current expiration date.
Pending state HRSN Section 1115 demonstration proposals are not expected to be approved. The Section 1115 option for federal matching funds to provide up to six months of housing supports, nutrition supports, and associated infrastructure capacity funding no longer aligns with the Trump Administration’s objectives for Medicaid and CHIP. Stakeholders interested in these concepts should consider alternative strategies and investment options.
What to Watch
Notably, CMS did not rescind the 2021 State Health Official Letter RE: Opportunities in Medicaid and CHIP to Address Social Determinants of Health (SDOH) (SHO# 21-001) published during the first Trump Administration. States and their partners should monitor CMS’s actions and signals for the agency’s posture toward SDOH proposals.
A new group of states proposing alternative and revised demonstration concepts and innovations is likely to emerge. These states may provide early signals of the nature and breadth of the Section 1115 demonstrations CMS is willing to consider. With regard to SDOH, states and their partners should consider aligning proposals with the approaches outlined in the 2021 guidance for regular federal program authorities (e.g., 1915(i) state plan options, 1915(c) waiver options) as well as certain managed care authorities.
In addition, states and Medicaid stakeholders should watch for other Medicaid and CHIP policy priorities advanced through demonstration and other authorities, including efforts to address substance use disorders (SUD) and reentry initiatives that focus on supporting individuals who are transitioning from incarceration back into society. SUD and reentry initiatives can intersect with Section 1115 demonstrations and other authorities, such as managed care, in a variety of ways. The intersection of these issues can provide another area of common ground and opportunity to continue work on state reentry initiatives, though likely with new and modified federal parameters.
Connect With Us
HMA is monitoring other developments in Congress and from the White House and agencies affecting federal Medicaid and CHIP policy changes. The complexity and nuances associated with potential future statutory and regulatory changes necessitate thoughtful and immediate impact analysis, scenario planning, and preparations that will allow organizations to pivot if and when policy changes occur. HMA colleagues have expertise in all of the components critical to staying informed, engaged, and prepared for changes to Section 1115 programs—from the policy knowledge to actuarial/budgeting talent, to communications and project management skills, as well as the necessary IT infrastructure.
For questions about these developments and your organization’s plan to adapt to new federal Medicaid policy priorities, contact our featured experts Tonya Moore and Carter Kimble.
HMA Roundup
Alaska
Alaska Releases Medicaid Vision Program RFP. The Alaska Department of Health released on March 4, 2025, a request for proposals (RFP) seeking a qualified contractor to manage the state’s Medicaid vision program, including eligibility verification, benefit tracking, and manufacturing and supplying vision products such as frames, lenses, and lens add-ons. The contract budget is estimated at $12.1 million for its full term. Proposals are due by March 26, with a notice of intent to award expected to be issued the week of March 31. The contract start date is July 1, 2025, and will run through June 30, 2029, with two potential three-year renewal options.
California
Blue Shield of California Chief Executive Resigns, Mike Stuart Appointed Interim Replacement. Health Payer Specialist reported on March 12, 2025, that Lois Quam has resigned as CEO of Blue Shield of California after serving for two months in the role. The health plan did not provide a reason for her departure, which is effective immediately. CFO Mike Stuart will serve as interim CEO while the board searches for a replacement.
Connecticut
Connecticut Community Health Center Association Files Petition Over Low FQHC Medicaid Rates. CT Mirror reported on March 11, 2025, that the Community Health Center Association of Connecticut (CHCACT) filed a petition against the state’s Department of Social Services (DSS), alleging non-compliance with laws requiring regular adjustments of Medicaid reimbursement rates for Federally Qualified Health Centers (FQHCs). An analysis in the filing shows Connecticut’s average Medicaid reimbursement rate is $163.37 per visit, the lowest in New England. The petition claims that the failure to adjust rates has financially strained FQHCs, leading to service reductions. DSS has 90 days to respond to the petition.
Idaho
Idaho Legislature Approves Medicaid Work Requirements, Managed Care Bill. The Idaho Capital Sun reported on March 11, 2025, that the Idaho Senate voted 29-6 to pass House Bill 345, which seeks to implement Medicaid work requirements and shift Idaho toward fully capitated managed care. The bill, sponsored by Representative Jordan Redman (R-Coeur d’Alene), would direct Idaho to submit a plan to the federal government to move its Medicaid program toward managed care, implement work requirements for all able-bodied adult Medicaid recipients, implement Medicaid cost-sharing, and give Medicaid expansion enrollees access to tax credits to purchase health insurance on Idaho’s healthcare exchange. The bill now moves to Governor Brad Little for signature.
