On January 6, The Centers for Medicare & Medicaid Services (CMS) approved Medicaid State Plan Amendment . The SPA authorizes the California Department of Health Care Services Service (DHCS) to use an alternative payment methodology (APM) to pay Federally Qualified Health Centers (FQHC), Rural Health Clinics (RHC), and Tribal Health Programs at the Medi-Cal fee-for-service (FFS) rate for dyadic services. FQHCs and RHCs will receive a separate payment for dyadic services in addition to their standard prospective payment system (PPS)/all-inclusive payment rates in certain circumstances. This SPA is retroactively effective to March 15, 2023.
Key provisions are as follows:
颁补濒颈蹿辞谤苍颈补鈥檚 new set of dyadic benefits supports relationship-based caregiver and family surveillance and family-based interventions that bolster child development, recognizing the importance of the parent/caregiver and child dyad to support healthy child development. Dyadic health care services are ideally provided in the context of routine well child care in pediatric settings, meeting families where they regularly receive health care and related services.
Services are linked to a child鈥檚 Medi-Cal coverage, providing a basis for revenue recovery for primary care pediatric settings and for cases in which the parent/caregiver may not be a Medi-Cal beneficiary.
Services are exempt from the same day exclusion applied to FQHCand RHC settings. If FQHCs or RHCs have met their visit per day limit, then dyadic services provided to Medi-Cal-eligible members (children or parents/caregivers) will be reimbursed at the FFS rate. Any dyadic services that are provided to a non-Medi-Cal-eligible parents/caregivers for the direct benefit of Medi-Cal-eligible children will be reimbursed at the FFS rate.
Payment for dyadic FQHC and RHC services will be reimbursed at the applicable FFS rate in addition to Medi-Cal member visits, which are reimbursed at the applicable PPS rate.
In addition, the dyadic care benefit provides a pathway for families to access additional supports via the new . Family therapy is a psychotherapy service that managed care plans provide under Medi-Cal鈥檚 Non-Specialty Mental Health Services benefits. Family therapy services support members younger than age 21 to receive up to five family therapy sessions before a mental health diagnosis is required. More importantly, children and youth (younger than age 21) may receive family therapy without the five-visit limitation if they (or their parents/caregivers) demonstrate certain risk factors, including separation from a parent/caregiver because of incarceration, immigration status, or death; foster care placement; food insecurity; housing instability; exposure to domestic violence or trauma; maltreatment; severe/persistent bullying; and discrimination.
海角社区 (海角社区) has been proud to partner with HealthySteps, as a DHCS-recognized model, to provide an evidence-based ( approach to implementing the new dyadic care benefits. Contact our experts below to learn more.
With full Republican control, expect Congressional Republicans and the Trump Administration to quickly leverage the budget reconciliation process to pass legislation in several priority areas, including taxes, immigration, and domestic energy production. While expiring tax provisions may be the driving force of this year鈥檚 reconciliation efforts, Republicans are also likely to include other priorities, potentially including raising the debt ceiling, which will increase the need for reductions in mandatory health programs or changes to health care revenue to be used as offsets.
Budget reconciliation provides a rare opportunity to pass significant health care legislative changes on a party-line basis. However, while budget reconciliation has certain procedural advantages, it is also fraught with complex rules and procedures that can make it very difficult to pass large pieces of policy legislation intact.
Experts from Leavitt Partners, an 海角社区 company, recently held a webinar reviewing the budget reconciliation process, opportunities and legislative strategies to navigate this process, and potential policies that could be considered. Access the webinar replay . Contact experts Elizabeth Wroe, Josh Trent, and Sara Singleton if you鈥檙e interested in learning more about the specialized services our team can offer your organization to navigate the Congressional budget reconciliation process and its outcomes.
Trump Administration and Congress to Consider Policy Changes
This week, our In Focus section reviews the final . The Centers for Medicare & Medicaid Services (CMS) rule, released January 13, 2025, describes the policy and payment parameters for issuers that participate in federally facilitated and state-based marketplaces in 2026.
The NBPP is particularly notable given that marketplace enrollment is at an all-time high. Last week, CMS that 24.2 million people joined a marketplace plan during 2025 Open Enrollment, last year鈥檚 historically high enrollment levels by more than 2 million people.[1] With millions more individuals covered in the individual market, this final rule presents several opportunities for the healthcare industry to improve the well-being of covered individuals and families and the financial health of participating organizations.
Marketplace policies are under scrutiny, however, from new Trump Administration officials and congressional leaders. Subsidies, eligibility, and reimbursement are among the topics receiving the greatest attention.
Key highlights from the final rule and considerations for stakeholders in the changing healthcare landscape follow.
Consumer Protections
The final rule further strengthens consumer protections, consistent with the policies advanced during the Biden Administration. CMS finalized policies to achieve the following:
Protect consumers from agents and brokers seeking to make unauthorized changes to their healthcare coverage
Allow the agency to take enforcement actions against lead insurance agents for violations of marketplace standards
Expand the agency鈥檚 authority to immediately suspend an agent or a broker鈥檚 ability to make transactions within the marketplace if the information creates an unacceptable risk to the accuracy of marketplace eligibility determinations, operations, applicants, or enrollees, or marketplace IT systems
Update the model consent form, which helps agents and brokers document consent from consumers to assist with their marketplace enrollments and submission of marketplace eligibility applications
Revisions to Marketplace User Fees
The enhanced premium tax credits are the driving force behind the in nationwide marketplace enrollment to more than 24 million today from 11.4 million in 2020. If not extended, or if Congress takes no action by July 31, 2025, CMS will increase the user fees collected to pay for administration of HealthCare.gov as follows:
Increase fees to 2.5 percent of monthly premiums in 2026 for federally facilitated marketplaces (FFM) states, up from 1.5 percent in 2025
Increase fees to 2.0 percent of monthly in 2026 for state-based marketplaces on the federal platform (SBM-FPs)鈥攗p from 1.2 percent in 2025
CMS also is finalizing an alternative set of user fee rates. If enhanced premium tax credit subsidies are extended through the 2026 benefit year by July 2025 at the current or a higher level the following user fees rates will apply:
2 percent for FFM states
1.8 percent for SBM-FPs
CMS originally proposed a March 2025 subsidy extension deadline for activating the lower user fee. Insurer should take into account the higher user fees when setting their 2026 premiums鈥擲BMs as they finalize their 2026 user fee levels and FFM states considering the costs of staying in Healthcare.gov or transitioning to a SBM.
