AHLA's Speaking of Health Law
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AHLA's Speaking of Health Law
Key Health Law Developments From 2025 and What to Expect in 2026
Judith Waltz, Partner, Foley & Lardner LLP, Faraz Siddiqui, Assistant General Counsel, Memorial Sloan Kettering Cancer Center, David Lazarus, Partner, Foley Hoag LLP, and John Hood, Associate, Akerman LLP, discuss some of the key health law developments from 2025 and what to expect in 2026. They cover a wide range of legislative, regulatory, and judicial issues, focusing on Medicare and Medicaid, public health, civil and criminal enforcement, and drug development. Waltz, Siddiqui, Lazarus, and Hood are editors of AHLA’s bestselling title, Federal Health Care Laws and Regulations.
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SPEAKER_02:Hello, I'm Judy Waltz. I'm a partner with Foley and Lardner in San Francisco. I actually chair Foley's health care practice. I am here today with some co-editors from the HLA Federal Health Care Law and Regulations, which I'm going to see if the camera can pick up this year in a lovely shade of yellow. We are co-editors with a few other people, and the new version is just out, the new yellow version, replacing the purple version from last year. Each of us as a co-editor takes a particular section and reviews the various laws and regulations that have been enacted in the past year. Some are dotted, some are acted, some are moved, to make sure that the book is complete and it's a good, really good desk reference. I know this is old school, but I will also make a pitch for the hard copy of it. It also comes in digital, which I think comes with the subscription. The hard copy I use to annotate, and so I scribble on it all year. It's a little sad at the end of the year when I have to go with my whole copy because all my notes, my cross-references, and things are gone. But I use it pretty much on a daily basis and really um recommend it. So like I said, I have well, first I'll tell you my sections, which were um Title 18, so Medicare. And it sounds like John and I had a little bit of overlap on Title 19 this year. So Title 18 is Medicare, Title 19 Medicaid. Um we'll talk a little bit about the topics in substance, but first I want people just to introduce themselves. So Faraz, would you introduce yourself, please?
SPEAKER_03:Yes, absolutely. Thank you, uh Judy, for setting it up. I'm Faraz Sadiki. Um for the last uh seven or eight years I've worked as uh outside counsel um uh at uh law firms uh uh with a specific focus on food and drug law. I uh did uh uh quite a bit of work in uh the drug development area, pre-approval um uh work and post-approval at advertisement and promotion. And I also uh did a fair amount of uh work in uh Medicaid, Medicaid pricing and uh reimbursement for uh for the AHLA uh federal uh laws and regulations. I've been reviewing Title 21, Food and uh the Food, Drug and Cosmetic uh Cosmetics Act uh for the group, um, and we'll be talking about that today. Uh right now I'm uh at uh Memorial Sloan Kettering, a cancer center, and that's uh where uh I've been for the past year. Uh and and I'll I'll try and bring some of the issues uh that we've been facing related to the FDCA uh for today for the viewers today.
SPEAKER_02:Thank you. So, Dave, would you like to introduce yourself, please?
SPEAKER_04:Sure. Thanks, Judy. Thanks uh to the HLA for having me to speak on the podcast today. It's always a good uh beginning of the year to listen to this. So I'm excited to actually participate this time. So thanks for the invitation. Appreciate it. Uh so I'm Dave Lazarus. I am a partner at Foley Hoag based in Boston in our white-collar practice group. I was a federal prosecutor, a state prosecutor for about 17 years total in uh Florida and Massachusetts and New York. And I focus my practice now on advising companies and individuals in all different aspects of government enforcement investigations, as well as uh healthcare compliance regulatory advice to pharmaceutical companies, uh providers, kind of run the gamut of the healthcare sector, uh, rehab centers, clinical laboratories, uh, DME suppliers, um, and a lot of other related organizations. I am uh my my purview within the AHLA book is in the fraud abuse space. So I look at those statutes and regulations.
SPEAKER_02:Thank you. And John Hood.
SPEAKER_05:Thanks, Judy. Um I'm a member of uh Ackerman's Orlando office. I'm an associate in our healthcare practice group. I focus my practice on advising healthcare industry clients on transactions and regulatory compliance matters. Um it runs the gamut from hospitals, health systems, physician groups, uh pharmacies. Um I've also done some work um advising insurance uh companies on regulatory compliance matters. Um as uh Judy mentioned. Um I I cover as an editor with this publication title 42, with the exception of uh those titles that that that Judy mentioned. Um so so there is is some um overlap in the in the areas that that we're looking at. Um but uh as as as I'm sure our audience knows, uh Title 42 is uh quite a large section of the of the of the US code for um for practitioners and makes up uh uh quite a bit of our publication.