Illinois
Illinois Awards D-SNP Contracts to Four Plans. The Illinois Department of Healthcare and Family Services (HFS) awarded on March 6, 2025, contracts to incumbent insurers Humana, Meridian, Molina, and CVS/Aetna for the state’s transition to a Fully Integrated Dual Eligible Special Needs Plan (FIDE-SNP) model. Health Care Service Corporation/Blue Cross Blue Shield of Illinois was the only incumbent to not receive a contract. UnitedHealthcare, which also bid, was not selected. This procurement replaces the Medicare-Medicaid Alignment Initiative (MMAI) demonstration, which currently has approximately 79,000 beneficiaries. Starting in 2027, the awarded plans also will be required to provide managed long-term services and supports (MLTSS).
The transition to the FIDE-SNP model emphasizes whole-person, integrated care, addressing health equity, social determinants of health, and expanding access to behavioral health services. The awarded plans are also expected to increase the use of Alternative Payment Models (APMs), which promote value-based care and incentivize better outcomes, particularly for behavioral health providers. The goal is to reduce program opt-outs by enhancing the overall care experience.
Iowa
Iowa House, Senate Committees Approve Medicaid Work Requirements Bills. The Des Moines Register reported on March 6, 2025, that the Iowa House and Senate Health and Human Services Committees approved two bills, HSB 248 and SF 363, that would require Medicaid expansion recipients to work at least 80 hours per month to maintain benefits, pending federal approval. The measure, backed by Governor Kim Reynolds, affects 182,000 enrollees and includes exemptions for seniors, minors, disabled individuals, and caregivers.
Louisiana
Louisiana Lacks Medicaid MCIP Spending Oversight, Audit Finds. NOLA reported on March 11, 2025, that over the past five years, the Louisiana Department of Health (LDH) has not properly overseen approximately $2.4 billion in Medicaid spending for the Managed Care Incentive Payment (MCIP) program, according to an audit conducted by the Louisiana Legislative Auditor. The report found that approximately 63 percent of those funds went to administrative and other similar expenses. Additionally, the audit cited specific payment reporting issues with certain hospital systems and issues with LDH allowing the two different quality network hospital systems to use different metrics to measure performance. The auditors recommended that LDH should evaluate the structure of the MCIP, reevaluate reporting policies, update program milestones, amend managed care organization contracts to establish how MCIP funds should be used, and regularly monitor MCIP funds.
Maine
Maine to Withhold Some Medicaid Payments Amid Budget Shortfall. 13 WGME reported on March 11, 2025, that Maine will temporarily withhold some Medicaid payments to providers due to a $118 million budget shortfall. With no bipartisan agreement on the budget, the state will pause payments for hospital claims over $50,000, and will hold payments for retail pharmacies, medical equipment suppliers, and out-of-state providers. The payment hold will continue through March 19 if necessary.
Massachusetts
Massachusetts Healthcare Spending Increases to $78.1 Billion in 2023. The Boston Globe reported on March 12, 2025, that the Massachusetts Center for Health Information and Analysis (CHIA) released its annual report on healthcare spending, which found that health care spending in Massachusetts increased 8.6 percent to $78.1 billion in 2023, more than double the 3.6 percent annual growth benchmark set by the state. Pharmacy spending, along with new MassHealth supplemental payments, drove growth in 2023. Pharmacy spending net of rebates increased by $1.0 billion. MassHealth administered $1.5 billion in new payments to hospitals to support key initiatives in quality and health equity.
Montana
Montana Senate Rejects Medicaid Expansion Work Requirements Bill. KTVH reported on March 6, 2025, that the Montana Senate rejected Senate Bill 334, which sought to narrow eligibility for Medicaid expansion by lowering income limits and introducing work requirements. This decision follows the Senate’s earlier rejection of another bill intended to phase out Medicaid expansion entirely. Recently, the state legislature passed House Bill 245, which reauthorized Montana’s Medicaid expansion through 2029, maintaining existing eligibility standards.
