John Zen Jackson, Of Counsel to the firm’s Healthcare practice, was installed as President of the Medical History Society of New Jersey (MHSNJ) on May 6, 2026. He has been a member of the MHSNJ since 2013.

Founded in 1980, the MHSNJ is a non-profit organization devoted to promoting and encouraging historical research, analysis, and publications concerning the history of medicine and related fields. Its main activities include a weekly online newsletter that frequently announces medical history events in the area, monthly Zoom presentations of scholarly papers, and an annual dinner in Princeton with several short presentations and an invited featured lecturer. This year’s lecture was presented by William Summers, M.D., Ph.D. of Yale University.

A frequent author of articles on legal issues, John has also addressed topics associated with medical history since 2012. He focuses his practice on civil litigation including trial and appellate advocacy, primarily in the healthcare area, as well as in healthcare regulatory and compliance matters. He is certified by the Supreme Court of New Jersey as a Civil Trial Attorney, and has authoritative expertise in medical liability, biomedical ethics, and end-of-life issues.

The New Jersey Department of Labor and Workforce Development’s new regulations impacting the “ABC test” used to determine independent contractor status goes into effect on October 1, 2026, and will apply to New Jersey’s Unemployment Compensation Law, the Wage Payment Law, and the Wage and Hour Law, among other statutes. Employers in the healthcare sector who reply on the services of independent contractors should take steps now to evaluate their current worker classifications to avoid future liability or a potential NJDOL audit, as explained in this recent Client Alert from our employment law practice team.

People are increasingly turning to AI for answers and advice, but many don’t understand the significant risks that are involved, particularly in the healthcare sector.  Healthcare providers and healthcare-adjacent businesses who input patient information (PHI) into these tools may be violating HIPAA rules and risk regulatory scrutiny and audit exposure.  Our recent Client Alert examines a recent federal court ruling and offers advice on how to protect yourself from the unintended consequences of AI use.

Last year, we published this blog post about a case filed in the U.S. District Court for the District of New Jersey by two out-of-state physicians alleging that New Jersey’s telehealth licensure requirements were unlawful because they violated the physicians’ freedom of speech by preventing them from communicating with New Jersey residents without a valid in-state or telehealth license. That case was argued and ultimately dismissed by the District Court on May 12, 2025.

Thereafter, the physicians appealed the matter to the U.S. Court of Appeals for the Third Circuit, arguing that the District Court ruled incorrectly and seeking a reversal of the dismissal of their case.
The federal appellate panel in Philadelphia is now tasked with balancing the physicians’ free speech rights and New Jersey’s authority to regulate the practice of medicine. The panel is focused on the key question of how “treatment” should be defined and why a physician’s telemedicine conversation with a patient should not be considered part of the patient’s treatment. The physicians argued that the conversations are merely speech about treatment because you cannot treat cancer by talking. New Jersey’s Attorney General’s Office argued that telemedicine conversations are part of the treatment process and therefore professional conduct that can be regulated.

It remains to be seen how the Third Circuit will rule on the appeal, but the legal precedent and constitutional framework are likely to heavily favor preserving the authority of states to regulate the practice of medicine, which would mean affirming the District Court’s dismissal.

Even if the dismissal is upheld, this case underscores the ongoing push for healthcare across state lines and the efforts of providers to expand their ability to offer services to patients. These efforts will continue to be balanced against states’ obligations to ensure sufficient oversight to protect their residents and regulate the profession. While it is unlikely that the courts will ever eliminate the ability of states to require licenses and oversee the practice of medicine, the various compacts and interstate agreements allowing for telemedicine licenses across state lines are almost certain to continue to expand.

New legislation signed by New Jersey Governor Mikie Sherrill will now exempt certain qualified Advanced Practice Nurses (APNs) from longstanding joint protocol requirements, allowing them to practice independently. This Client Alert from our healthcare team provides an overview of the new law’s provisions, as well as related exceptions, compliance obligations, and key considerations for stakeholders.

