The Regulator

93 percent: that is the share of Humana Medicare Advantage plan members who will be enrolled in plans rated four stars or higher in 2027 after the Centers for Medicare and Medicaid Services (CMS) published its annual star ratings October 8, up from roughly 41 percent in 2026, a surge analysts project could translate to $3 billion or more in additional quality bonus payments in 2028. CMS rated 508 Medicare Advantage and Part D contracts for 2027, with 71 percent of enrollees landing in four-star or higher plans and the enrollment-weighted average score slipping slightly from 4.01 to 3.99. Alignment Healthcare moved in the opposite direction, with the share of its members in top-rated plans collapsing from 98 percent to 25 percent, a swing analysts estimate could cost the company more than $170 million in 2028 revenue; Alignment said it intends to pursue every available administrative remedy and to litigate the methodology CMS used, the same methodology Elevance Health, SCAN Health Plan and Clover Health have already sued over in federal court. The 2027 ratings go live on Medicare’s Plan Finder as the October 15 Open Enrollment window opens and run through December 7, making this the competitive map every insurer uses to acquire the year’s new members. Confidence: High on the star percentages; Medium on the dollar projections, which reflect analyst estimates. Sources: 2027 Medicare Advantage and Part D Star Ratings, Centers for Medicare and Medicaid Services, Humana soars, Alignment plummets in 2027 Medicare Advantage star ratings, Healthcare Dive.

Federal Medicaid rules eliminating coverage for refugees, asylees and other lawfully present non-citizen immigrants took effect October 1, and states are now working through redeterminations for an estimated 281,000 or more current enrollees in nine states and the District of Columbia alone. The 2025 reconciliation law (P.L. 119-75) restricts Medicaid and Children’s Health Insurance Program eligibility to lawful permanent residents, Cuban and Haitian entrants, Compact of Free Association migrants, and lawfully residing children and pregnant immigrants in states that have elected that coverage option, ending eligibility for many categories of lawfully present non-citizens including refugees, asylees and humanitarian entrants. State data compiled by KFF identified Florida with roughly 177,000 enrollees at risk, North Carolina with about 29,000, Arizona with about 28,000, New Jersey with 15,000 to 25,000 and Washington state with about 11,000. States must attempt electronic immigration-status verification through the Department of Homeland Security’s Systematic Alien Verification for Entitlements database before terminating anyone and must offer a 90-day reasonable opportunity period to individuals whose status cannot immediately be confirmed. Confidence: Medium-High; the enrollment figures are projections from state-submitted data, and final disenrollment counts will not be available until states complete the process later this fall. Sources: Implementation of Medicaid Immigrant Eligibility Restrictions Under the 2025 Reconciliation Law, KFF, CMS Guidance on H.R. 1 Restrictions for Non-Citizen Coverage in Medicaid and CHIP, State Health and Value Strategies.

A North Texas urgent care chain and its owner agreed to pay $20 million to settle federal False Claims Act allegations that they billed the federal COVID-19 Uninsured Program for complex medical visits patients never received, with overseas scribes fabricating the records needed to justify the higher charges. The HHS Office of Inspector General (OIG) announced October 7 that Heal 360 Urgent Care PLLC, Heal 360 Primary Care PLLC and owner Dr. Mohammed Amer Mohiuddin agreed to the settlement, resolving allegations that between January 2021 and March 2022 the clinics billed the Health Resources and Services Administration’s COVID-19 Claims Reimbursement to Providers and Facilities for the Uninsured program for Level 3 and Level 4 evaluation and management visits when patients at walk-up and drive-through sites received nothing more than a nasal swab for a COVID-19 test; remote scribes overseas filled in template medical records, including fabricated past medical history and examination sections, to support the higher-reimbursing billing codes. The COVID-19 Uninsured Program, now closed, paid providers for care given to uninsured patients during the pandemic and was among the largest rapid-deployment federal health programs ever created. Confidence: High. This run reviewed the OIG enforcement announcement directly. Sources: Heal 360 Clinics and Owner Agree to Pay $20M to Resolve False Claims Act Allegations, HHS Office of Inspector General, Heal 360 Clinics and Owner Agree to Pay $20M to Resolve False Claims Act Allegations, U.S. Department of Justice Northern District of Texas.

