Health Law Advisor

In recent years, the Centers for Medicare & Medicaid Services (CMS) has approved demonstrations under Section 1115 of the Social Security Act, providing federal matching funds for state expenditures for Designated State Health Programs (DSHP) and Designated State Investment Programs (DSIP) that advance the Medicaid program.

But on April 10, CMS published a State Medicaid Director Letter stating CMS “does not anticipate approving new state proposals of section 1115 demonstration expenditure authority for federal DSHP or DSIP funding or renewing existing Section 1115 demonstration expenditure authority for federal DSHP or DSIP funding, including when current DSHP or DSIP authority concludes before the expiration date of the demonstration.”

The reasoning? CMS has concluded that these programs were funded entirely without Medicaid funds prior to their approval, and the additional federal funds that they received “does not render these programs as integral components of section 1115 demonstration programs.” CMS now frowns on the notion that the federal government should: (i) share in the costs of funding these state programs; (ii) reduce state obligations with respect to services that CMS deems not otherwise covered by Medicaid; (iii) and “[serve] primarily as a financing mechanism for states, resulting in increased federal expenditures.”

New from the Diagnosing Health Care Podcast: From removing diversity, equity, and inclusion initiatives to suspending foreign aid and canceling federal funding, it is clear that the current administration is drastically changing the landscape of government-funded research as we know it.

What should research institutions be doing now to best prepare themselves for what's to come? 

On this episode, Epstein Becker Green attorneys Marylana Saadeh Helou, Emily Chi Fogler, and Elizabeth McEvoy discuss how recent executive actions are impacting federally funded research at ambulatory medical centers, hospitals, universities, and other institutions, as well as how these actions may impact existing or future grants from the government.

On March 25, 2025, U.S. Senators Bill Cassidy, M.S. (R-LA) and Jeff Merkley (D-OR) introduced the No Unreasonable Payments, Coding, or Diagnoses for the Elderly (No UPCODE) Act (the “Bill”). According to Senator Cassidy’s press release, the Bill aims to improve how Medicare Advantage plans evaluate patients’ health risks, reduce overpayments for care, and save taxpayers money by removing incentives to overcharge Medicare. If passed, this Bill would have a tremendous impact on plans, vendors, and risk-bearing provider groups relative to Medicare Advantage (“MA”).

Background

Traditional Medicare (Parts A and B) reimburses health care providers based on the cost of services already rendered (known as “Fee-for-Service” or “FFS”). Conversely, MA functions as a prospective payment model, whereby Medicare Advantage Organizations (“MAOs”) contract with the Centers for Medicare & Medicaid Services (“CMS”) to administer and insure their respective member population.

Green leases are emerging as a key component of commercial leasing, as both landlords and tenants in different industries place an increasing emphasis on sustainability and environmental impact. A “green lease” is a commercial real estate lease agreement that focuses on environmental performance and sustainability practices, and aligns the environmental and financial goals of the parties. The parties to a green lease commit to work together to meet certain environmentally-sound goals, such as efficient energy consumption, waste reduction, water conservation and healthier air quality.

The benefits of green leases to both landlords and tenants include:

• Cost savings resulting from reduced energy consumption, water conservation and efficiency measures such as energy-efficient HVAC systems, lighting an insulation;
• Health benefits and increased productivity stemming from employees enjoying better air quality, use of non-toxic cleaning materials, temperature comfort and use of natural lighting;
• Increased property value and marketability by demonstrating a commitment to the environment with green certifications or eco-friendly features, which leads to attracting and retaining tenants who value sustainability practices;
• Positive long-term environmental impact of reducing a building’s carbon footprint by preserving natural resources and reducing waste;
• Fostering collaboration between landlords and tenants by creating shared accountability for meeting common sustainability goals;
• Supporting the building’s compliance with current and evolving environmental standards, such as reducing carbon emissions and meeting energy-efficiency standards; and
• Potential for governmental incentives for sustainable building practices, which provide economic benefits for both parties.

New from the Diagnosing Health Care Podcast: Since Pam Bondi was appointed U.S. Attorney General, we’ve seen notable shifts in the U.S. Department of Justice’s criminal enforcement priorities.

How significant are some of these changes, and how might they affect your health care organization as we progress through 2025 and beyond?

On this episode, Epstein Becker Green attorneys Sarah Hall, Melissa Jampol, Thomas Jaworski, and Richard Westling discuss what to expect from criminal health care fraud enforcement under Attorney General Bondi’s leadership and how it may impact the health care industry.

Roughly two years in the making, the New York State Department of Health (NYS DOH) has issued long-awaited guidance on its material transactions law. Notably, the guidance provides clarity on how to calculate the “de minimis” exception to the material transaction law requirement—including an indication that “related” transactions only need to have a single party in common, which is an important consideration for providers and investors pursuing a “roll-up” strategy.