One of the most immediate developments affecting hospitals is a new compliance requirement for off-campus hospital outpatient departments (OPDs) enacted through the FY2026 federal appropriations bill.

Beginning January 1, 2028, hospitals must obtain a unique National Provider Identifier (NPI) for each of its off-campus outpatient departments. Hospitals will also be required to attest that each off-campus facility meets Medicare’s provider-based requirements. Failure to comply with these requirements may render the department ineligible for Medicare reimbursement.

Increased Scrutiny of Provider-Based Departments

The new statutory requirement builds on earlier site-neutral payment reforms and expands the Centers for Medicare & Medicaid Services’ (CMS) oversight of provider-based departments (PBDs). Historically, hospitals could bill certain off-campus facilities under the Outpatient Prospective Payment System (OPPS) if they met CMS provider-based criteria. This often resulted in higher reimbursement than services billed by freestanding physician offices.

Under the new provisions, CMS is expected to increase scrutiny of whether off-campus departments truly satisfy provider-based requirements under 42 C.F.R. § 413.65, including standards related to clinical integration, financial control, and public awareness of hospital affiliation.

Hospitals may face both prospective payment denials and potential recoupment of past payments if CMS determines that a department is improperly billing under OPPS.

Broader Site-Neutral Payment Trends

The new requirements are widely viewed as part of a broader federal push toward site-neutral payment policies. For example, CMS has already taken steps to expand site-neutral payments to certain drug administration services, and to begin phasing out the Medicare inpatient-only list. Increased transparency into off-campus billing patterns may further accelerate site-neutral payment reforms in future rulemaking.

Extension of Key Provider Programs

At the same time, the FY2026 appropriations package extends several provider-favorable programs, including:

  • Medicare telehealth waivers through 2027
  • The hospital-at-home program through fiscal year 2030
  • Supplemental payments for low-volume and Medicare-dependent hospitals
  • Add-on payments for ambulance services

Implications for Hospitals and Healthcare Stakeholders

Viewed collectively, these developments signal a continued federal shift toward greater transparency, tighter compliance oversight, and expanded site-neutral payment policies across care settings. Hospitals and health systems should begin evaluating their off-campus outpatient department structures well in advance of the January 1, 2028, compliance deadline, including confirming whether each location satisfies Medicare’s provider-based requirements under the federal regulations, and preparing for the operational implications of obtaining separate NPIs.

At the same time, stakeholders should closely monitor future regulatory and legislative activity and related appropriations measures that may further accelerate payment reform, increase scrutiny of hospital-affiliated outpatient operations, and reshape reimbursement dynamics across the healthcare system.

Proactive compliance planning and strategic review of outpatient facility structures may help providers mitigate financial exposure and adapt to the evolving federal policy landscape.

Early federal enrollment data for the 2026 Affordable Care Act (ACA) marketplace plan year indicates a meaningful decline in coverage following the expiration of enhanced premium tax credits, which may have significant implications for hospitals and providers as coverage affordability pressures grow and payer mix volatility increases.

Enrollment Declines Following Subsidy Expiration

As of early January 2026, approximately 22.8 million individuals had enrolled in ACA marketplace coverage, compared with 24.2 million enrollees at the end of the 2025 enrollment cycle, a 5.8% decline in coverage, with 1.4 million fewer enrollees overall.

While enrollment remains open in some states, these figures represent the first major data point illustrating the impact of the expiration of enhanced federal premium tax credits, which had substantially lowered coverage costs in recent years. Importantly, the FY2026 appropriations bill did not extend these enhanced subsidies, meaning many consumers are now facing significantly higher out-of-pocket premium costs.

Current projections suggest that premiums for many enrollees may more than double, on average, in comparison to 2025 costs. Although a bipartisan group of lawmakers continues to discuss potential legislative extensions, no such measure has been enacted to date.

State-Level Enrollment Trends

State-reported enrollment data released by the Centers for Medicare & Medicaid Services (CMS) on January 28, 2026, show uneven but concerning shifts across markets, with several large federally facilitated marketplace states experiencing notable enrollment declines, including Florida, North Carolina, and Ohio.