Premium Payment Threshold Options
CMS finalized new options for insurers to avoid triggering late payment grace periods for members who make most but not all their premium payment. The new threshold options are intended to minimize termination of coverage for people who owe small amounts. The options include:
For the first month鈥檚 premium payment to effectuate coverage鈥攐r binder payments鈥攖he only option is to use a net premium threshold as low as 95 percent
For all other premium payments after the first month鈥檚 payment, the options include:
Net premiums as low as 95 percent or a fixed dollar threshold of up to $10
Gross premiums percent of as low as 98 percent or fixed dollar threshold of up to $10
Fixed dollar thresholds will be adjusted for inflation.
Information Sharing and Transparency
CMS is finalizing policies designed to increase transparency and promote program improvements by publicly releasing state marketplace operations data, including spending on outreach and additional open enrollment customer service metrics, such as for call center performance surveys and website visits. The final rule clarifies that CMS will not publicly release each SBM鈥檚 annual State-based Marketplace Annual Reporting Tool (SMART), a reversal from what was proposed.
In addition, CMS is finalizing that it will share aggregated, summary-level Quality Improvement Strategy (QIS) information publicly on an annual basis starting January 1, 2026, with data submitted during the 2025 qualified health plan application period.
奥丑补迟鈥檚&苍产蝉辫;Next/Key Considerations
The new leadership at the US Department of Health and Human Services (HHS) and CMS will likely conduct a thorough review of these payment and policy changes. In consideration of potential repeals or modifications, states and marketplace plans will need to consider the following:
Uncertainty around extending or modifying Affordable Care Act subsidies
Potential statutory changes approved by Congress and regulatory changes from the Trump Administration
Review of existing operations and policies in light of the new regulations and the changing policy environment
Connect With Us
海角社区 experts support states, managed care organizations, consumer groups, and other interested stakeholders to achieve success in the operation of and participation in the marketplaces. Our team has the broadest historical perspective on the challenges and opportunities in this market and can support every step of the planning and execution processes to optimize markets as they continue to evolve in the coming months and years. If you have questions or want to discuss the final rule, contact聽our experts below.
[1] Centers for Medicare & Medicaid Services. Over 24 Million Consumers Selected Affordable Health Coverage in ACA Marketplace for 2025. January 17, 2025. Available at: https://www.cms.gov/newsroom/press-releases/over-24-million-consumers-selected-affordable-health-coverage-aca-marketplace-2025.
This week, our In Focus section examines the Centers for Medicare & Medicaid Services (CMS) calendar year (CY) , published January 10, 2025. That same day, CMS also released draft . This regulatory guidance includes CY 2026 payment updates as well as additional technical and methodological changes to MA and Part D for the coming plan year.
The release of the CY 2026 Advance Notice鈥攁long with the complementary CMS policy and technical proposed rule released in November 2024鈥攔epresent the last major Medicare regulations of the Biden Administration, and these annual payment and policy updates will be finalized under the incoming Trump Administration. As a result, the proposed MA and Part D payment policies could be modified before finalization in April 2025.
Comments on the Advance Notice are due by February 10, 2025, leaving a tight timeline for MA plans and other stakeholders to provide formal feedback and written comments to CMS. Following are brief summaries of the major proposals in the Advance Notice and key considerations for stakeholders as they analyze the proposals.
Payment Impact on Medicare Advantage Organizations
In the Advance Notice, CMS projects that federal payments to MA plans will increase by 4.33 percent from 2025 to 2026鈥攚hich represents a $21 billion increase in expected payments to MA plans next year. CMS estimates that federal payments to MA plans in 2026 will total $590.9 billion.
The proposed increase in payments accounts for several factors, including growth rates in underlying costs, changes to MA Star Ratings, continued implementation of the new risk adjustment model, and MA risk score trends. The estimated growth rate considers demographic changes in MA enrollment, including projected increases in the number of enrollees.
The Advance Notice estimates represent the average increase in payments to MA plans and actual payments will vary from plan to plan. Below, Table 1 provides estimates of the impact of proposed policy changes on net MA plan payments.
MA Risk Adjustment Changes
CMS intends to complete the three-year phase-in of the MA risk adjustment model that was first published in the CY 2024 Rate Announcement. Specifically, CMS proposes to calculate 100 percent of the risk scores using the new MA risk adjustment model, referred to as the 2024 hierarchical condition categories (CMS-HCC) framework. CMS maintains that the changes to the methodology for calculating risk have improved the predictive accuracy of the model while ensuring risk-adjusted payments to MA plans are accurate.
In addition, CMS has been working to calibrate the risk adjustment model based on MA encounter data, and CMS proposes to begin phasing in an encounter-based MA risk adjustment model as soon as CY 2027.
CMS also proposes to apply the statutory minimum MA coding pattern difference adjustment factor of 5.90 percent for CY 2026.
Technical Adjustment to Cost Calculations Related to Medical Education Costs
Similar to changes in the MA risk adjustment model, CMS plans to complete the three-year phase-in of technical adjustments to the per capita cost calculations related to indirect and direct medical education costs associated with services delivered to MA beneficiaries. This technical adjustment鈥攆inalized in the CY 2024 Rate Announcement鈥攈as reduced growth rates for MA plans because of the removal of MA-related medical education costs from the benchmarks.
MA Star Ratings
CMS reiterates its continued focus on moving toward a 鈥淯niversal Foundation鈥� of measures with the goal of creating metrics that center on clinical care, patient outcomes, and improved patient experiences and are aligned across CMS programs. In addition, CMS is soliciting initial feedback on both substantive measure specification updates as well as comments on new measure concepts. CMS also is seeking stakeholder feedback on modifications to the Health Equity Index, including adding social risk factors and geography (urban or rural) to the reward factor. Any specific changes to MA Star Ratings measures, including modifications to the Health Equity Index, would occur through the formal rulemaking process.
