August 5, 2025

The Health Record - Healthcare Law Insights, V 2, Issue 8, July 2025

Jennifer Baker, H. Dill Battle III, Charity Lawrence, Brienne Marco, Joseph Unger

Spilman Thomas & Battle, PLLC

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Volume 2, Issue 8, 2025

Welcome

Welcome to our eighth issue of 2025 of The Health Record -- our healthcare law insights e-newsletter.

In this edition, we look at the rural health "slush fund" included in the Federal budget bill, the effect of Medicaid cuts on Virginia, the results of an investigation of an organ procurement organization, the rescission by CMS of EMTALA guidance on the obligation of hospitals to provide emergency abortions, the impact of a new ruling on medical debt and credit reports, and proposed updates to the HIPAA Security Rule.

We want to thank Summer Associates Jonathan Gharib, Gabe Papadoupolous, and Carter Capehart for their contributions to this issue and for closing out our special summer series of this newsletter. All of our Summer Associates have been particularly helpful with research and content development throughout the summer. We hope you have enjoyed their insights.

$50B Rural Health ‘Slush Fund’ Faces Questions, Skepticism

“A last-minute scramble to add $50 billion rural health program . . . has left hospital and clinic leaders nationwide hopeful but perplexed.”

Why this is important: A last-minute addition to President Trump’s tax and spending law has secured over $50 billion in funding for a rural healthcare program that will deliver much-needed funding to rural healthcare providers across the country. The program “calls for federal regulators to hand states $10 billion a year for five years starting in fiscal year 2026.” Those in rural communities in the United States “have more chronic diseases, die younger, and make less money,” and as such, the healthcare infrastructure in rural areas needs federal funding to maintain access to critical health care services.

The funding requires states to submit a detailed plan on how the funds would be used to improve access to hospitals, improve health outcomes, and enhance the economic and technological options for medical professionals. While there are questions as to whether these funds will be used effectively in rural areas and even if these funds will be enough to offset cuts to Medicaid, this is a positive first step in ensuring that rural Americans have access to quality healthcare. --- Jonathan E. Gharib, Summer Associate

Virginia Hospitals could Face 'Billions' in Losses as Medicaid Officials Await Federal Guidance

“New work requirements and verification processes will affect 600,000 Virginians enrolled through Medicaid expansion as officials await federal guidance.”

Why this is important: President Trump’s “One Big Beautiful Bill” Act is going to have a significant impact on 600,000 Virginians enrolled through Medicaid expansion. While guidance is still severely lacking, new requirements in the federal legislation include that enrollees must complete 80 hours of monthly work, education, or community service, along with compliance verification twice yearly instead of just once. Another significant impact of the “One Big Beautiful Bill” Act will be on hospitals, which are expected to lose $2 billion annually as a result of these changes in Medicaid eligibility. Virginia lawmakers have expressed concerns about the lack of transparency and lack of specifics from Congress, which are preventing them from being able to provide guidance to impacted Virginians and from allaying concerns from hospital administrators. --- Jennifer A. Baker

HHS Finds Systemic Disregard for Sanctity of Life in Organ Transplant System

“The U.S. Department of Health and Human Services under the leadership of Secretary Robert F. Kennedy, Jr. announced a major initiative to begin reforming the organ transplant system following an investigation by its Health Resources and Services Administration that revealed disturbing practices by a major organ procurement organization.”

Why this is important: On July 21, 2025, Robert F. Kennedy Jr. announced a new initiative via a Department of Health and Human Services press release to reform the organ transplant procurement process. This decision comes after an investigation by the Health Resources and Services Administration (HRSA) revealed shocking details about the practices of a major federally funded organ procurement organization (OPO) serving Kentucky, Southwest Ohio, and parts of West Virginia. HRSA directed the Organ Procurement and Transplantation Network (OPTN) to reopen a case involving harm caused by the OPO to a neurologically injured patient, which could have possibly been prevented.

While the initial OPTN investigation conducted under the Biden administration closed the case without taking any action, the recent HRSA investigation examined 351 instances where organ donation was authorized but was not completed. Among those cases, the investigation found:

103 cases containing concerning features, such as patients displaying neurological signs incompatible with organ donation.
28 patients who may not have been deceased at the time harvesting was initiated.
Evidence of poor neurologic assessments, lack of coordination, questionable consent practices, and misclassification of causes of death.