SPEAKER_02:So our plan for today is do another kind of round robin here with each of our co-editors discussing um a bit about what they thought was important in the last year and probably most important. I find it hard to predict at this point, but what will be most important in this in this coming year? And just a reminder that we are each speaking here today on our own behalf and not on behalf of our firms or clients or anybody else we know. So please um uh take these as our own opinions and judgments. So for us, uh you're gonna go first.
SPEAKER_03:Thank you, Judy. Thank you. Um yeah, just what you said at the tail end over there, you know, it has been uh quite uh quite a marathon just keeping up with all the changes, both for practitioners and for uh folks like us who um who are trying to present uh the uh uh the the the sum of the changes uh to readers. Um in fact, uh some of the uh topics that I'm going to cover today were additions that we made to the uh some new um regulations that have already been taken out uh you know because of how how things um have been going. Um okay, so from a food and drug perspective, what I wanted to do today is uh give the uh give a little bit of a flavor of how uh a hospital like uh memorial slow and catering uh that that uh uh participates in uh in a in a lot of clinical trials, uh cancer clinical trials, what what what are what have been some of the big changes that we have felt? Uh also looking at it from the uh pharmaceutical uh uh industry and uh healthcare systems uh also um but I wanted to give that a little context uh because um you know the the I have seen how um the work that I do with with the uh with the volumes really dovetails with uh the work that I do uh at the hospital. So the first big change that we saw um uh was a uh was uh Congress uh finally enacted a buyer secure act. Uh this is a uh an act um that has been in legislative limbo for quite a while. Uh it had garnered significant attention for not being uh enacted earlier. Um and finally it it went to uh Donald, uh President Donald Trump to sign. Now, what is the Bio Secure Act? Um essentially what what this does is this is a um this was part of this was included in the National Defense Authorization Act for fiscal year 2026. What it does is it it puts restrictions on the federal government from uh from contracting with certain biotechnology companies of concern um uh when they uh use biotechnology equipment or services uh due to uh national security risks. Um there's a list of uh companies of concern that the DOD maintains, uh, and that list is going uh that list uh feeds into uh the um the new law. Uh right now the the uh law prohibits federal government uh money fair uh procurements and contracts from going to uh to these biotechnology uh companies of concerns, but overall the the uh the the bill puts immense pressure on pharma companies in the US to sever ties with biotech companies, uh mostly in China. There are parts of this law that uh try and put more focus on uh on uh you know creating creating uh local uh uh US-based uh biotech companies that and suppliers so that they can supply the pharma companies that are over here. At the hospital, um we have seen some similar uh regulations uh have been implemented, uh regulations that have come down from uh the DOJ and the NIH. Uh the NIH recently released, uh finalized a rule that prohibits the transfer of any biospecimens to China and some other countries of concern. These are uh countries that already have uh the US already has export compliance uh uh rules. So that would that be China, Russia, Venezuela, Cuba, Iran, and North Korea. There's a lot of uh uh clinical trials and a lot of uh data that and and other work that moves uh between China and the US. So the federal government is coming down hard uh in a very bipartisan way to uh to to block uh biospecimen transfer, they uh to track all uh what's called bulk sensitive personal data. So this is uh similar to uh protected health information, and it's going to the uh our hospital and other entities that do that work in clinical trials have to monitor and track all data, uh patient-level data that's going to China and these other countries. So, so you know, there's this there's there's been a lot of changes already in this space, and we will continue to see these, but uh uh you know, uh rest assured that um the both the pharma company and uh uh trial sites like ours are uh were were affected uh by these. Um moving on to the second one. Uh this is uh uh you know uh this is in the medical device space. Uh and in fact, uh even even uh more specifically, lab develop tests. We spoke about lab develop tests that I think in last year's uh podcast and in this year's uh uh volumes, we added regulations that uh came in uh uh because of a finalized uh rule by the FDA on increasing uh on yes, increasing its regulations on laboratory developed tests. Um however, there was a lot of blowback from the industry, the way that the FDA went around around, uh went about doing this. Uh, this change uh was both in substance and in uh the the speed of how they were doing it was just not something that the industry uh could um uh could could uh put up with, and there were a lot of legal challenges. Uh finally, the uh Eastern District Court of Texas vacated the rule, and in August, FDA rescinded uh the changes it made to the um to the lab developed tests. Uh so you know we will see next year that we will be back at square one. FDA will have to go back to the that you know to to to square one and figure out what how they're going to enforce uh this kind of in vitro diagnostics. Um I think we'll leave it at those two. Um, you know, these these were the main things that I uh think the the readers uh me and uh the readers and our viewers would have seen if they practice in this space.