Medicare Part D Provisions
The CY 2026 Advance Notice and the include several payment and benefit updates as required in the Inflation Reduction Act (IRA) of 2022. The CY 2026 updates include:
The CY 2026 annual out-of-pocket cost threshold for Part D covered drugs is $2,100, which is the original out-of-pocket cap of $2,000 adjusted for the annual percentage increase in average expenditures for Part D covered drugs
Establishment of the selected drug subsidy program
Changes to the liability of enrollees, plan sponsors, drug manufacturers, and CMS in the standard Part D benefit design, specifically to account for the start of the Medicare Drug Price Negotiation Program in 2026
Guidance on the successor regulation exception to the IRA鈥檚 formulary inclusion requirement for selected drugs under the Medicare Drug Price Negotiation Program
Other previously implemented IRA reforms will continue in CY 2026, including no cost sharing for Medicare beneficiaries for Part D covered drugs in the catastrophic phase, which begins after the annual out-of-pocket threshold of $2,100 is reached; a $35 monthly cap on enrollee cost sharing for insulin; no cost sharing for adult vaccines recommended by the Centers for Disease Control and Prevention鈥檚 (CDC鈥檚) Advisory Commission on Immunization Practices and covered under Part D; and the requirement for Part D plans to offer the Medicare Prescription Payment Plan to beneficiaries.
What to Expect
The CY 2026 Advance Notice includes important technical, programmatic changes and payment updates for MA and Part D plans, which will be finalized when CMS publishes the final CY 2026 Rate Announcement on or before April 7, 2025. MA plans and other stakeholders have a rigid timeframe to provide formal input and written comments to CMS before the February 10 deadline.
Like the policy and technical changes included in the MA proposed rule, the CMS Advance Notice payment updates will be finalized under the incoming Trump Administration. MA plans and other stakeholder can anticipate that the new leadership at the US Department of Health and Human Services and CMS will closely examine and take a fresh look at the proposed payment and policy changes. Though the current CMS leadership maintains that payment updates included in the Advance Notice are sufficient to support stability in MA premiums and benefits, proposed payment policies can be modified or delayed as the new leadership takes shape.
For example, officials in the Trump Administration could seek to delay the phase in of the risk adjustment changes as well as the technical adjustment regarding medical education costs, which CMS estimates would result in an additional $10.4 billion in payments to MA plans.
Connect With Us
Medicare experts at 海角社区, will continue to assess and analyze the policy and political landscape, which will determine the final policies included in the CY 2026 Rate Announcement. 海角社区 experts have the depth of knowledge, experience, and subject matter expertise to assist organizations that engage in the rulemaking process and to support implementation of final policies, including policy development, tailored analysis, and modeling capabilities.
For details about the CY 2026 MA Advance Notice and its impact on MA and Part D plans, providers, and beneficiaries, contact our featured experts below.
Ohio Medicaid is no stranger to change. Over the last several years, there have been several broad policy changes, from a new managed care system, to new programs like OhioRISE, to an expansion of MyCare Ohio. And, during this time, there have been complicating factors like the covid-19 public health emergency and the resultant impact of inflation on the basic delivery of services and care. Now, as the Trump administration comes in for the second time, questions arise as to what to expect in Medicaid policy and how it may impact Ohio.
While it鈥檚 often overlooked, federal rule making has a significant impact on the operations of states. Just in the last couple of years, the Biden Administration has implemented policies including:
罢丑别听, such as the 80/20 policy, implementation timelines, and other questions regarding Home and Community Based Services waivers that states and certain stakeholders elevate to the Centers for Medicare & Medicaid Services (CMS).
罢丑别听, which聽addresses Medicaid聽managed care聽access, financing, and quality, including strengthening standards for timely access to care and states鈥� monitoring and enforcement efforts.
The Long-Term Care Facility (聽requires minimum聽聽for nursing facilities.
Two rules streamline Medicaid enrollment and renewal processes for the聽聽(MSP) and for聽. Each rule is expected to increase Medicaid enrollment by about one million people.
These rules are set to be implemented over several years. The Trump Administration could delay implementation of certain provisions, which would eliminate regulations while rolling back enrollee protections, payment transparency, and improved access. Alternatively, the Trump Administration could adjust their enforcement strategy or issue new regulations that would undo or augment these final regulations.
Beyond regulation, there is still the potential for fundamental policy change to the program鈥檚 financing. Notably, the concept of block grants or per-capita caps has reemerged as a potential option, where states would no longer receive federal 鈥渕atch鈥�, but rather a fixed amount based on historical averages. In fact, Energy and Commerce as an area of active conversation in the House Republican Caucus.
Making a fundamental, national change in the financing arrangement of Medicaid would require an act of Congress. Many think this movement away from a traditional reimbursement structure was one of the main reasons for the failure to repeal the Affordable Care Act during the first Trump administration. Notably, as Ohio is a 鈥渞ecipient鈥� state, meaning it receives more in federal taxes than it provides for the Medicaid program, this could significantly impact the long-term financial stability in future state budgets. Often, this challenge is why block granting is usually associated with additional state powers around curbing enrollment, services and coverage, so states may more easily cut the program to accommodate tighter financing.
Depending on how all of these changes would unfold, Medicaid programs, including Ohio鈥檚 may have to adopt their systems to accommodate. However, the Trump administration may also pursue greater flexibility for states to design and innovate in Medicaid in ways that are consistent with their goals. This could include greater flexibility to limit covered services, raise cost-sharing requirements, limit enrollment or require more frequent determination of eligibility. There may also be programmatic refocusing away from initiatives which center health equity and expanded coverage, including alternatives to 鈥淢edicaid expansion鈥�, as well as a fundamental reorientation of the use of waivers.