N.Y. Pub. Health Law Article 45-A, “Disclosure of Material Transactions,” took effect on August 1, 2023, and requires “health care entities” involved in a “material transaction” to provide written notice to the NYSDOH at least 30 days prior the proposed closing of a transaction. As our colleagues wrote at the time, the legislation grew out of concerns with the “proliferation of large physician practices being managed by entities that are investor-backed” (e.g., private equity).

These concerns have only increased in the past two years; more than a dozen states including New York have enacted health care transaction notice requirements. Currently, several state legislatures are attempting to either amend existing requirements or create new ones. New York is one state that is potentially amending its existing notice requirement. As we noted in March, proposed legislative changes to the New York law would include an extension of the notice deadline to 60 days; a statement as to whether any party to the transaction owns any other health care entity that within the past three years has closed operations, is in the process of closing operations, or has experienced a substantial reduction in services; and a statement as to whether a sale-leaseback agreement, mortgage or lease, or other payments associated with real estate are a component of the proposed transaction.

The order is in, and the LDT Final Rule is out.

In May 2024, the U.S. Food & Drug Administration (“FDA” or the “Agency”) published its Final Rule establishing its regulatory framework over laboratory developed tests (“LDTs”) as medical devices and, in effect, announced the end to decades of enforcement discretion by the Agency. The deadline to comply with the first phase of the Final Rule was set for May 6, 2025. On Monday, March 31, however, a federal judge in the U.S. Eastern District of Texas ordered that “FDA’s final rule exceeds its authority and is unlawful” and that “[t]herefore, consistent with controlling circuit precedent, the proper remedy is vacatur of the final rule and remand to FDA for further consideration in light of this opinion.”

Epstein Becker & Green’s Life Sciences Team is continuing to review and digest this order and its impact on the clinical lab industry, and we plan to release a more fulsome analysis in the coming days.

The potential plunge off the telehealth cliff that we warned you about in our March 3, 2025, blog post has been averted, for now.

With the passage of the Continuing Resolution (CR) by the House and Senate, and the subsequent signing by the president, current telehealth flexibilities and Medicare coverage for the benefit will not expire on March 31. With funding established through the end of the fiscal year—September 30, 2025—the CR provides at least a brief extension of telehealth flexibilities for those, particularly in rural areas or with mobility problems, who have come to rely on telehealth for access to critical health care services since March 2020.

As we noted on March 3, COVID-19 shifted perceptions of telehealth in a way that is not likely to ever return to pre-2020 notions, despite the wrangling over extensions. Between April and June of 2020, nearly half of all Medicare beneficiaries had at least one virtual medical visit. The COVID-19 public health emergency officially ended in May 2023, but the Medicare telehealth flexibilities have been extended several times.

On March 10, 2025, Robert F. Kennedy, Jr., Secretary of the U.S. Department of Health and Human Services (“HHS”), in a seismic shift, announced that the U.S. Food and Drug Administration (“FDA”) would “explore potential rulemaking” to eliminate the pathway allowing companies to self-affirm that food ingredients are Generally Recognized as Safe (“GRAS”). This means that companies seeking to introduce new food ingredients would be required to publicly notify the FDA of the ingredients’ intended use and underlying safety data. Presently, the FDA strongly encourages but does not require the submission of a GRAS notice. Given the importance of the issue, the food industry should closely monitor any change to the FDA’s regulation of GRAS ingredients.

Defining GRAS

Under the Federal Food, Drug, and Cosmetic Act, unless a substance is generally recognized among qualified experts as safe under the conditions of its intended use, food additives are subject to premarket review and approval by the FDA. The implementing regulations, 21 C.F.R. §§ 170.3 and 170.30, provide that the use of a food substance can be GRAS through scientific procedures or experience based on common use in food before 1958. Salt, pepper, vinegar, baking powder, and monosodium glutamate are some examples.

Those waiting anxiously for the rules expanding the prescribing of buprenorphine via telemedicine and the controlled substance prescribing for patients at the Department of Veterans Affairs to officially go into effect will now have to wait until New Year’s Eve—December 31, 2025.

Practitioners will, however, be allowed to continue prescribing via telemedicine without first having an in-person visit with the patient, owing to COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications, in effect through the same end-of-year date.

A seven-page document released by the Department of Justice’s Drug Enforcement Administration (DOJ, DEA) and Department of Health and Human Services (HHS)—scheduled to be published in the Federal Register on March 24—further delays the effective dates of the “Expansion of Buprenorphine Treatment via Telemedicine Encounter” Final Rule and the “Continuity of Care for Veterans Affairs Patients” Final Rule, both dated January 17, 2025 .