McDermott Plus Review: April 26, 2024


  • A quiet week of health on Capitol Hill.Congress was largely in recess this week, although the Senate returned briefly to complete consideration of a long-awaited foreign aid bill. Both chambers will be back in session the week of April 29, and health-related activity is expected at the committee level.
  • An intense health week for the administration
    • FTC moves forward with non-compete ban.
    • CMS publishes two Medicaid rules.The Centers for Medicare and Medicaid Services (CMS) published final rules on access and managed care for home and community-based services (HCBS).
    • CMS publishes nursing home minimum staffing standards final rule.
    • HHS publishes HIPAA Reproductive Health Privacy Rule.


FTC votes to ban non-compete clauses.Along with the 3-2 vote, the Federal Trade Commission (FTC) issued a final rule that broadly bans new non-compete agreements nationwide and renders existing non-compete agreements that bind most workers unenforceable . The rule requires employers to notify employees that their non-compete agreements are no longer applicable. The standard also defines worker broadly, and includes people who work as employees, independent contractors, interns, outsiders, volunteers, and sole proprietors. Currently, the final rule will enter into force 120 days after its publication inFederal Registerbut it is already facing legal challenges.

Nonprofits, such as many health care systems and hospitals, may be exempt from the final rule, but the FTC has cautioned that simply claiming tax-exempt status is not enough. The FTC noted that it will consider the entity’s facts and circumstances to determine whether it falls within the FTC’s jurisdiction.

You can find an FTC fact sheet here and an in-depth summary of the final rule from McDermott Will & Emery here.

CMS publishes Medicaid access final rule.The final rule focuses on HCBS, including direct care worker compensation requirements, waiting lists, claims process development, critical incident reporting definitions, and quality reporting. The final rule also seeks to increase transparency more broadly in payment rates.

In the rule, CMS maintains the proposed policy of requiring that at least 80% of Medicaid payments for personal care, homemaker, and home aide services be spent on compensation for direct care workers (a difference in administrative expenses). However, the final rule makes changes that include excluding some costs from the 80% calculation and creating a waiver process that states can use for small and struggling providers. The final rule requires states to post all fee-for-service Medicaid payment rates on a publicly accessible and available website, and requires states to compare their fee-for-service rates for primary care, obstetrics and gynecology care and outpatient mental health. and substance use disorder services in Medicare rates and publish it every two years. The final rule also requires states to publish the average hourly rate paid for personal care, home health aide, homemaker, and habilitation services every two years. States will be required to establish and operate the newly appointed Medicaid Advisory Committee (MAC) and a Beneficiary Advisory Council (BAC) one year after the effective date of the rules.

A CMS fact sheet can be found here and a timeline for various effective dates here. Our team is working on a full summary that will be available soon on the McDermottPlus website.

CMS publishes Medicaid managed care final rule.This final rule is largely finalized as proposed. It includes several process and transparency changes to State Directed Payments (SDPs). In particular, the final rule includes updates to funding transparency in SDPs and creates new limitations on funding through SDPs. As proposed, the rule requires plans to submit to the state a payment analysis and annual documentation demonstrating their level of payment for certain services compared to Medicare rates.

The final rule also increases transparency and opportunities for meaningful and continued public participation around States’ managed care quality strategies. Establishes a framework for states to implement a Children’s Health Insurance Program (CHIP) quality rating system as a one-stop shop for enrollees to compare Medicaid or CHIP managed care plans based on quality care, access to providers and covered benefits. and drug, cost, and other plan performance indicators.

A CMS fact sheet can be found here and a timeline for various effective dates here. Our team is working on a full summary that will be available soon on the McDermottPlus website.

CMS publishes nursing home minimum staffing standards final rule.The final rule codifies the new minimum nursing staffing requirements for three years for many facilities and five years for rural facilities. CMS finalized the total nurse staffing standard at 3.48 hours per resident day (HPRD), but also requires registered nurses (RNs) to provide a minimum of .55 HPRD of direct patient services and that the nursing assistants provide a minimum of 2.45 HRPD. The rule also requires an RN to be on site 24 hours a day, seven days a week. The rule includes limited exemptions for qualified facilities. It is estimated that 80% of nursing homes will need to increase staff to meet this threshold.

The rule includes other provisions, including the following:

  • More rigorous guidelines for long-term care facilities in reporting their center-wide assessments.
  • New Medicaid institutional payment transparency reporting provisions, including new reporting requirements, support for quality care and worker safety, and promotion of publicly available payment information.

A CMS fact sheet can be found here. Our team is working on a full summary which will soon be available on the McDermott Will & Emery website.

HHS Releases HIPAA Reproductive Health Privacy Final Rule.The final rule builds on the Privacy Rule of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to prohibit disclosure of certain protected health information (PHI) when individuals travel to different states to seek services reproductive

The standard includes the following provisions:

  • Prohibits the use or disclosure of PHI for the purpose of investigating or imposing liability on individuals, health care providers, or others who seek, obtain, provide, or facilitate reproductive health care that is lawful under the circumstances in which it is provided health care, or identify people for these activities.
  • Requires the health care provider, health plan, clearinghouse, or its business partners to obtain a signed certification that certain requests for PHI potentially related to reproductive health care are not for these prohibited purposes.
  • Requires health care providers, health plans, and clearinghouses to modify their notice of privacy practices to support reproductive health privacy.

The press release from the US Department of Health and Human Services (HHS) can be found here.

HRSA publishes ADR 340B final rule.The final rule, effective June 18, 2024, requires the establishment of an administrative dispute resolution (ADR) process for the 340B Drug Pricing Program. The ADR process aims to resolve:

  • Claims by covered entities that manufacturers have overcharged for covered outpatient drugs, i
  • Claims by manufacturers, after the manufacturer has conducted an audit of a covered entity, that a covered entity has violated the prohibition on deviations or duplicate rebates.

An in-depth summary of the McDermott Will & Emery Final Rule can be found here.


  • HHS publishes National Strategy for Suicide Prevention and Federal Action Plan.The national strategy outlines recommendations to address the needs of at-risk populations, and the federal action plan identifies 200 actions to be initiated and evaluated over the next three years. Read the press release here.
  • GAO publishes report on Medicaid immunization strategies.In this report, the US Government Accountability Office (GAO) found that some Medicaid programs used patient-level data to increase vaccination rates against COVID-19, primarily through incentives and targeted outreach.
  • HHS takes steps to strengthen direct care workforce.Through the Community Living Administration’s Direct Care Workforce Strategy Center, select states are offered two technical assistance programs that aim to better recruit, train, and retain direct care workers. HHS and the US Department of Labor have also released recommendations to build a data infrastructure to strengthen the HCBS direct care workforce. Read the press release here.


Congress returns next week and has health activities planned at the committee level. The House Energy and Commerce Committee will hold a legislative hearing on Medicaid and a hearing with the CEO of UnitedHealth Group on the Change Healthcare cyber attack. The CEO of UnitedHealth Group is also expected to testify before a Senate Finance Committee next week. On the regulatory side, we expect a controversial final rule on laboratory-developed tests. The Office of Management and Budget has also been reviewed by the proposed rules for the Medicare physician fee schedule and the hospital outpatient prospective payment system.

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