Speaking of waivers, there is likely going to be a dramatic change in the way waivers are applied and executed. This can include, but is not limited to, waivers that test new policies the prioritize cost-cutting measures over access and coverage, including waivers which change how the Medicaid expansion group is managed in states. Included in this are 鈥淲ork Requirement鈥� waivers, something . While examples from other states have shown that such waivers are , the Trump administration and many policymakers see these requirements as a way to ensure labor force participation. Though there is evidence to suggest
As Ohio providers, plans and policymakers gear up for the next state budget, the landscape of Medicaid policy will be something to pay attention to. While Medicaid represents nearly 48% of the total state budget, . What鈥檚 more, nearly 1 in 3 Ohioans rely on the program, disproportionately in rural communities, and it supports Ohio鈥檚 second largest industry in healthcare. Make sure you stay on top of the latest updates to the program in Ohio and beyond and sign up for 海角社区s Weekly Roundup.
Ohio Health Policy Snapshots
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The Centers for Medicare & Medicaid Services (CMS) on January 6, 2025, announced that 15 states have been selected to participate in the agency鈥檚 new TMaH) Model. They are: Alabama, Arkansas, California, the District of Columbia, Illinois, Kansas, Louisiana, Maine, Minnesota, Mississippi, New Jersey, Oklahoma, South Carolina, West Virginia, and Wisconsin. This week, our In Focus section reviews this initiative and the need for improved maternal healthcare for Medicaid and Children鈥檚 Health Insurance Plan (CHIP) enrollees.
Adverse Maternal Health Outcomes Among Medicaid and CHIP Enrollees
Medicaid and CHIP programs cover a large portion of all births in the United States. According to a CMS data brief published in December 2024, , the public health programs covered 41 percent of all births that year. In some states, Medicaid and CHIP-covered healthcare accounted for up to 67 percent of births.
The data brief examines the trends of premature births and severe maternal morbidity (SMM) events鈥攊ncluding blood transfusion, acute respiratory distress syndrome, sepsis, acute renal failure, ventilation, and other conditions鈥攊n Medicaid and CHIP-covered births for people ages 15 to 49 between 2019 and 2021. During this period, the percentage of preterm live births increased from 10.5 percent to 10.8 percent, and SMM rates increased from 209.6 per 10,000 live births to 252.7 per 10,000 live births.
Some demographic groups had higher rates of preterm births and SMM than others. Enrollees who were Medicaid-eligible because of disability had more than 1.5 times the percentage of preterm births, and nearly double the rate of SMM than enrollees in other eligibility categories. In addition, non-Hispanic Black enrollees and non-Hispanic Native American enrollees had the highest rates of preterm births and SMM compared with all other racial and ethnic groups.
With the increasing adverse maternal health outcomes facing Medicaid and CHIP enrollees, as well as people with private insurance, state leaders and their partners are looking toward different initiatives to help improve outcomes. As governors prepare for their 2025 State of the State Addresses, several are expected to identify maternal health as a key priority. Their priorities will initiate and build on policy changes and other actions in development since 2022, such as expanding Medicaid coverage to 12 months postpartum, collecting and publishing actionable data on pregnancy-associated and pregnancy-related mortality and causes, and directing funding to expand targeted high-quality care provided by doulas and community health workers (CHWs), for example.
TMaH Model
The TMaH Model, which CMS introduced in December 2023, is designed to improve maternal healthcare, improve health outcomes for Medicaid and CHIP-covered births, and lower healthcare expenditures. The model centers on three main pillars described in Table 1.
Notably, the model is intended to facilitate design and implementation of a value-based alternative payment model for maternity care services. It also includes a health equity strategy to address disparities among racial and ethnic minorities, as well as people who live in rural and underserved areas.
The 10-year TMaH Model has an initial three-year implementation period that began January 1, 2025. During that time, states will receive targeted technical assistance to develop and implement elements of the model while achieving pre-implementation milestones. Moreover, participating states will receive up to $17 million in cooperative agreement funding to support planning and implementation over 10 years.
Obstetrical Quality Measures and Standards
To further support the goals of the TMaH Model, CMS has new national health and safety standards, known as conditions of participation (CoPs), for hospitals and critical access hospitals that offer obstetrical services. These CoPs represent a significant step in advancing maternal health outcomes by requiring maternal quality assessment and performance improvement programs, setting baseline standards for the organization, staffing, and delivery of obstetrical care, and mandating staff training in evidence-based maternal health practices.
By establishing a consistent standard of high-quality maternity care for all Medicaid participating facilities, the CoPs complement the TMaH Model鈥檚 pillars of quality improvement and safety, as well as whole-person care. Together, these initiatives are intended to produce a unified framework for reducing maternal morbidity and mortality, addressing health disparities, and fostering equitable, patient-centered care across participating states.
Key Considerations
The new TMaH Model provides participating state Medicaid agencies (SMA) with an opportunity to accelerate their efforts to improve maternal health outcomes for a large percentage of their maternal population. State TMaH planning initiatives will need to consider the model requirements and include:
Strengthening partnerships. The model provides states with an opportunity to strengthen collaboration with and build capacity among key partners, including Perinatal Quality Collaboratives, hospitals, birth centers, healthcare centers and rural health clinics, maternity care providers, and CBOs, to successfully implement the model. Specifically, states can work with providers to use provider infrastructure payments to support their engagement with CBOs that can address the HRSNs and behavioral health needs of beneficiaries and integrate them into screening, referral, and follow-up activities.
Defining the role for managed care organizations (MCOs). Agencies will need to work with MCOs and stakeholder groups to support the model. SMAs may designate some of their Cooperative Agreement funding to MCOs to support infrastructure and capacity building for the TMaH Model.
Integrating TMaH with existing and other planned initiatives. Optimizing the TMaH Model requires states and their partners to consider how the framework complements and may be incorporated into other state initiatives. Specifically, the TMaH Model will require reporting on screening for three domains of HRSNs: food insecurity, housing instability, and transportation. The TMaH Model will require use of a validated health IT-encoded HRSN screening instrument, such as the Accountable Health Communities HRSN screening tool. States and their partners can integrate existing HRSN tools and Medicaid section 1115 demonstration initiatives with efforts carried out using the TMaH Model.
