HHS Publishes New Rights of Conscience Final Rule

On January 11, 2024, the US Department of Health and Human Services (HHS) published its new final rule governing federal healthcare conscience protection statutes. The 2024 final rule, which went into effect March 11, 2024, repeals the majority of the prior final rule from 2019 that was found to be unlawful by three federal courts and reverts to the 2011 framework created by the Obama administration to address rights of conscience.

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Update on Texas Senate Bill 14-Related Lawsuits

In May 2023, the Texas Legislature passed Senate Bill No. 14 (SB 14), which prohibits physicians and other licensed medical professionals from providing gender-affirming medical care to minors. The bill faced numerous legal challenges but ultimately went into effect on September 1, 2023. The case challenging the bill remains pending before the Texas Supreme Court.

Amidst the legal challenges, the Texas Office of the Attorney General has used its investigative and enforcement powers under the Texas Deceptive Trade Practices Act to initiate investigations of a hospital and telehealth clinic based outside of Texas in connection with their provision of gender-affirming care to minors.

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CMS Releases CY 2025 Advance Notice for Medicare Advantage and Part D

On January 31, 2024, the US Centers for Medicare & Medicaid Services (CMS) released the Advance Notice of Methodological Changes for Calendar Year (CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C and D Payment Policies. CMS also released a press release and fact sheet. The advance notice is released on an annual basis and includes proposed updates to the capitation and risk adjustment methodologies used to calculate payments to MA plans, as well as other payment policies that impact Part D. The final CY 2025 rate announcement will be published no later than April 1, 2024.

The advance notice discusses several updates the Inflation Reduction Act of 2022 (IRA) made for 2025, including:

As a result of the IRA, CMS proposes updates to the Part D risk adjustment model to reflect the Part D benefit design.

CMS is annually required to update the parameters for the defined standard Part D drug benefit. This is meant to ensure that the actuarial value of the drug benefit tracks changes in Part D expenses. For non-low-income subsidy beneficiaries, the advance notice outlines the benefit parameters for defined standard benefits in 2025 as follows:




California Employee Civil Rights Defenses Following Estrada Case

On January 18, 2024, in a highly anticipated and unanimous decision, the Supreme Court of California barred striking a claim under the Private Attorneys General Act (PAGA) on trial manageability grounds alone, instead authorizing due process defenses to PAGA claims (Estrada v. Royalty Carpet Mills, Inc.). The decision also commented approvingly on representative testimonies, surveys and statistical analyses. As a result of the decision, employers now face a new challenge of marshalling such evidence to their defenses and challenging the misuse of such evidence on due process grounds in future PAGA litigation.

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Pending Oregon Law Undermines Traditional Physician Practice Structure

In an apparent attempt to shield physician practices from perceived abuses of close association with physician practice management (PPM) companies, a pending Oregon law could undermine a broad range of structures and transactions between physicians and laypersons, including loans, real estate leases, practice sales, national virtual care platforms, investor sponsored practice roll-ups and payor-provider joint ventures.

Oregon House Bill 4130 prohibits several relationships and control structures which would materially constrain the typical PPM structure utilized by hospitals, private equity sponsors, virtual care providers, managed care companies and others to create a more integrated approach to care delivery, to take advantage of efficiencies and, in many instances, simply to operate.

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