SPEAKER_02:Thank you, Fraz. So, Dave, how about you? What's going on in the enforcement world?
SPEAKER_04:Uh sure. So that could be uh the topic of probably days of conversation and it changes on a daily basis, it seems, these days. But uh looking back at the last year, I'll speak briefly about two different categories of enforcement, although they're as usual very closely related, both civil enforcement and criminal enforcement. Civil enforcement uh once again this past year focused or was in the form of False Claims Act investigations and litigation. Most of it still whistleblower relator driven, although the government continues to bring its own uh false claims act cases in certain circumstances. And so they remain kind of an individual player, but also uh a whistleblower-driven player. Um, in the first circuit, there was the long-awaited decision in the United States versus Regeneron Pharmaceuticals False Claims Act case that answered the question in the first circuit what is required for causation under the 2010 amendments to the anti-kickback statute. So, for those of you uh following along at home, in 2010, the anti-kickback statute was amended to talk about um how any claim resulting from an anti-kickback statute violation is a false claim. And so the question is, what is resulting from? And that had been the topic of great debate in the First Circuit in Boston, for example, there were dueling district court opinions that uh described the standard very differently. Um, in the ultimately prevailing decision, the First Circuit uh held that the resulting from requires but for causation. And so it's a much tighter standard for the government. The defense bar, we were happy to see that decision. Uh, and that that joy was somewhat short-lived as the U.S. Attorney's Office, at least in Boston, immediately announced that they could still pursue uh false claims at cases connected to anti-kickback statute violations using the pre-amendment uh technique of relying on false certification, which essentially requires evidence of certification that a provider or a practice group or an institution will comply with Medicare and other regulations, and then some sort of materiality and falsity. And under that standard, the courts and the government have long conflated materiality with causation, essentially ignoring causation. And so the government has continued to argue that they can proceed under either the butt for causation standard or the older uh false certification standard. And so we'll see how that will continue to play out. Cases that have been, courts have been interpreting the Regeneron First Circuit opinion at least once in Boston, subsequent to that February 2025 decision. Judge Kalwani in Boston uh refused to uh dismiss uh false claims act action that challenged causation. And she found in that case that there was sufficient allegations to support a finding of causation, even if she were to apply the butt for uh causation standards. So that continues to be an area that is much watched in the healthcare space. Uh, there was also the what I would call the traditional uh enforcement over the past year in the spaces that we've seen for the last you know many years. Um, another area of legal development over the past year that uh Judy's firm, Fulane Lardner, has had a very large hand in uh is the Zafarov litigation. And so the Zapharov case very briefly. There's been a lot written and spoke about it, and more will follow. But essentially, uh District Court in the Middle District of Florida agreed with the defendants in that case that the false claims act statutes, whistleblower provisions are unconstitutional. And so it's an argument that's been raised in different contexts and different jurisdictions, typically without getting much traction. But in this case, where the district court did agree, then everybody sat back and waited and watched to see what the 11th Circle will do on appeal. And those arguments were held last week. I am not a prognosticator on the outcomes of appeals based on oral arguments, so I'm not going to do that. But I will just say the arguments are available online. And if you practice in this space, they're fascinating and they're worth listening to. And certainly we'll be talking uh next year's Roundup, uh, hopefully, uh, about the 11th Circuit Zafiroff decision. Uh, in addition, on the civil side, uh, paycheck protection program cases continue to happen en masse uh around the country. These are ranging from small resolutions under$100,000 up to multi-million dollar resolutions. There appear to be a number of very sophisticated relators who are bringing bulk PPP cases, for example, arguing that a whole category of organizations that are 501c4 organizations and thus were not eligible for a PPP loan actually received PPP loans. And so there's been a wave of more technical PPP False Claims Act cases that are typically, at least from what we're seeing, prone to resolution. It tends to be a typical uh technical violation, checking the wrong box, affirming something incorrectly. The first wave of PPP investigations and prosecutions, as is often the case, were the most egregious uh involving more aggressive fraud. Um, and so we're seeing the PPP cases continue. In addition, just very briefly, the False Claims Act is being relied on more and more by the government in the tariff space, in the cybersecurity space, dealing with