Connect With Us
Join 海角社区 (海角社区) experts聽Michelle Hurst,聽Marilyn Johnson, and聽Zipatly V. Mendoza聽for the聽Improving Maternal Health Outcomes: Navigating CMS Guidance for Better Care聽webinar on January 28, 2025. They will dive deeper into recent CMS regulations and other federal developments that affect maternal health, actionable strategies to implement regulations, and approaches to reduce maternal health disparities and ensure equitable care.
Through a new collaboration with , 海角社区鈥檚 Strategy & Transformation practice aims to foster innovation in Medicaid and public healthcare. This collaboration seeks to support a new generation of public health innovators, focusing on transformative approaches to healthcare payment, policy, and delivery.
Kyle Murphy and R.J. Briscione presenting.
Kyle Murphy and R.J. Briscione of 海角社区鈥檚 Strategy & Transformation Practice will mentor early-stage companies, deliver guest lectures on the U.S. public healthcare system, and co-develop thought leadership pieces with Stanford faculty and students at Stanford Emergence Program.
This multi-faceted collaboration is designed to provide real-world insights to aspiring healthcare entrepreneurs aiming to improve public health outcomes and equity.
Prof. Narges Baniasadi, who is the founder and executive director of Emergence program says: 鈥淲e are excited about our growing collaboration with 海角社区 team to catalyze the translation of academic research to impactful innovations for public health and to educate budding entrepreneurs on ways they can scale their impact through working with the public sector.鈥�
Dr. Narges Baniasadi oversees this new initiative that strives to 1) catalyze impact entrepreneurship to address systemic challenges in the health of our society and planet and 2) shift the culture of the innovation ecosystem to be more mission-driven and inclusive. At the core of Emergence is its mission to inspire, educate, and support the next generation of innovators to improve societal and planetary health through impact entrepreneurship.
Early in January, 海角社区鈥檚 Strategy & Transformation Practice will also participate in the 鈥檚 implementation bootcamp for its 2024-25 cohort of Innovation Fellows. Murphy and Briscione will focus on expanding the Innovation Fellows鈥� understanding of Medicaid and assessing its viability as a go-to-market strategy for innovative solutions. Since 2001, Stanford Biodesign has educated and empowered aspiring and experienced innovators interested in improving healthcare with technology innovation through fellowships, graduate and undergraduate courses, faculty training, and executive education.
To date, the center has trained 219 Innovation Fellows through a 10-month program where they learn to identify and screen important unmet health needs, invent technology-based solutions to address the most promising ones (including medical devices, diagnostics, digital health, drug delivery, and biotechnology solutions), and prepare to implement them into patient care. The Strategy & Transformation Practice brings valuable experience to this collaboration, having previously worked with companies that have emerged from Biodesign trainee projects.
This collaboration elevates 海角社区鈥檚 position within the innovation ecosystem and prepares founders to build and scale products designed for Medicaid populations. By bridging the gap between evidence-based research and practical implementation, this effort has the potential to drive changes in public healthcare policy and delivery, generate the development of cost-effective healthcare solutions, and improve healthcare access for vulnerable populations. As 海角社区 continues to lead in healthcare consulting,supporting the Emergence Program and Stanford Biodesign reinforces its commitment to fostering innovation and improving public health outcomes across the country.
This week, our In Focus section also reviews the significant efforts under way in Ohio to transform how the state provides healthcare services to its Medicare and Medicaid dual-eligible population. Effective January 1, 2026, MyCare Ohio will transition to the Next Generation of its program for people who are dually eligible for both programs.
Overview of Ohio鈥檚 Transition to Next Generation MyCare Ohio
This evolution moves Ohio to a fully integrated dual-eligible special needs plan (FIDE-SNP) model that seeks to achieve several key goals through a population-based health approach designed to address inequities and disparities in care for dual-eligible individuals. Examples include:
Improved Care Coordination: Strengthening integration between Medicare and Medicaid services to provide seamless, holistic care for individuals, thereby reducing fragmentation and ensuring comprehensive management of medical, behavioral, and social needs
Personalized Care:聽Applying data analytics and technology to create more tailored care plans, with a focus on proactive care to address the unique health needs of each individual, especially people with chronic conditions
Expanded Access to Services: Increasing accessibility, particularly through telehealth and digital tools, to reach underserved populations and improve accessibility, particularly for people living in rural or remote regions
Enhanced Quality of Care:聽Shifting focus from service volume to outcomes, encouraging providers to deliver high-quality care and improve patient satisfaction, while incentivizing preventive care to reduce hospital admissions and other high-cost interventions
Technology Integration:聽Leveraging advanced technologies like mobile apps, predictive analytics, and telemedicine to monitor patient health, improve communication between patients and providers, and deliver care more efficiently
The program currently is offered in 29 counties across Ohio but will transition to a statewide program as a part of the Next Generation changes. In addition, coordination only dual-eligible special needs plans (CO-DSNP) will no longer be permitted.
After the Ohio Department of Medicaid (ODM) publicly released the request for applications and evaluated submitted proposals, the agency selected four managed care organizations (MCOs), which will become the Next Generation MyCare plans. The ODM contracts to the following MCOs that will serve MyCare members beginning in January 2026: Anthem Blue Cross and Blue Shield, Buckeye Health Plan, CareSource, and Molina HealthCare of Ohio.
Considerations for the Market
The shift to the FIDE-SNP model and selection of four participating health plans will have a considerable impact on the competitive landscape for Medicare and Medicaid managed care in Ohio. The resulting changes may affect both selected and non-selected participants in different ways, including:
Increased competition among MyCare MCOs: MCOs will need to focus on enhancing their care coordination systems, adopting new technologies, and developing personalized care plans to compete not just in terms of the volume of services provided, but also to the quality and effectiveness of healthcare delivery. Those plans that can best integrate services, offer proactive care management, and improve patient outcomes through value-based care and advanced technology initiatives will gain the competitive advantage, potentially attracting more beneficiaries.
