Health Plan Weekly

CMS Deputy Administrator Daniel Tsai on Jan. 16 wrote a letter to state Medicaid directors telling them the agency was rescinding guidance it had provided in January 2020 on a Healthy Adult Opportunity (HAO) demonstration. The HAO policy introduced by the first Trump administration allowed states to apply for and use Section 1115 waivers “to set additional conditions of Medicaid eligibility, establish additional premiums and cost-sharing, and adopt alternative demonstration financing for participating states,” according to Tsai. He wrote that approving a waiver based on the January 2020 letter “would raise legal conflicts with the core statutory objective of Medicaid,” but he added that CMS “will consider states’ applications for Section 1115 demonstration authority on a case-by-case basis to determine whether they satisfy the requirements for approval under Section 1115 of the Social Security and CMS regulations.” KFF noted in a February 2020 overview of the HAO that the demonstration could allow states to impose additional eligibility requirements, including work requirements. Several states did indeed use that flexibility to get work requirements demonstrations approved, but only one ever fully operationalized such a program amid a flurry of legal challenges. Ahead of the second Trump administration, Ohio’s Dept. of Medicaid in late 2024 applied for a waiver to implement work requirements in its Medicaid program.  

Prescription drug affordability boards (PDABs), PBM reform, and ripple effects from the possible end of the Affordable Care Act’s preventive services coverage mandate are a few of the issues topping some experts’ lists of policies to watch in 2025. 

Emily Donaldson, a principal at consulting firm Avalere Health, says she is keeping an eye on states’ moves regarding PDABs. Maryland enacted the first PDAB in 2019, and seven other states (Maine, Minnesota, New Hampshire, Oregon, Ohio, Colorado and Washington) have followed suit. Additionally, 11 states are considering or have considered creating PDABs.  

In the waning days of 2024, Ohio’s Dept. of Medicaid applied for a waiver that would let the state again try to implement a type of demonstration program that the first Donald Trump administration embraced enthusiastically: requiring certain Medicaid enrollees to prove they’re employed or risk losing health coverage.  

Ohio’s application — which will be reviewed by CMS once Trump takes office for his second term — is likely to be followed by other states filing similar waivers, one health policy expert tells AIS Health, a division of MMIT. And like the spate of work requirements waivers approved during the first Trump administration, the new crop of demonstrations may not be good news for Medicaid managed care organizations. 

As of Jan. 4, over 23.6 million people have enrolled in Affordable Care Act marketplace coverage since the start of the 2025 open enrollment period (OEP), which represents an enrollment record for the fourth consecutive year, according to CMS.

The OEP for HealthCare.gov, which 31 states use, started on Nov. 1, 2024, and ends on Jan. 15.

About 3.2 million people who have signed up for ACA plans are new enrollees this year. More than 16.7 million people have enrolled through HealthCare.gov in the 31 states that use that platform, and another 6.9 million have enrolled across 19 states and the District of Columbia, which use their own marketplaces. Georgia transitioned to its own state-based marketplace (SBM) this year.

A California law that went into effect on Jan. 1 places stricter restrictions on payers’ use of artificial intelligence (AI) in coverage decisions, continuing a trend that the Biden administration and some states have looked at implementing. Two health care attorneys tell AIS Health, a division of MMIT, that the impact of the California law on health plans depends on guidance from the state that could come in the next few months. They add that they expect plans across the country to pay close attention to California’s implementation of the law because other states often follow California’s lead when it comes to health care regulation.  

The law, known as the Physicians Make Decisions Act or SB 1120, requires that payers have physicians or other licensed providers make decisions about the medical necessity of treatments rather than relying solely on AI, algorithms or other software tools. It also mandates that the AI or other tools used by insurers must meet certain standards such as being fair and equitable and base decisions on individuals’ specific conditions and medical history and providers’ input.