Other states, including California, Colorado, Minnesota, New Mexico, Idaho, Virginia, and Pennsylvania, reported strong enrollment totals in early snapshots, although year-over-year comparisons remain incomplete.

Overall, the available data suggests a broad downward pressure on coverage uptake across multiple states, rather than isolated market fluctuations.

New Jersey Marketplace Trends

The national coverage shifts are particularly relevant for New Jersey, which operates its own state-based exchange through GetCoveredNJ. In recent years, New Jersey saw record marketplace participation, with more than 500,000 residents enrolled in 2025 coverage, driven in part by enhanced federal subsidies and state outreach initiatives.

However, with the expiration of those subsidies entering the 2026 plan year, many residents are now facing higher net premiums. In response, New Jersey extended its open enrollment period through January 31, 2026, to allow additional time for consumers to evaluate coverage options.

Even so, early data suggests notable shifts in consumer behavior. Among individuals actively shopping for plans, the selection of Silver plans declined from approximately 83% in 2025 to 69% in 2026, while Bronze plan selections increased from 16% to 30%.

At the same time, the share of consumers receiving financial assistance that reduced premiums to $10 per month or less dropped from 48% in 2025 to just 10% in 2026. These changes suggest that consumers are responding to higher premiums by selecting lower-cost plans with higher deductibles and cost-sharing obligations.

Implications for Hospitals and Providers

For healthcare providers, these coverage trends should raise concerns. Even when patients remain insured, higher deductibles and increased cost sharing may lead to delayed care, increased uncompensated care, and growing patient bad debt.

Hospitals and health systems should anticipate continued potential payer mix volatility and greater patient financial responsibility as these market shifts continue to unfold.

Implementation of the One Big Beautiful Bill Act (OBBBA) continues to reshape Medicaid financing structures across the country. In early 2026, the Centers for Medicare & Medicaid Services (CMS) issued several regulatory actions that operationalize key OBBBA provisions that affect how states fund Medicaid programs and how hospitals receive supplemental payments.

Two developments that are particularly significant for providers are CMS’s Provider Tax Waiver Final Rule limiting certain state Medicaid financing arrangements and new CMS guidance imposing caps on Medicaid managed care State Directed Payments (SDPs).

Together, these changes may significantly alter Medicaid supplemental payment flows and introduce new fiscal uncertainty for hospitals, particularly those serving large Medicaid populations.

CMS Finalizes Provider Tax Waiver Rule

On January 29, 2026, CMS issued a final rule implementing OBBBA provisions restricting how states may use provider taxes to generate federal Medicaid matching funds. The rule becomes effective April 3, 2026.

Historically, some states relied on non-uniform or non-broad-based provider taxes, approved through federal waivers, to finance Medicaid supplemental payments and maintain program funding levels. The new rule narrows the circumstances under which such arrangements may qualify for federal approval and establishes phased compliance deadlines for existing waiver-based financing structures.

As a result, states relying heavily on waiver-supported provider taxes may need to restructure Medicaid funding models or identify alternative revenue sources.

For hospitals, these changes are significant because provider tax structures are often closely tied to:

  • Supplemental Medicaid payments
  • Medicaid Disproportionate Share Hospital (DSH) funding
  • State Medicaid program sustainability

The practical impact will vary across states depending on how heavily they relied on waiver-based financing arrangements.

CMS Caps Medicaid Managed Care State Directed Payments

On February 2, 2026, CMS released guidance implementing Section 71116 of the OBBBA, which governs Medicaid managed care State Directed Payments (SDPs).

The guidance limits certain SDP payments for hospitals, nursing facilities, and academic medical centers by capping reimbursement levels at a specified percentage of Medicare rates. States must revise payment arrangements exceeding these caps beginning with rating periods on or after July 4, 2025, although limited grandfathering provisions extend through 2028.

Over the past several years, SDPs have become a major source of supplemental Medicaid funding for hospitals, particularly in states with large managed care populations. The new caps could reduce available supplemental funding and force states and providers to revisit existing financing arrangements.