Nevada
Nevada Announces Medicaid Managed Care Notice of Intent to Award Five Health Plans. The Nevada Department of Health and Human Services Division of Health Care Policy and Financing (DHCPF) released on March 12, 2025, notice of intent to award the Medicaid and Children’s Health Insurance Program (CHIP) managed care contracts to incumbents Centene/SilverSummit HealthPlan, Elevance/Anthem/Community Care Health Plan of Nevada, Molina, and UnitedHealthcare/Health Plan of Nevada along with non-incumbent CareSource. The new contracts will cover Urban Clark, Urban Washoe, and Rural service areas, expanding managed care statewide and adding an estimated 75,000 Medicaid enrollees in rural counties. Implementation is scheduled to begin January 1, 2026. Contracts will run through December 31, 2030, with one two-year extension available.
New Hampshire
New Hampshire Senate Advances Medicaid Work Requirement Bill. The New Hampshire Bulletin reported on March 11, 2025, that the state Senate voted 16-8 to pass a bill seeking to add Medicaid work requirements for able-bodied adults in the program. Senate Bill 134, sponsored by Senator Howard Pearl (R-Loudon), would direct the state Department of Health and Human Services to resubmit a Section 1115 demonstration application to the Centers for Medicare & Medicaid Services for approval to enforce work requirements. The Senate Finance Committee must review the bill before it goes to the House for consideration. New Hampshire previously attempted to implement Medicaid work requirements in 2019.
New Mexico
New Mexico Senate Passes Bill to Create Medicaid Trust Fund. The Albuquerque Journal reported on March 5, 2025, that the New Mexico Senate voted 37-0 to pass a bill to create a Medicaid trust fund. Senate Bill 88, sponsored by Senator George Muñoz (D-Gallup), would help pay for Medicaid in the future as federal funding remains unclear. The funding would come from investment earnings from the State Treasurer’s Office—which will total an estimated $280 million in the upcoming budget year—and would grow to an estimated $2 billion, allowing the state to distribute approximately $100 million per year to help pay for Medicaid. The bill now heads to the House for consideration.
New York
New York DOH Sends Cease and Desist Letters to Home Care Companies for Misinformation Amid CDPAP Transition. Crain’s New York Business reported on March 11, 2025, that the New York State Department of Health (DOH) has sent cease and desist letters to 17 home care companies amid the state’s transition from nearly 600 fiscal intermediaries (FIs) to a single, statewide FI for its consumer-directed personal assistance program (CDPAP). The letters allege that the companies are spreading misinformation on the CDPAP transition, which officially begins April 1, 2025, and orders each company to stop. If the companies do not stop, the department said it would revoke their licenses.
New York CDPAP Faces 30,000 Dropouts Amid Program Transition. Politico Pro reported on March 10, 2025, that at least 30,000 individuals have left the New York Medicaid Consumer-Directed Personal Assistance Program (CDPAP) as the state transitions to a new single statewide fiscal intermediary system managed by Public Partnerships LLC. This accounts for over 10 percent of CDPAP recipients, many of whom have opted for personal care services instead. The number may continue to fluctuate, as enrollees can switch between programs at any time, according to the state Department of Health.
North Carolina
North Carolina Healthy Opportunities Pilot Poised for Statewide Expansion. WECT News reported on March 6, 2025, that North Carolina’s Healthy Opportunities Pilot (HOP) program, which launched in 2022, has addressed non-medical health needs such as food insecurity, housing instability, transportation challenges, and interpersonal violence to more than 38,000 Medicaid beneficiaries across 33 predominantly rural counties. The statewide expansion of North Carolina’s 1115 Healthy Opportunities Pilot program demonstration is currently awaiting funding approval from state lawmakers, following a recent federal approval by CMS.
Blue Cross Blue Shield of North Carolina Restructures, Creates Subsidiary. Blue Cross Blue Shield of North Carolina announced on March 7, 2025, that it has restructured and created a new not-for-profit parent holding company, CuraCor Solutions. Blue Cross NC will operate as one of CuraCor’s subsidiaries.
Pennsylvania
Pennsylvania Medicaid Agency Seeking More Prior Authorizations for Weight-loss Drugs. 90.5 WESA reported on March 6, 2025, that the Pennsylvania Department of Human Services (DHS) is seeking to increase the prior authorizations needed to prescribe GLP-1 weight-loss drugs to treat obesity in Medicaid recipients as a cost-control measure. GLP-1s are one of the biggest drivers of increased costs in Pennsylvania’s Medicaid program and could lead to $1 billion in new costs this year, according to state officials. Additional authorizations may require patients to go through diet or exercise programs or try less expensive medications first. Officials will also propose only allowing GLP-1s for obesity treatment in patients who reach a certain body mass index.