government contractors as well as in the DEI space and relating to school investigations. I won't go into those here other than to say the government is aggressively using the False Claims Act because of its broad investigatory powers. And there continue to be battles in the courts about their ability to use CIDs to obtain certain categories of documents and other information. And so politics aside, this litigation looks likely to help shape the scope of False Claims Act investigations far into the future. On the criminal side, the last year has been more of the same. A lot of durable medical equipment investigations and prosecutions as well, clinical labs, genetic testing in particular, urinary testing, still to a certain extent, have all seen continued significant criminal enforcement. What was notable about the past year is that in addition to the traditional criminal enforcement that we're used to seeing culminating in a large annual takedown that every year is reported as the largest in history of the takedowns, and this year was no different, according to DOJ. But what we're seeing now is a big push from the Department of Justice to identify international connections in these prosecutions. A lot of the international connections existed for years. They just weren't highlighted or called out by the government. And now, for example, if there's an overseas call center in operation or if there's overseas investors, it appears that the government is working to identify those in its press releases and in its theories of prosecution, tying it very closely to the current administration's international uh agenda. In addition, uh the anti-kickback statute, as well as the eliminated kickback act statute, ECRA, continue to be the primary drivers of government enforcement on the criminal side. Uh although they they have announced the newly formed health and safety unit within the fraud division in uh Washington that is going to essentially look at it sounds like a lot of the space where Faraz works on the Food, Drug, Cosmetic Act side, uh, replacing some of the former consumer protection enforcers uh that were reorganized under the current administration within the department. So they just announced that last week, and we'll wait and see where it goes. The final piece that I'll just note is an overall uh messaging from the government pointing to their desire to increase collaboration among the enforcement community, which has always been on their list of important action items. So they've stood up a working group, they've uh made strides to talk about using Treasury's payment data uh alongside uh the claims data to try to do some more sophisticated uh enforcement investigating. So we'll see how that plays out in the coming year. Thanks, Jim.
SPEAKER_02:So, Dave, you mentioned ECRA, and just for people in our audience who may not have had the pleasure of meeting ECRA before, could you just give us a brief overview of that?
SPEAKER_04:Sure. So ECRA is a relatively recent statute that uh passed in 2018. It makes it a federal crime to offer or receive payments for patient referrals specifically to recovery homes, clinical labs, or treatment centers. And what's what's interesting about the statute is not only is it a very powerful criminal statute, but it also is an all-payer statute. So the anti-kickback statute, its hook, its jurisdictional elements is a federal payer, traditionally Medicare, Medicaid, TriCare, for example. The ECRA statute is broad and it applies to commercial payers as well as government insurers. And so it is a uh a very powerful tool that the government has now at its disposal. It is really just getting going as far as being used on a regular basis for enforcement and for different scenarios, for example, where there's commercial payers uh in addition to uh government payers. Part of the past year with ECRA that's been interesting in the Ninth Circuit is the question of how far does culpability extend to marketing companies that get involved in clinical lab space in genetic testing uh in uh clinical recovery centers. And so there was a very defense-friendly Ninth Circuit decision last year that that limited marketer culpability in some ways, and also uh very importantly noted that paying marketers based on volume, which is traditionally a very scary proposition, either in the anti-kickback statute or ECRA. But the Ninth Circuit said, which is which is true, but it's always nice to hear them say, that paying in that type of arrangement is not a per se violation of the statute. And so that's an argument that is often raised on the defense side. But uh, any time a court uh reaffirms that proposition uh brings a smile to my face.
SPEAKER_02:And just one more point, because it is a criminal statute, it's delegated to DOJ, whereas the anti-kickback statute being federal payers is in Title 42, which is where John and I come in. Um, but they are not um entirely consistent in their wording in terms of carve outs. And so there's been a lot of discussion that thinks it might be okay under the anti-kickback statute because of the safe harbors or or other provisions would not be okay under ECRA. And yet DOJ hasn't and probably won't do regulations with their thoughts on the topic. So it is, I think, a an area of uh um with a lot of grays in it at the moment. So all right, John, tell us what what was big and new in uh Title 19 and your other provisions.