Strategic responses of nonparticipating MCOs to counter potential membership and financial losses: MCOs that lose members because they were not selected or are unable to offer CO-DSNPs moving forward, will likely strategize to gain membership through other product lines or benefit design to offset losses. Strategies may vary but might include tactics such as: enhancing benefits or decreasing member cost sharing to entice member movement across carriers for non-D-SNP plans; finding innovative ways to further reach different segments of the Medicare population, such as Special Supplemental Benefits for the Chronically Ill (SSBCI) packages or Chronic Condition SNP plans; or shifting their focus to product lines outside of Medicare Advantage and Medicaid.
Connect with Us
Ohio is one of many states transitioning to a FIDE model beginning January 2026. 海角社区, Inc. (海角社区), has successfully supported participating and nonparticipating carriers throughout the transition process and continues to be a dedicated partner to organizations navigating Medicare and Medicaid changes across the country.
Contact our featured experts below, to learn more about the Ohio FIDE-SNP initiative and 海角社区鈥檚 capabilities and expertise to support states, carriers, and other key partners with these transitions.
The Centers for Medicare & Medicaid Services (CMS) announced on December 16, 2024, that it will be terminating the (VBID) model at the end of 2025 because of the model鈥檚 鈥渟ubstantial and unmitigable costs to the Medicare Trust Funds.鈥� This In Focus article delves into the factors driving CMS鈥檚 decision and considerations for policymakers, Medicare Advantage Organizations and other interested stakeholders.
VBID Outcomes
VBID, run by the CMS Innovation Center, is not a permanent part of the Medicare Advantage (MA) program. Innovation Center models are required to be modified or terminated if they are a cost to the program.
CMS found that costs for the VBID model totaled $2.3 billion in calendar year (CY) 2021 and $2.2 billion in CY 2022, an unprecedent amount for an Innovation Center model. CMS concluded that these substantial expenses鈥攄riven by increased risk score growth and Part D expenditures鈥攚ere unmitigable through policy modifications. Therefore, consistent with statutory requirements, CMS took action to terminate the model by the end of 2025. Earlier this year, CMS announced it would discontinue the part of VBID that allowed MA plans to offer hospice services.
Next year, the VBID model will have 62 participating MA plans and is projected to offer 7 million Medicare beneficiaries additional benefits and/or rewards, including those designed to address social determinants of health and reduce cost-sharing for prescription drugs used to treat and manage chronic conditions. As part of the announcement, CMS pledged to support a stable transition for all enrollees in MA plans participating in the MA-VBID model and emphasized that key benefits available under the model will continue to be widely available, including supplemental benefits that address the whole-person healthcare needs of beneficiaries. In addition, CMS noted beneficiary cost-sharing for prescription drugs will be reduced as the result of the expansion of the low-income subsidy program under the Inflation Reduction Act and the CMS Innovation Center鈥檚 Medicare $2 Drug List Model, which is slated to begin in 2027.
As part of the announcement, CMS released an executive summary of a forthcoming evaluation report, with the full report expected to be released in early 2025.
Key Considerations
Since the MA-VBID model鈥檚 launch in 2017, the program has experienced significant growth through a series of legislative and model changes, including requirements in the Bipartisan Budget Act of 2018 that expanded eligibility to MA plans in all 50 states and allowing all types of MA special needs plans to participate in MA-VBID. Previous CMS found that the MA-VBID model led to improvements in the quality of care for beneficiaries and promoted greater adherence to prescription drugs used to treat and manage chronic conditions. Though CMS has concluded that excess costs require the termination of MA-VBID by the end of 2025, the incoming Trump Administration can be expected to closely examine this decision and look at the entire Innovation Center portfolio.
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海角社区, Inc. (海角社区), Medicare experts will continue to assess and analyze the response to CMS鈥檚 announcement, including the incoming administration鈥檚 views on the decision and potential alternatives. 海角社区鈥檚 experts have the depth of knowledge, experience, and subject matter expertise to assist MA organizations and interested stakeholders in analyzing and adapting to the marketplace as the MA-VBID program ends.
For further analysis of the MA-VBID decision and its impact on the market, contact our experts below.
This week, our In Focus section reviews the year-end legislative package congressional leaders announced as part of the stopgap funding to prevent a government shutdown. The , which was unveiled December 18, 2024, would extend expiring Medicaid and Medicare policies, reauthorize health and human services programs, and extend federal funding for discretionary programs through March 14, 2025. The existing temporary funding measure expires December 20, 2024.
Following is a summary of several major healthcare policies that, if approved, will inform the shifting federal policy landscape and state and local programs in 2025.
Pharmacy Benefit Managers
The healthcare package includes policies that reflect several years of increased scrutiny on pharmacy benefit managers (PBMs), including:
Prohibiting PBMs from charging a Medicaid managed care organization more for a drug than the amount that a PBM pays a pharmacy (i.e., spread pricing)
Requiring consistency and additional transparency in contracts between Part D plans and PBMs
Prohibiting Medicare Part D plans from linking payments to drug list prices
Adding report requirements for PBMs
Medicaid Policies and Programs
The legislative text includes 13 separate sections that address Medicaid policies, including extensions on expiring policies, establishment of new programs, and plans to codify certain other policies related to Medicaid eligibility and renewals. These policy changes include:
Medicaid Disproportionate Share Hospital (DSH) allotment: Eliminates reductions for fiscal year (FY) 2025; delays the effective date of the two remaining years of Medicaid DSH allotment reductions until January 1, 2027; and changes the definition of the Medicaid shortfall component of the Medicaid DSH cap to include costs and payments for patients who have Medicaid as their primary source of coverage and for patients who are dually eligible for Medicare and Medicaid.
Home and community-based services (HCBS) waiver: Establishes a three-year, five-state Medicaid HCBS waiver program, which would allow states to cover these services for individuals who need them but do not meet the current statutory requirement of needing 鈥渋nstitutional level of care.鈥� States will have an opportunity to apply for planning grants.
Services for juveniles leaving public institutions: Delays by 12 months the requirement that state Medicaid programs provide screenings, diagnostic services, and targeted case management services for eligible juveniles within 30 days of their scheduled date of release from a public institution following adjudication.