A federal jury in Minnesota convicted a Lake Elmo woman this week of stealing $3.6 million from the state’s Medicaid housing program by billing for services her employees were not providing, including hours logged by workers who were in other states and other countries at the time. The jury convicted Sharmaine Meadows, 45, on October 8 on three counts of health care fraud, each carrying a maximum sentence of ten years, for her operation of a company that billed the now-defunct Minnesota Medicaid Housing Stabilization Services program for in-person housing case management and support services that were not rendered. Prosecutors showed at trial that Meadows directed employees to bill the program to its hourly cap regardless of hours worked, that billing records showed employees simultaneously providing services in impossible combinations of locations, that some workers were overseas or in other states when billing purportedly in-person hours, and that data analysis found billings claiming more than 20 hours of work a day, every day, for weeks at a time. Medicaid beneficiaries the program was designed to move from homelessness into stable housing testified they received little or no help despite the company’s billing. Confidence: High. This run reviewed the OIG enforcement announcement and confirmed through multiple news outlets. Sources: Minnesota Woman Convicted in $3.6M Scheme to Defraud Medicaid Housing Services Program, HHS Office of Inspector General, Minnesota Woman Convicted in $3.6M Scheme to Defraud Medicaid Housing Services Program, U.S. Department of Justice.

UPDATE: The calendar year 2027 Medicare Physician Fee Schedule final rule arrived at the White House for mandatory regulatory review on September 29, one day after American Health Intel reported the rule had not yet reached the Office of Information and Regulatory Affairs, and the November 1 statutory deadline is now 23 days away. The Office of Information and Regulatory Affairs (OIRA) public pending-review database, checked this run, shows the CY2027 Physician Fee Schedule final rule (RIN 0938-AV82) received September 29 as an economically significant rule requiring OIRA review under Executive Order 12866; four companion CY2027 payment rules are already in review, including the hospital outpatient prospective payment system rule, the end-stage renal disease rule and the home health rule. Federal law requires CMS to publish the final physician fee schedule rule “before November 1” each year; the CY2024 edition missed that deadline by one day. The proposed version of the current rule drew more than 40,000 public comments and would cut the physician conversion factor by 1.68 percent for clinicians outside alternative payment models and 1.19 percent for those inside them. Physician practices and Medicare Shared Savings Program accountable care organizations need the final numbers to lock in 2027 budgets and risk-track elections. Confidence: High. This run reviewed OIRA’s public database directly. Sources: Regulatory Review search, Office of Information and Regulatory Affairs, Calendar Year 2027 Medicare Physician Fee Schedule Proposed Rule, Centers for Medicare and Medicaid Services.

CMS proposed rewriting the federal rules governing the nation’s 330,000 clinical laboratories October 8, codifying pandemic-era enforcement discretion that let pathologists review digital test results remotely and for the first time allowing those remote reviews to count under the originating laboratory’s Clinical Laboratory Improvement Amendments (CLIA) certificate. The proposed rule (CMS-3478-P, Federal Register 2026-20613, comment deadline December 7) would allow laboratory personnel to access digital data, images and live feeds generated at a primary testing site from an off-site location under that site’s CLIA certificate, except for the subspecialty of cytology, which remains excluded because of the hands-on judgment required for Pap smear and similar specimen reviews. The rule also proposes allowing digital images of glass slides for gynecologic cytology proficiency testing, aligning those testing requirements with the Food and Drug Administration’s already-authorized digital cytology screening systems, and updates personnel qualification standards for several laboratory roles to address documented workforce shortages. Providers, health systems and commercial laboratory companies operating multi-site networks have the most at stake: the virtual-access provision would let a highly credentialed pathologist oversee digital results across facilities without being on site, reducing staffing costs and geographic constraints for hospitals in rural or underserved areas. Confidence: High. This run reviewed the Federal Register notice directly. Sources: Clinical Laboratory Improvement Amendments of 1988 (CLIA); Virtual Access, Gynecologic Cytology Proficiency Testing, Personnel Qualifications, and Other Changes, Federal Register, CMS proposes CLIA updates for digital access, personnel qualifications, Medical Laboratory Observer.