SPEAKER_05:Uh thanks, Judy. Yes. Um, so I I think um you know, if we're looking at the the year in review, I I think we we we have to talk about the um Trump administration's executive actions. Um so a lot of those are are not going to be in our volumes, right? But we're gonna see the effects of how the um you know laws and regulations that are in our volumes are being implemented. Um and uh we we also have uh some major rules that that are in limbo um and that that's resulting from um how the the the White House um has has uh laid out its its its vision for um this second Trump administration. Um the what's been reported as a um flood the zone. So I think we're we're all familiar with how many executive orders and presidential memos uh came out at the beginning of this year. I'm just gonna touch upon a few of those. We had the um regulatory freeze memo and we had the um executive order um unleashing prosperity through deregulation, which created that the 10 to 1 initiative. So, what do those two things do? One, the regulatory um freeze pending review memo, uh which is is typical of a new administration, um, requires federal agencies to immediately withdraw unpublished rules and postpone the effective date of published rules that have not yet taken effect. And um you you you juxtapose that with the um unleashing prosperity through deregulation executive order, which requires federal agencies to identify um at least 10 existing regulations to be repealed when proposing a new regulation, um, it's created a uh difficult space for uh the federal agencies to operate. So some of the examples of effects that we're seeing, um, we see the uh HIPAA um security proposed rule, which was published um in January 2025 in the final days of the Biden administration. Um and so the the status of that rule is in limbo. Um we can follow up on that when we're when we're projecting what's going to happen in 2026, but that's that's a question mark. Um similarly, uh DEA, Samsung, HHS um put out rules um regarding the expansion of bupenorphine treatments via telemedicine and continuity care uh via telemedicine for VA patients. And those were originally scheduled to take effect in February. The effective dates of those rules have been delayed until the end of this year. And so what those will do is they they create flexibility for providers um prescribing certain controlled substances for opioid use disorders via telemedicine. Um, they also allow um providers caring for VA patients more flexibility with respect to uh telemedicine. Um and you know, let's hold that thought because I want to circle back to it when we talk about what legislation we've seen in 2025. Um we we've we've also got uh in the rulemaking standpoint, we've got the DEA's proposed rule um regarding special registrations for telemedicine. That, like the um HIPAA rule, was published in January of 2025, um, the final days of the Biden administration. Um that the status of that rule is also in limbo. So um we can see those uh you know major rules um and the question mark as to what will happen with them as as effects of that um those those executive orders and and and presidential actions. Um similarly on on um in that vein, we had the executive order creating the Department of Government Efficiency or Doge. Um and and that created um widespread workforce cuts across the federal government, right? The um Department of Health and Human Services announced its uh transformation to Make America Healthy Again um initiative, uh which HHS has said will result in a total downsizing from 82,000 uh full-time employees to 62,000 full-time employees. So um, you know, one of the areas that I cover is the Public Health Service Act. So I'm you know trying to focus this on a kind of public health implications. Um that's that's a significant reduction in force um across HHS, which which includes CDC. Um we've also seen uh numerous grant and other funding cuts or um uh federal fundings being withheld um across HHS, CDC, and NIH. Now some of that has been litigated. Uh some of some of some of those that funding is is is flowing again, but but there still um have been significant cuts in grants for HIV prevention and treatment programs, um COVID-19 and public health funding for state and and local health departments, um, Title X family planning service grants were were temporarily withheld. Um, and uh the CDC also um ordered uh across the the board um spending cuts on contracts by by 35 percent. So that's been a significant theme of of the past year have been uh you know reductions in federal workforce and and and reductions in and federal spending uh related to public health initiatives. And uh continuing on on public health initiatives, we we saw the executive order establishing the president's Make America Healthy Again Commission, right? Maha. Um this includes um uh a number of um high-ranking members of the Trump administration, including the HHS secretary, the FDA commissioner, the NIH director. Um, and and the Maha Commission put out its Maha report, which um, among other things, it it questioned the number of uh recommended vaccines on the CDC's recommended immunization schedule for children and adolescents. Um so um we've seen uh quite a bit of action there um you know within the executive branch. We we saw the um CDC's advisory committee on immunization uh practices, which is a federal advisory committee that's established under the Public Health Service Act. Um that committee um which which can uh sit up to 19 members, it makes vaccine recommendations. Uh the CDC then later decides whether to formally adopt them. Um and that has big implications for um not only uh health care coverage, right, for for uh patients, uh the public um uh seeking vaccines, whether or not that those vaccines are going to be covered. Public and and private health insurers are required to cover vaccines recommended by uh the ACIP. Um, but it also has implications for uh state level scope of practice uh for pharmacists, among other things. Um so what is you know, trying to compress the timeline here and talk about you know what what happened, um the the Secretary of HHS uh dismissed all of the um members of uh of the of the um committee earlier this year and reappointed new members. Um that reconstituted committee um has has since um recommended that the um vaccine for COVID-19 be determined on an individual decision making, right? A shared decision-making uh process with individuals uh providers rather than a universal recommendation. Um we've also seen the recommendation change for the um combined MMRV vaccine, that's measle mom, cerebella, and varicella. Uh so that's it's no longer, uh the ACEP is no longer recommending um that combined uh vaccine for a first dose option for children under four. Instead, the recommendation is now that children under four receive a separate MMR vaccine and a separate varicella vaccine. Uh the committee cited an increased risk for febrile seizure for the for the combined vaccine. Um, but but the you know many um public health experts have have have suggested this could um increase vaccine hesitancy, it could make things um more uh uh difficult for the for the public to understand the ins and outs of that. Um and and we have seen, you know, speaking of of public health, we we've seen that uh across the country uh a dramatic increase in the um rates of uh measles cases, which which have gone from uh very rare occurrence uh to um I think we're in the uh four four-digit figure range of of uh numbers of of cases across the country. Um so that's that's a that's a dramatic public health change. Um we've also seen from from the ACIP uh a recommendation change for individual-based decision making um for parents deciding whether to give the hepatitis B vaccine, um, including the birthdose, uh to infants um born to to women who test negative for the virus.