National
Trump Administration Proposes to Shorten ACA Enrollment Period, Apply New Restrictions. Modern Healthcare reported on March 10, 2025, that the Trump administration has proposed new Affordable Care Act (ACA) regulations to shorten the open enrollment period by one month (ending December 15) and eliminate monthly enrollment for individuals below 150 percent of the federal poverty level (FPL). The plan would also reduce subsidies by $5 per month until enrollees verify income. Additionally, the rule would bar Deferred Action for Childhood Arrivals (DACA) recipients from ACA coverage and remove gender-affirming care as an essential health benefit.
CMS to End Certain CMMI Payment Models Early. The Centers for Medicare & Medicaid Services (CMS) announced on March 12, 2025, it will be ending some of the Centers for Medicare & Medicaid Innovation’s (CMMI) payment models on December 31, 2025, earlier than scheduled, after conducting a review of the payment model portfolio. CMS’s announcement does not specify which models will end early and which models will continue as planned. According to CMS, the move is estimated to save $750 million.
House Passes Stopgap Funding Measure Extending Telehealth, Excludes Medicare Rate Increase. Modern Healthcare reported on March 10, 2025, that House Speaker Mike Johnson’s (R-LA) stopgap budget resolution extends telehealth and hospital-at-home rules, delays cuts to disproportionate share hospitals, and includes a six-month funding extension for community health centers, graduate medical education, and other health programs due to expire at the end of March. However, the resolution did not include a Medicare reimbursement rate hike for physicians, after rates were cut 2.9 percent beginning January 1, 2025. The measure must pass the Senate by March 14.
HHS Offers Buyout Option to Employees. The Associated Press reported on March 9, 2025, that the U.S. Department of Health and Human Services (HHS) has offered a buyout option of up to $25,000 for most of the 80,000 federal workers it employs to leave their jobs. The buyout, a part of President Donald Trump’s attempts to cut down on government spending, is spread across HHS agencies. Employees have until March 14, 2025, to accept the voluntary resignation offer.
Medicare Insurance Brokers Earn More Money Enrolling Beneficiaries in Medicare Advantage, MedPAC Finds. MedPage Today reported on March 7, 2025, that Medicare insurance brokers have a financial incentive to enroll beneficiaries in Medicare Advantage plans instead of traditional Medicare and Medigap, according to a report released by the Medicare Payment Advisory Commission (MedPAC). Agents may also receive bonuses from the payers they work for if they meet enrollment benchmarks, and may receive administrative payments for marketing or payments for conducting health risk assessments of enrollees. Some MedPAC commissioners are calling for an overhaul of the insurance agent system over concerns that agents’ financial incentives are not in the best interest of Medicare enrollees.
Federal Judge Blocks Trump Administration’s Funding Freeze for Second Time. Fierce Healthcare reported on March 6, 2025, that U.S. District Judge John J. McConnell Jr., who had already issued a temporary restraining order, granted a preliminary injunction blocking the Trump administration’s federal funding freeze, extending the pause while legal proceedings continue. Despite the White House rescinding the order, courts found ongoing harm. Judge Loren AliKhan had previously issued a similar injunction.
CMS Alerts Hospitals to Possible Restrictions on Gender-Affirming Care for Minors. Fierce Healthcare reported on March 6, 2025, that the Centers for Medicare & Medicaid Services (CMS) issued an alert to hospitals, indicating it may take steps to limit gender-affirming care for minors. The move follows Trump’s executive order banning federal support for gender-affirming care for individuals under 19, which has faced legal challenges. Two federal judges have issued preliminary injunctions blocking parts of the order.
U.S. Lawmakers Reintroduce Medicaid Work Requirements Bill. Florida Daily reported on March 3, 3035, that U.S. Representatives Aaron Bean (R-FL) and Scott Franklin (R-FL) have reintroduced a bill requiring able-bodied Medicaid recipients, aged 18-65 with no dependents, to work, volunteer, or train for at least 80 hours per month to maintain coverage. The Congressional Budget Office estimates $109 billion in taxpayer savings over a decade.
Industry News
CareFirst Sues UnitedHealth Group Over Change Healthcare Data Breach. Health Payer Specialist reported on March 6, 2025, that CareFirst has filed a lawsuit against UnitedHealth Group, seeking $900,000 in damages, plus interest and attorneys’ fees, over alleged cybersecurity failures leading up to the Change Healthcare breach. The Baltimore-based Blues affiliate claims it had to reallocate $25 million to support providers during the payment freeze and faces ongoing legal risks from resulting data breaches.