Medicare Payments
The compromise package also increases the Medicare Physician Fee Schedule conversion factor by 2.5 percent in 2025 to partially offset a 2.83 percent cut that the Centers for Medicare & Medicaid Services (CMS) finalized in November. Providers consider this a short-term fix, however, and Congress, provider advocates, and other interested parties are engaged in discussions about making broader changes to Medicare physician pay in 2025.
Notably, the agreement includes a payment policy consistent with a bill that the House of Representatives passed earlier this year鈥攖he Lower Cost More Transparency Act鈥攖o provide enhanced information about payment differentials between off鈥恈ampus outpatient departments and other outpatient facilities. The provision requires each off-campus outpatient department to obtain and bill for services under a unique national provider identifier.
Other notable Medicare policies include:
Telehealth: Extends Medicare telehealth flexibilities through December 31, 2026; establishes special rules for telehealth services provided by Federally Qualified Health Centers and Rural Health Clinics for prospective payment and all-inclusive rates; adds modifiers for telehealth services provided incident-to other services and those offered via contracts with virtual platform vendors; expands services that can be provided via telehealth; and enhances tracking of telehealth use
Payment extensions: Extends the Medicare low-volume hospital payment adjustment and Medicare-dependent hospital program through December 31, 2025; Medicare ground ambulance add-on payments through December 31, 2026; incentive payments for advanced alternative payment models through payment year 2027 at an adjusted amount of 3.53 percent; and Qualifying Participant eligibility thresholds in effect for performance year 2023 through payment year 2027
Hospital at-home program: Extends the Acute Hospital Care at Home initiative through December 31, 2029
Part D: Prohibits cost sharing for generic drugs for Part D beneficiaries who are eligible for the low-income subsidy
Provider directories: Requires Medicare Advantage plans to maintain accurate provider directories on a public website beginning in plan year 2027
Screening: Adds multi-cancer early detection screening tests as a covered benefit beginning in 2029
Home infusion: Allows coverage of home infusion treatments by classifying certain approved infusion treatments as Durable Medical Equipment (DME)
Other Notable Provisions
Reauthorizes and revises the Second Chance Reauthorization Act of 2024, including allowing substance use disorder (SUD) services to be provided through the State and Local Reentry Demonstration Projects program
Reauthorizes and modernizes several aspects of child welfare programs
Provides mandatory funding for community health centers and the National Health Service Corps through FY2026, the Teaching Health Center Graduate Medical Education Program through FY2029, and the Special Diabetes Programs (SDP) for Type I diabetes and the SDP for Indians through FY2026
Reauthorizes through FY 2029 the SUPPORT for Patients and Communities Act, which includes a range of mental health and SUD prevention, treatment, and recovery programs
Reauthorizes Older Americans Act programs
Reauthorizes several programs and authorities related to preparedness and response through FY2026, including the Public Health Emergency Preparedness Program and the Hospital Preparedness Program
What鈥檚 Next
Funding for the federal government expires December 20, 2024. Congress will need to approve another temporary measure to avert a government shutdown. The length and scope of such an extension remains under discussion, though the current continuing resolution would push the funding deadline into the first few months of the incoming Trump Administration and new Congress. Healthcare stakeholders, including payers, state and local governments, providers, and community organizations, should continue to monitor the congressional negotiations and be prepared to analyze the impact of legislation that Congress ultimately approves.
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海角社区, Inc. (海角社区) experts will continue analyzing the implications of the funding and policy updates in the December 18 package and ongoing congressional discussions to reach an agreement. 海角社区鈥檚 experts have the depth of knowledge, experience, and subject matter expertise to assist organizations with navigating these changes and the impact for health and health adjacent sectors. Please contact Laura Pence and Andrea Maresca to connect with our experts.
This week’s聽In Focus聽section summarizes states’ Medicaid Section 1115 demonstration priorities over the last four years and highlights predicted changes coming with a new presidential administration. In the waning days of any presidency, regardless of party, reviewing and approving pending Section 1115 applications that reflect the current administration鈥檚 key policy initiatives is a priority for officials at the Centers for Medicare & Medicaid Services (CMS).聽
Each administration has discretion over which Section 1115 demonstrations to encourage and approve. Though specific Medicaid priorities under the upcoming Trump Administration are still nascent, 海角社区, Inc. (海角社区), federal, and state experts are monitoring these developments. This article describes a subset of the signature initiatives the Biden Administration permitted states to pursue in their Medicaid Section 1115 demonstrations and how the new administration could focus on different priorities, rescind existing guidance, or potentially withdraw already approved waivers.
Overview of Biden-Era Section 1115 Demonstration Initiatives
CMS-approved Section 1115 demonstrations permit alternative methods to improve the accessibility, coverage, financing, and delivery of healthcare services under joint federal-state funded programs, specifically Medicaid and the Children鈥檚 Health Insurance Program (CHIP).
Addressing health disparities and promoting integrated care in Medicaid became a primary focus of the Biden Administration. In November 2023, CMS introduced a , 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 new initiatives were not intended to replace other federal, state, and local social service programs, but rather to coordinate with those efforts. HRSN demonstration approvals to date include coverage of rent/temporary housing and utilities for up to six months and nutrition support (up to three meals per day), departing from longstanding prohibitions on payment of room and board in Medicaid.
During the present administration, CMS also has provided novel opportunities for states to adopt strategies that promote continuity of Medicaid coverage, mainly through bolstering Section 1115 demonstrations to provide 鈥痜or children. In addition, CMS released鈥痠n April 2023 so states could apply for a new Section 1115 demonstration opportunity to test transition-related strategies that support community鈥痳eentry鈥痜or incarcerated people who would otherwise be eligible for Medicaid or CHIP.
The table and map below show the types of demonstrations approved and pending to date. We anticipate that incoming administration officials will closely examine the four demonstration initiatives outlined as they determine their own Medicaid policy agenda and priorities. Under President Biden鈥檚 Administration, nine states received federal approval for HRSN demonstrations under the new framework. Another 10 states have applications pending.