SPEAKER_02:John, and in the interest of time, um I'm gonna ask you to go into your predictions for next year, what we need to uh review most quickly, and then I'll do a quick um recap on a couple of Title 18, and we'll go back to for for Oz and to Dave for their final words.
SPEAKER_05:Sure, absolutely. Thanks, Judy. Um, so for projections for for 2026, um, I think the big question is uh what will happen with with Affordable Care Act subsidies, right? We had um two really within uh for for Title 42, we we we had two big pieces of legislation. We had um no pun intended, we had we had HR1, the One Big Beautiful Bill Act, right? Um, and we also had the um the uh continuing appropriations act of of 2026, which which ended the federal shutdown. Um I I think Judy, uh you know, Medicaid and and and those parts of the One Big Beautiful Bill Act are are sections that that you've edited. So I I don't I won't get too far into that. But um, you know, some some notable things that that were not included in in that legislation were the Affordable Care Act um enhanced premium tax credit, which if we're trying to look at this from a public health lens, those subsidies or the um elimination of those subsidies is is likely to dramatically increase the insurance costs of um uh consumers who who are purchasing health plans through those Affordable Care Act marketplaces. Um so how does that affect um you know, as healthcare lawyers advising hospitals, health systems, um, practitioners, um, there's there's likely to be an increase in the uninsured um patient population, right? Which puts puts pressure on um on the bottom line for for uh healthcare uh providers and facilities. Um so as far as in with what will happen in 2026, will those affordable care subsidies be extended? Um the the Senate uh just just this month and in December um failed to advance um on a procedural vote um uh a legislation that that would have um extended those those enhanced subsidies um which increase which uh essentially provide a tax credit to um folks earning up to uh 400 percent of the federal poverty level. Um and uh we've we've seen in in in 2025 uh gridlock in Congress and and a lot of um uh uh Brinksmanship type type legislating, if you will, right along um appropriations deadlines. And and we have one of those coming as soon as the end of January 2026. So that would be uh you know from a legislative standpoint, uh my projection would be it's it's it's hard to predict what exactly will happen. And and there is a possibility that that early in 2026 we could see another uh federal government shutdown um if if uh a continued appropriations act or or a um longer range appropriations act isn't isn't enacted. Um from a rulemaking standpoint, we we have that uh HIPAA proposed security rule. Um you I think we're we're short on time to go into the ins and outs of that, but that is a substantive update on the security rule, um, a significant modernization and would have uh big amplifications uh across the US health system. We also have the DEA proposed um rule uh for special registration. For telemedicine and limited state telemedicine registrations. Now, that proposed rule is a big shift in how the DEA would regulate telemedicine prescribing of controlled substances. It seems unlikely that that will be finalized in the near term. And just recently on the Office of Management and Budget, which is part of the White House that reviews rules the DEA for the temporary extension of the COVID-19 telemedicine flexibilities for the prescription of controlled medications recently showed up on the regulatory agenda of the OMB. So it seems like we're likely to see another extension of the DEA's flexibilities that were put in place initially with the COVID-19 pandemic to allow telemedicine prescribing of certain controlled substances through an exception to the Ryan Hayde Act, which generally requires an in-person visit to be able to prescribe controlled substances. So we're likely, I think, from a projection standpoint to see a continued extension of that while the industry waits to see what happens with the DEA rule. And I mentioned the 10 to 1 initiative. It may be difficult for the DEA to promulgate that new regulation while also adhering to that executive order requiring them to remove 10 regulations at the same time. Another item from a public health standpoint within the Public Health Service Act, there is, of course, Section 340B, which is a very important program for not only hospitals and health systems, but a wide range of covered entities, including certain federal health centers and lookalikes, Ryan-Wright clinics, and other safety net uh care facilities that allows those entities to purchase uh drugs from manufacturer drug manufacturers at a significantly discounted price. Um there has been uh litigation about how those discounts are provided, whether that the manufacturers are required to give those discounts up front. Um some manufacturers would like to see a rebate model, which is contemplated under the statute. And HERSA has has recently put forward a 340B rebate model pilot program, which would apply to 10 drugs and it would it would um kind of flip the script, if you will, instead of the covered entities uh purchasing those drugs at the discounted price at the front end, the um the entities would would instead um seek those rebates uh after the the drugs have been dispensed. So it would significantly change how that that program works.