FY2026 Appropriations Bill Adjusts Medicaid DSH Cuts

The recently enacted FY2026 federal appropriations bill further modifies Medicaid hospital financing.

Most notably, the legislation delays and reduces previously scheduled Medicaid DSH cuts, scaling a planned three-year, $24 billion reduction down to an $8 billion cut beginning in fiscal year 2028.

While this postponement provides temporary relief, the law also changes how hospital-specific DSH limits are calculated. Under the revised methodology, Medicare, Medicare Advantage, and other primary payments must be deducted when calculating uncompensated care costs. This adjustment could materially affect hospitals serving large numbers of dual-eligible patients, potentially reducing allowable DSH payments.

What Hospitals Should Monitor

These developments reflect a broader trend emerging under OBBBA implementation: while Congress has softened certain funding reductions, it has simultaneously imposed tighter fiscal guardrails on Medicaid financing structures.

Hospitals should expect continued scrutiny of state financing mechanisms and should monitor how their state Medicaid agencies respond to the new federal requirements. Key areas to watch include:

  • State responses to CMS provider tax restrictions
  • Changes to Medicaid managed care SDP arrangements
  • Adjustments to Medicaid DSH calculations
  • Potential shifts in hospital supplemental payment programs

For providers with high Medicaid utilization, these policy changes could materially affect reimbursement levels and long-term financial planning.

The Rural Health Transformation (RHT) Program, created under the One Big Beautiful Bill Act (OBBBA), has moved from authorization to implementation with the distribution of the first $10 billion in federal funding for fiscal year 2026 (FY26). The RHT program represents a $50 billion, five-year federal initiative designed to strengthen rural healthcare infrastructure and expand access to care nationwide.

CMS announced the first round of RHT funding allocations in early 2026. States received awards averaging approximately $200 million, based on a formula incorporating rural population size, healthcare access needs, and proposed transformation strategies.

New Jersey received slightly over $147 million in FY26 funding. Although this allocation is smaller than awards to more heavily rural states, it still represents a substantial investment aimed at strengthening healthcare capacity in underserved areas of the state.

How RHT Funds May Be Used

The RHT program allows states to use federal funds for a broad range of healthcare system improvements, including:

  • Workforce recruitment, training, and retention initiatives
  • Expansion of primary, preventive, and behavioral health services
  • Investments in telehealth and health information technology
  • Regional collaborations and innovative care delivery models designed to improve rural access to care

Importantly, RHT funds are distributed to states rather than directly to healthcare providers. State agencies are responsible for designing implementation plans and distributing sub-awards to participating providers and healthcare organizations.

Importance of State Engagement for Hospitals & Providers

Because funding flows through state programs, hospitals and providers seeking to access RHT funding will need to engage closely with state agencies as implementation plans are developed. Participation in state-level planning processes may be critical to ensuring that funding opportunities align with provider needs and regional healthcare priorities. For rural hospitals and clinics in New Jersey, early engagement with state policymakers and health agencies may help position organizations to benefit from the program’s funding opportunities.

Since the enactment of the One Big Beautiful Bill Act (OBBBA) in mid-2025, the healthcare industry has been navigating a period of accelerated policy change affecting coverage, reimbursement, and care delivery. As the implementation of OBBBA-authorized funds continues, the data offers insights into how the law is reshaping the healthcare landscape at both the national and state levels.

Against this backdrop, President Trump recently unveiled a new policy framework, the Great Healthcare Plan, and on February 5, 2026, signed a fiscal year 2026 appropriations bill introducing significant operational and reimbursement implications for hospitals that will interact directly with both OBBBA implementation and future reform efforts. For hospitals and providers, these developments arrive at a moment of heightened financial and operational sensitivity, particularly as payer mix volatility and underinsurance concerns continue to grow.

Our healthcare team will continue to examine the early implementation of the OBBBA and related federal healthcare policy developments shaping the healthcare landscape and will address various aspects of those developments in future posts on this blog.