Rescissions and renewals. Incoming Trump Administration officials technically could attempt to rescind some of the Section 1115 demonstrations approved during the Biden Administration. The Biden Administration unsuccessfully pursued with, a similar strategy for certain 1115 demonstration components approved during President-Elect Trump鈥檚 first term. Like the Biden Administration, the incoming Trump officials may choose not to renew demonstrations, even if the courts prevent them from rescinding approvals.
Any signature Section 1115 policy is unlikely to emerge until the new administration鈥檚 policy officials are in place. There are, however, important insights to consider based on the first Trump Administration鈥檚 priorities and areas of common ground across the Biden and first Trump administrations.
Signature 1115 initiatives. During President Trump鈥檚 first term, one signature鈥�痑llowed states to apply work requirements to some eligibility groups. CMS officials at that time also approved 鈥痜or certain components of a state鈥檚 Medicaid program. Some states might consider revisiting these options with incoming administration officials. Two other key policy areas to watch following the transition include:
The first Trump Administration聽鈥痑 pilot program to test interventions addressing HRSNs in 鈥�疢edicaid 1115 demonstration program. Though the approved HRSNs were less expansive than the HRSN 1115 interventions later announced by the Biden Administration, this could be an area of common ground where the policy evolves and can be incorporated into discussions on other nascent initiatives.聽
Multiple administrations, including the first Trump Administration, have prioritized Medicaid policies and demonstration initiatives to address substance use disorders (SUD) and, separately, reentry. 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 parameters.聽
Implementation Considerations
Federal approval of Medicaid Section 1115 demonstration proposals is a critical milestone for states. Demonstration implementation also requires significant and ongoing leadership, resources, and collaboration between states and CMS and states and their partners.
The type of state demonstration activity is expected to shift dramatically over the course of the new administration. For example, proposals may shift from expansions in coverage and benefits to reflect the new administration鈥檚 other priorities. States, too, may consider alternative approaches to Section 1115 demonstrations, such as state plan authorities like in lieu of services (ILOS), to pursue certain innovative approaches that they might otherwise have implemented with demonstration authority.
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海角社区 empowers states, providers, and other stakeholders to thrive in an ever-changing healthcare landscape. With deep expertise at every level, 海角社区 teams support state Medicaid programs and stakeholder partners nationally to address a range of operational challenges, including designing innovative healthcare approaches to address urgent healthcare challenges, expanding coverage opportunities, and optimizing integration to address program efficiencies and improved 鈥渨hole person鈥� care.
We have expertise in all of the components critical to developing Section 1115 programs鈥攆rom the policy knowledge, to actuarial/budgeting talent, to communications and project management skills, as well as the necessary IT infrastructure.
Contact鈥痮ur featured experts below聽to learn more about 海角社区鈥檚 capabilities and expertise.聽
The transition of MyCare Ohio to the Next Generation of its program on January 1, 2026, marks a significant evolution in the way Ohio provides healthcare services to its dual-eligible population 鈥� those who qualify for both Medicaid and Medicare services.聽This evolution moves Ohio to a Fully Integrated Dual Eligible Special Needs Plan model (FIDE SNP) that aims to achieve several key goals through a population health approach, designed to address inequities and disparities in care for dual-eligible individuals.聽These goals include:
Improved Care Coordination. Strengthening integration between Medicare and Medicaid services to provide seamless, holistic care for individuals, reducing fragmentation and ensuring comprehensive management of medical, behavioral, and social needs.
Personalized Care. Utilizing data analytics and technology to create more tailored care plans, with a focus on proactive care to address the unique health needs of each individual, especially those with chronic conditions.
Expanded Access to Services. Increasing accessibility, particularly through telehealth and digital tools, to reach underserved populations and improve convenience for patients, particularly those in rural or remote areas.
Enhanced Quality of Care. Shifting focus from service volume to outcomes, encouraging providers to deliver high-quality care and improve patient satisfaction, while incentivizing preventive care to reduce hospital admissions and other high-cost interventions.
Technology Integration. Leveraging advanced technologies like mobile apps, predictive analytics, and telemedicine to monitor patient health, improve communication between patients and providers, and enable more efficient care delivery.
The current MyCare program is offered in 29 counties across Ohio but will transition to a statewide program as a part of the Next Generation changes. Additionally, Coordination Only Dual Eligible Special Needs Plans (CO DSNP) will no longer be permitted.
After the Ohio Department of Medicaid (ODM) publicly released the request for applications (RFA) and evaluated submitted proposals, they selected four Managed Care Organization (MCOs) that will become the Next Generation MyCare plans. The ODM awarded the following MCOs to serve MyCare members beginning in January 2026: Anthem Blue Cross and Blue Shield, Buckeye Health Plan, CareSource, and Molina HealthCare of Ohio.
The shift to the FIDE SNP model and selection of four participating health plans will have a considerable impact on the competitive landscape for Medicare and Medicaid managed care in Ohio. The resulting changes can affect both selected and non-selected participants in different ways, including:
Increased competition among chosen MyCare MCOs. MCOs will need to focus on enhancing their care coordination systems, adopting new technologies, and developing personalized care plans to compete not just on the volume of services provided but also on the quality and effectiveness of care. Those who can best integrate services, offer proactive care management, and improve patient outcomes through value-based care and advanced technology initiatives will gain the competitive advantage, potentially attracting more beneficiaries.
Strategic responses of nonparticipating MCOs to counter potential membership and financial losses. MCOs that lose membership by not being selected, or are unable to offer CO DSNPs moving forward, will likely strategize how to gain membership through other product lines or benefit design to offset losses. Strategies may vary but could include tactics such as enhancing benefits or decreasing member cost shares to entice member movement across carriers for non-DSNP plans; finding innovative ways to further reach different segments within the Medicare population, such as Value Based Insurance Design (VBID) packages or Chronic SNP plays; or shifting focus to product lines outside of Medicare Advantage and Medicaid.
Ohio is one of many states transitioning to a FIDE model beginning January 2026. 海角社区 (海角社区) has successfully supported participating and non-participating carriers throughout the transition process and continues to be a dedicated partner to organizations navigating Medicare and Medicaid changes across the country. Contact one of 海角社区鈥檚 many experts for more details on how to navigate this evolution in health care.