SPEAKER_02:Uh so in looking back at 2025, there was a surprisingly small amount of statutory change from my perspective. It was like the least I've ever looked at in all of these years. Not surprising since we all know that Congress was a little uh dysfunctional last year. Um but in looking at the physician fee schedule, which I was looking at, I was looking at my notes from last year and this year with the important things. The last year we had the revision to the Medicare overpayment refund rules for A, B, C, and D, which were very significant changes, and particularly on the A and B side, um removed the obligations that have been set forth to dig deeper and be proactive and reverted to a false claims act standard of you know, knowledge should have known a reckless disregard, which I thought was a significant change. There were also from last year expanded access provisions, so MFTs and the like. There were also social equity discussions and paying for the services that go into assessing social equity needs. Not so much this year in terms of what is new in the physician fee schedule, and we'll have to see the um big beautiful act I'm not going to go into because I think everybody's heard probably more than they ever want to hear about it. But a couple of things that flagged my attention in this year's physician fee schedule were one, a focus on skin substitutes, which Dave may have seen and also in the enforcement side. The reimbursement mechanism on this is going from a biological, so paid under 1847A at a much higher rate. It will now be an incident to supply. And this is happening not only in the physician office. So incident twos you typically think of as a physician, a supply incident to a service in a physician office, can also be in a hospital outpatient clinic or department. And those are also being changed. So the reimbursement is going to be cut by about 80% on those. The other thing of most interest to me in this new physician fee schedule, and this is the final, um, was a new ambulatory specialty model that will be mandatory if you're picked up as one of those doctors who will be participating. So these are in special, um, two special chronic care conditions. Um and they the the identified participants will be in uh certain geographical areas that are MSAs and another uh uh variety there. In those, so people who are picked for this mandatory um program will be assessed on a variety of criteria, and their reimbursement may go up a certain amount, may go down a certain amount depending on their scores. And it's just a very um, very interesting um approach. And and I think we're going to hear more about this. So, Dave, let's go back to you and you can give us some predictions about the world of enforcement.
SPEAKER_04:Sure. Well, I'll start where you began, Judy, which is skin substitutes. Uh, the department have signaled in conjunction with the change in the billing framework, making it now an incident two uh claim, as opposed to how it had been billed, which was incredibly lucrative. Um so it appears the department will now prioritize looking back over the last several years of skin substitute wound treatment claims. Uh, they'll have stopped the bleeding, so to speak, as far as potential fraud into the future goes by making it into the two. But now they're gonna uh no doubt look back over the last several years of claims, uh, which they have already begun to do. And the whistleblower bar, the relators have already uh been out seeking uh cases of this type to bring under the False Claims Act. DOJ is also looking for criminal prosecutions related to that space. So I expect next year, 2026, will be the year we hear a lot about skin substitutes. I think we're also going to hear a lot more about clinical labs. Uh, I think that next year as well. The the DME enforcement has been on the decline because uh DOJ would argue of the success of some of their larger enforcement operations, like Operation Brace Yourself, which was a very large uh takedown several years ago. Some of those cases, uh, amazingly after four or five years, however long it's been, are still making their way through the criminal court system. But uh DOJ is likely turning its attention now to skin substitutes and clinical labs and clinical testing. That's not to say that they won't continue to be opportunistic in the anti-kickback space whenever they're able, and I expect they will. Uh, next year is also going to continue to see an increased review by DOJ of any type of relationship involving in an international connection. And that's a very broad statement, but I but I would expect DOJ will continue pushing with the messaging from the top that their enforcement has an international angle, an international component, however that may appear. And so uh I would expect increased use of money laundering charges alongside healthcare fraud, which is nothing new, but I think it will be even more common in the next year. Uh, in addition, the other areas I spoke about, as far as tariffs, cyber enforcement, and so on, those will also uh be big in the next year. Cases to watch, there are a number of interesting cases going on around the country. Uh, I've mentioned the Zafiroff decision. Certainly, people are watching that one very closely, uh, and there are a whole host of others. And I'll leave that as a teaser to stay tuned for more great content from AHLA on those.
