The Regulator

A federal court deadline lands today in a fast-moving legal fight over how Medicare Advantage insurers earn hundreds of millions of dollars in federal quality bonus payments. SCAN Health Plan’s reply brief in its lawsuit against the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) is due September 22, 2026, in the U.S. District Court for the District of Columbia, the next step in briefing on cross-motions for summary judgment. SCAN sued in July arguing CMS’s partial recalculation of 2026 Medicare Advantage Star Ratings, ordered after a Georgia federal court found in May that CMS had used measures never put through formal rulemaking, still leaves its rating a half-star short of where it should be, a gap SCAN says is worth $125 million in 2027 quality bonus payments. SCAN is not alone: Elevance Health separately sued CMS in July over $115 million tied to the same recalculation dispute, and Alignment Healthcare is seeking $50 million, part of a wave of litigation that followed insurer Clover Health’s original court win. CMS itself is appealing the underlying Georgia ruling to the Eleventh Circuit. Confidence: Medium-High. This run reviewed the case’s own docket activity via the Georgetown Health Care Litigation Tracker directly; the filed brief itself was not independently retrieved. Sources: SCAN Health Plan v. Department of Health and Human Services et al., Georgetown Health Care Litigation Tracker, SCAN, Alignment sue CMS over 2026 star ratings recalculation, Becker’s Payer Issues, Elevance sues government over $115 million tied to Medicare Advantage star ratings, STAT.

The federal government restored nearly $12 billion in Medicaid funding to Texas hospitals this week, ending a standoff that had cut off the money for the first time since the program began in 2014. The Centers for Medicare and Medicaid Services (CMS) had halted the state’s supplemental hospital payments on September 1, 2026, over a dispute dating to late 2025 about how Texas raises more than $4.2 billion in provider taxes to draw down its federal Medicaid match, a stoppage that was costing hospitals roughly $27 million a day. Governor Greg Abbott announced the funding’s restoration September 17, 2026, after appealing directly to HHS Secretary Robert F. Kennedy Jr. and calling the earlier freeze “an economic gun to Texas”; the money funds Medicaid reimbursement gaps at hospitals, physicians, rural clinics, nursing facilities and behavioral health providers statewide. Confidence: Medium-High. This run relied on Texas news reporting that quoted the Governor’s office directly; CMS’s own announcement of the resolution could not be independently located this run. Sources: $12 billion in Medicaid funds restored to Texas hospitals, ending impasse with the feds, The Texas Tribune.

A new mandatory Medicare payment model locks in for 5,556 specialists nationwide on January 1, putting up to 9 percent of their Medicare payments at risk based on how well they manage heart failure and low back pain patients. The Centers for Medicare and Medicaid Services (CMS) Innovation Center’s final participant list for the Ambulatory Specialty Model (ASM), posted to its public data portal September 15, 2026 and announced through the agency’s September 17, 2026 provider newsletter, names cardiology, anesthesiology, pain management, neurosurgery, orthopedic surgery and physical medicine specialists who bill Original Medicare for qualifying heart failure or low back pain cases. The model runs five performance years, January 1, 2027 through December 31, 2031, is mandatory with only limited exceptions, and carries no opt-out; payment adjustments start at a two-sided range of negative 9 percent to positive 9 percent and widen to negative 12 percent to positive 12 percent by the model’s final year. Participants must also enter Collaborative Care Arrangements with primary care providers covering data sharing, co-management and patient transition planning, and CMS is holding a virtual office hour for participants September 30, 2026. Confidence: High. This run reviewed CMS’s own ASM model page and participant dataset directly. Sources: Ambulatory Specialty Model (ASM), Centers for Medicare and Medicaid Services, Ambulatory Specialty Model Participants dataset, CMS, MLN Connects Newsletter for September 17, 2026, CMS.

The Justice Department rewrote its own internal rulebook last week in a way that raises the bar for a common type of health care fraud lawsuit, cases built on a provider violating agency guidance rather than an actual statute or regulation. The Department of Justice (DOJ) announced September 18, 2026 that it revised two sections of the Justice Manual: JM 1-19.000 reinstates the 2017 “Brand Memo” policy barring the government from basing enforcement actions solely on allegations that a party violated sub-regulatory guidance, such as a Medicare coverage article, program manual or FAQ, rather than a statute or regulation; JM 4-4.111 directs DOJ attorneys to assess whether the government’s interests are served by seeking dismissal of whistleblower False Claims Act suits the department declines to join. Associate Attorney General Stanley Woodward said “the Department of Justice should enforce the law, not make law through enforcement.” DOJ preserved several carve-outs, including using guidance documents to establish a defendant’s knowledge of wrongdoing or to prove a defendant made representations of compliance with guidance it did not actually meet, so health systems and providers that certify compliance with agency guidance still carry legal exposure. Confidence: High. This run reviewed DOJ’s own press release and the revised Justice Manual section directly. Sources: Department of Justice Revises Justice Manual To Strengthen False Claims Act Enforcement, U.S. Department of Justice, Limitation on Issuance of Guidance Documents, Justice Manual 1-19.000.

Drugmakers have two days left to learn whether federal health officials approved their plans to pay hospitals 340B drug discounts as rebates instead of upfront, the second attempt at a model a court blocked earlier this year. The Health Resources and Services Administration (HRSA) required manufacturers seeking to join its 340B Rebate Model Pilot Program to submit participation plans by August 24, 2026, and says it will issue approvals by September 24, 2026, for an effective date of January 1, 2027; the pilot covers drugs selected for Medicare’s Drug Price Negotiation Program for 2026 and 2027, and shifts hospitals from receiving the 340B discount upfront at purchase to buying at full wholesale price, then submitting claims for manufacturers to rebate the difference within 10 days. HRSA relaunched the pilot August 3, 2026, roughly eight months after a Maine federal court enjoined an earlier version following a lawsuit from safety-net hospitals, and six months after HHS withdrew and formally vacated that version; the revised pilot, unlike its predecessor, lets manufacturers use its data for deduplication in Medicaid managed care. Confidence: Medium-High. This run reviewed the Federal Register notice directly; HRSA’s own press release returned an access error to direct fetch this run, corroborated instead through a law firm’s summary of the notice’s text. Sources: Notice Regarding 340B Rebate Model Pilot Program, Federal Register, HRSA Announces Revised 340B Rebate Model Pilot Program, Covington & Burling.

A government watchdog found more than a quarter of Affordable Care Act marketplace plans covered abortion services in 2026, and that some insurers are not properly disclosing it to shoppers as federal law requires. The Government Accountability Office (GAO) reported September 15, 2026 that 1,719 of 6,655 Qualified Health Plans sold on ACA exchanges nationwide, about 26 percent, covered non-excepted abortion services in 2026, together covering an estimated 4.4 million enrollees, up 683 plans from when GAO last reviewed the question in 2014. All 15 issuers GAO selected for closer review, across 10 states, priced that coverage at roughly the $1-per-enrollee-per-month minimum the Hyde Amendment requires insurers to charge separately from other premium costs, but GAO found some issuers were not meeting the Affordable Care Act’s requirement to prominently disclose abortion coverage to consumers shopping for a plan. Confidence: High. This run reviewed GAO’s own report directly. Sources: Health Insurance Exchanges: Coverage of Non-Excepted Abortion Services by Qualified Health Plans in 2026, U.S. Government Accountability Office.