Walgreens Agrees to $10 Billion Buyout by Sycamore Partners. The New York Times reported on March 6, 2025, that Walgreens Boots Alliance has agreed to a $10 billion deal with private equity firm Sycamore Partners to go private. Sycamore will retain Walgreens’ U.S. retail business while selling or spinning off other divisions. The deal is expected to close in the fourth quarter of 2025. The total value of the deal could rise to $23.7 billion including debt and potential payouts.
Over 100 Providers File Antitrust Lawsuits Against BCBSA. Modern Healthcare reported on March 5, 2025, that more than 100 providers have filed antitrust lawsuits against the Blue Cross Blue Shield Association (BCBSA) and its affiliated insurance companies, opting out of the $2.8 billion settlement that the insurer reached with other providers. The lawsuits reiterate claims from previous lawsuits against BCBSA, alleging that the company suppressed competition and lowered hospital rates. The providers are seeking treble damages, pre-judgment interest, and relief from future losses.
RFP Calendar
HMA News & Events
HMA Webinar
Survey Readiness: Prepare, Respond, Succeed, a 5-part Virtual Series. Every Wednesday in April 1:00 PM to 2:30 PM ET.
In today’s complex healthcare environment, navigating the scrutiny of regulatory and accreditation bodies like The Centers for Medicare & Medicaid Services (CMS), Department of Health (DOH), The Joint Commission, and Det Norske Veritas (DNV) Healthcare is critical for the success of every hospital and health system. Unexpected surveys, triggered by recertification, validations or even complaints, can occur at any time.
HMA has partnered with the Healthcare Association of New York State (HANYS) to develop the content for Survey Readiness: Prepare, Respond, Succeed, a 5-part virtual series on Wednesdays in April from 1- 2:30pm ET. HMA’s expert faculty will also co-teach the sessions. Attendees will dive deep into organizational strategies and tactics to prepare, manage and respond to surveyors effectively – and get the essential skills to excel in survey readiness.
While some examples in the program will address issues from the New York state perspective, attendees from organizations nationwide should attend. Hospital and long-term care executive team and leaders in quality and compliance, survey coordinators, and risk management will benefit from attending.
Survey Readiness: Prepare, Respond, Succeed
Virtual Series | April 2 – 30
- April 2: Survey readiness 101: Overview and getting started
- April 9: Preparation: How to mitigate risk and prepare for upcoming surveys
- April 16: They’re here: Establishing a survey response and management protocol
- April 23: Responding to survey findings: How to develop a strong correction plan and knowing your options
- April 30: What’s next: Leveraging survey findings and strengthening organizational quality and compliance
The cost to attend this series is $475.
State hospital associations and their members can enjoy $50 off when using this code when registering: SHADISCOUNT25
To learn more and to register, visit http://hanys.org/events/survey-readiness.
Wakely, an HMA Company, Playbook
Providers Taking Medicare Advantage Risk: Financial Forecast Playbook. Wakely, an HMA Company, offers supports for providers, from fully outsourcing a data, actuarial, or financial function to very specialized expertise for a niche problem. Wakely recently developed a Provider Playbook that outlines steps that providers participating with Medicare Advantage (MA) plans can use to monitor their risk arrangements. Read More
NEW THIS WEEK ON HMA INFORMATION SERVICES
(Exclusive Access for HMAIS Subscribers):
HMAIS Reports
- Updated Medicaid Managed Care RFP Calendar: 50 States and DC
- Section 1115 Medicaid Demonstration Inventory
- Updated Ohio and Oregon State Overviews
Medicaid Data
Medicaid Enrollment and Financial data from Georgia, Kansas, Louisiana, Maryland, Minnesota, Missouri, New Jersey, Oregon, South Carolina, Tennessee, and Washington.
Public Documents:
Medicaid RFP documents from Alaska, California, Illinois, Nevada, and New Hampshire.
Medicaid Quality Strategy Reports, Medicaid Rate Certifications, External Quality Reports, Budget Variance Reports, Proposed Budgets, and other key documents from the following states: California, Idaho, Louisiana, Nevada, Ohio, Oregon, and Washington.
A subscription to HMA Information Services puts a world of Medicaid information at your fingertips, dramatically simplifying market research for strategic planning in healthcare services. An HMAIS subscription includes:
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- Excel data packages
- RFP calendar
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