SPEAKER_03:How about you? Yeah, so you know, uh the the points that I mentioned before, of course that they will continue to develop, um, and we we want to look at that. But for the benefit of uh uh listeners, there are two other items that uh started making rumblings this year, and uh you know, we we we should keep an eye out for next year. Um both of these are in the drug development space. So you uh uh those of our listeners who who work on um on drugs and biologics will find uh interest uh for these two things. Number one, priority review vouchers. Um there's been a lot of uh conversation this year and next year about priority review vouchers. Essentially, um FDA reviews uh uh new drug applications and uh biologic uh license applications uh within 10 months with a pre uh under priority review, they can uh do it at a much faster pace. So six months, sometimes eight months. Uh they they agree to do it on a faster pace uh based on uh several different kinds of uh uh interests that the FDA has. Uh a voucher is a uh is a priority review voucher, basically is a uh it sounds uh it is what it sounds like. A company that does that uh gets uh a certain type of drug or biologic approved, uh where there is some national interest or you know, uh we want to encourage as a community, we want to encourage the development of something. They receive a voucher for their uh work. Uh this was first created for tropical diseases. If you get a tropical uh disease, uh therapy for tropical disease uh passed through, authorized through uh FDA, um, you will receive a voucher for that. There became a secondary market, and uh companies would be able to sell uh these vouchers to other companies for as much as$300 million at one point. Now the uh it's still uh receiving around$100 million. I I give you all this context because there's been a lot of changes in that. A very important part of uh the uh vouchers was uh to encourage the development of uh therapies for rare pediatric diseases. Every two years uh the FDA would uh uh would renew this. There was a sunset clause on this, and every two years, every few years, the FDA would uh would oh sorry, uh Congress would renew uh the authorization for this. Last year that did not happen. After in September, uh Congress uh uh extended the law to December, but for the well for most of 2025, there wasn't that incentive. Uh, you know, for small companies, if they receive a voucher of this kind, they could use the hundred million dollars or more that they get to fund the rest of their uh uh to fund a big part of their development. Um finally in September, uh FDA, uh sorry, Congress extended it to next year, and we want to see next year where that goes. Hopefully, Congress gets uh the enough votes to pass it and extend it out for uh a longer time. Hopefully take out the sunset clause. There are uh it seems like the kids give a chance, give kids a chance act that was uh approved earlier this year. Uh has some more priorities of uh of uh Congress that were built into uh the act, including the uh including the voucher. So we'll keep an eye out on that uh and see how that uh goes uh goes through. Um but in terms of priority uh review vouchers, this wasn't the biggest news uh uh uh this year, and uh uh because this year uh the FDA announced the release of a uh another uh different kind of voucher uh called the national priority vouchers. Uh uh they first said there'd be only five drugs, but they uh increased it to nine drugs. Um they will look through the the agency will look through uh through what's in their pipeline and accelerate the approval of high uh of medicines and other therapies that have that answer national priorities, such as a public health crisis, such as onshoring drug development into the US and strengthening supply chain resiliency. Um, already the FDA has gone through two cohorts of this, uh of giving out these vouchers. So we'll see a lot more next year. We want to see where these two land out. Uh we want to see whether this is only going to be done under the Trump administration or you know, if we see that there is a change in Congress, whether this will uh this will be something baked into uh into law. So that's all on one side priority review vouchers. The second main thing that I'll uh touch on is that the FDA released a draft guidance on gene therapy, cell and gene therapy products. We want to see next year if uh uh the FDA finalizes that, if it uh opens up some uh uh conversation, uh some public uh uh conversations on this. Cell and gene therapy, as uh many of our uh listeners would know, uh you know, sometimes some of these therapies you put you only get one administration of it over two weeks, and that's a uh that has cured people of uh of genetic diseases. So it's a very permanent sort of and long-lasting effect. And uh usually because they're so rare and they're custom made for people, the the uh clinical trials are very small, sometimes less than 10 people. So there isn't a lot of uh data on the safety and efficacy of uh of these uh therapies. So this graph guidance talks about uh it's uh it's entitled um post-approval methods to capture safety and efficacy data for cell and gene therapy products. So after they're they're approved, there's going to be uh FDA is is starting to create the infrastructure on how to see the safety down the down the uh down the road for these. So I'll leave it at that. You know, these are these are exciting new developments. Uh of course, uh we've been seeing that uh at the hospital well uh in cancer drugs uh quite a bit. And um pediatric uh cancers is is one of the areas which which is being uh focused on on the on the first point that I made about the uh about the national priority vouchers. Um but yeah, uh lots of interesting things to look out for.
SPEAKER_02:So thank you. I want to thank all our speakers today, and we could go on all day, but I think we uh are out of time. So thank you very much, and we'll regroup next year.
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