Stay ahead of the latest regulatory shifts and healthcare breaking news with Headlines from the Hill.
In this month’s edition you will find:
- Certificate of Need (CON) Laws: Why states are curbing CON laws to boost bed capacity.
- Medicaid Cuts / Prior Authorization: Major topics in 2025 state sessions.
- Healthcare Artificial Intelligence (AI): Bipartisan task force sets stage for action in 2025.
- Behavioral Health: CMS announces states in model.
Certificate of Need (CON) Laws: Why states are curbing CON laws to boost bed capacity.
States are rolling back Certificate of Need (CON) laws in the face of growing demand for healthcare and mounting evidence that they might not lower spending.
CON laws often require providers to get regulatory approval for large capital expenditures and projects, like some healthcare facilities. Facility mergers, acquisitions and ownership changes also require CON approval in some states. The laws aim to control spending by limiting unnecessary facility expansion or duplicative services within an area. Without CON laws, supporters say providers could raise prices to compensate for underutilized hospital beds and services.
Medicaid Cuts / Prior Authorization: Major topics in 2025 state sessions.
The 2025 state legislative sessions will have few new dollars not swallowed up by Medicaid, limiting options for lawmakers to address health concerns.
A revenue report from mid-December 2024 determined that incoming monies would be sluggish over the next two years, with barely any new dollars expected to hit state budgets. Much of that funding will be consumed by Medicaid costs, which are growing at a faster rate than state revenues.
Most state Medicaid costs are covered by the federal government — roughly two-thirds of most programs and 90% of state Medicaid expansion programs. The remaining 10% of the latter program is covered by other taxes and hospital fees. Both the state and federal governments will have new leaders, bringing the potential for massive change.
One expected legislative proposal in the upcoming sessions will be familiar to the state legislatures: a bill seeking to restrict the use of prior authorization. According to the American Medical Association, 94% of physicians reported care delays due to prior authorization, including 24% who reported that such delays had led to a serious adverse event. Other familiar topics include the potential to regulate pharmacy benefit managers, non-compete agreements for healthcare providers, scrutinizing medical debt and increasing tobacco taxes.
Healthcare Artificial Intelligence (AI): Bipartisan task force sets stage for action in 2025.
The House Task Force on Artificial Intelligence (AI) released a comprehensive 253-page report providing a roadmap for Congress as it develops policies to regulate and optimize the use of this rapidly advancing technology.
The bipartisan task force, cochaired by Reps. Jay Obernolte (R-CA) and Ted Lieu (D-CA), consulted over 100 experts across various fields to produce recommendations spanning 14 key issue areas, including healthcare. The report emphasizes the dual objectives of fostering U.S. leadership while establishing guardrails to protect against identified and emerging risks. It details the transformative potential of AI in healthcare, alongside the complexities and challenges of ensuring responsible adoption. Task force leaders call for transparency, regulation and continued bipartisan collaboration to address these challenges and maintain public trust.
The report serves as a foundation for future legislation and rulemaking, offering guiding principles and actionable recommendations to balance innovation with security and fairness. President-elect Donald Trump has committed to reversing President Biden’s executive order (EO) on AI in favor of a light-touch regulatory approach. Despite this pledge, the Department of Health and Human Services (HHS) has stated that it has developed an AI strategy independently of the EO that reflects longstanding efforts from agencies like the NIH and FDA. Outgoing Assistant Secretary for Technology Policy Micky Tripathi has said that the new administration may approach regulation differently, but HHS’s focus is on safety, innovation and trust, regardless of political changes.
Behavioral Health: CMS announces states in model.
The Centers for Medicare & Medicaid Services (CMS) announced Michigan, New York, Oklahoma and South Carolina state Medicaid agencies were selected to participate in its state-based Innovation in Behavioral Health Model.
The eight-year IBH Model is intended to improve care quality and behavioral and physical health outcomes for Medicare- and Medicaid-enrolled adults with moderate to severe mental health conditions and substance use disorders.
The pre-implementation period began January 1. States will now begin to conduct outreach and recruit specialty behavioral health practices to participate in the model.