RFK Jr. described the report as “horrifying” and proclaimed that the entire system needs to be fixed to ensure the sanctity of donors’ lives. HRSA has since mandated corrective actions for the OPO, including a root cause analysis to develop new policies on donor eligibility as well as formal procedures to allow any staff member to halt donation if a patient safety issue presents itself. The press release further noted that the OPO would be decertified if it failed to comply, and that the OPTN has been directed to improve safeguards and monitoring nationwide to ensure transparency and informed consent, restore trust, and protect the rights of all prospective donors and their families. --- Gabriel P. Papadopoulos, Summer Associate

CMS Rescinds EMTALA Guidance on Hospital Obligation to Provide Emergency Abortions

“The guidance, which was issued after the Dobbs v. Jackson decision, clarified that if a hospital emergency department physician believes that an abortion is the stabilizing treatment necessary to resolve a patient’s emergency medical condition, the physician must provide that treatment, regardless of state law.”

Why this is important: The Centers for Medicare & Medicaid Services (CMS) recently withdrew federal guidance that told hospitals they must provide emergency abortion care under a federal law known as EMTALA (Emergency Medical Treatment and Labor Act). EMTALA requires hospitals to stabilize patients in emergencies, and the guidance previously said this includes providing abortions if necessary to save a woman’s life or prevent serious harm.

The withdrawal of the guidance creates confusion for both doctors and patients. Without clear federal direction, hospitals in states with abortion bans may be unsure whether they can legally provide an emergency abortion, even when medically necessary. This may lead to delays in treatment or denial of care in urgent, life-threatening situations, depending on how individual hospitals and state laws are interpreted.

Supporters of the rescinded guidance say that the federal government was overreaching and interfering with state authority. Opponents, including many in the medical community, argue that the change puts pregnant patients at risk and forces doctors to choose between obeying state law and doing what is medically necessary.

This development underscores the continuing ripple effects of the Supreme Court’s 2022 Dobbs v. Jackson decision, which ended federal protections for abortion. As states pass widely varying abortion laws and federal agencies shift their policies, legal uncertainty remains a major challenge for healthcare providers and patients alike. --- Carter P. Capehart, Summer Associate

A Judge Blocked a Rule to Drop Medical Debt from Credit Reports. What Now?

“The ruling comes as Americans face higher healthcare premiums and the end of enhanced marketplace subsidies.”

Why this is important: In July 2025, a federal judge blocked a Biden-era rule from the Consumer Financial Protection Bureau (CFPB) that, if it had taken effect, would have stopped medical bills from appearing on credit reports and from being used in lending decisions. As it currently stands, healthcare providers do not typically report missed medical bills to credit bureaus, and medical debt does not show up on a credit report unless it has been reported to a collections agency. This ruling comes at a critical time, as 10 million Americans are expected to be without health insurance by 2034 as a result of the tax bill signed into law by President Trump last month. This same tax bill also removes enhanced premium tax credits that helped make Affordable Health Care marketplace coverage more affordable, which will result in the largest premium increases seen in years in 2026. Due to a higher number of Americans becoming uninsured as a result, medical debt will significantly increase and, if reported to credit bureaus, will be detrimental to a person’s ability to rent a home or obtain a credit card with a favorable rate, and may even impact job searches. --- Jennifer A. Baker

Risk Management, Legacy Tech Pose Major Threats to Healthcare Firms, Report Finds

“Companies have improved their recovery processes and user controls but still lag in risk preparedness, according to the report.”

Why this is important: On average, healthcare companies receive and maintain more sensitive information than other industries, making the healthcare sector a big target for cyberattacks. In 2024, 92 percent of healthcare organizations reported cyberattacks, and nearly 70 percent saw patient care impacted. Common areas of security vulnerabilities include: securing old systems, recovery process improvements, response planning, post-incident communications, and threat analysis maturity. Focused improvements in these areas are essential for protection against cyberattacks and compliance with upcoming potential federal regulations.

On January 6, 2025, the U.S. Department of Health and Human Services (HHS) published a notice of proposed rulemaking in the Federal Register detailing proposed changes to the HIPAA Security Rule. If implemented, it will be the first major update to the Security Rule in two decades. The comment period closed on March 7, 2025, and the process of reviewing the comments began thereafter. The proposed rule aims to improve cybersecurity and better protect the U.S health care system from a growing number of cyberattacks. The proposed rule would, among other things, mandate specific risk analyses and the use of multi-factor authentication. --- Joseph C. Unger

Featured Attorneys Question & Answer

This is our Featured Attorneys Q&A to introduce you to our large healthcare law team. To help you get to know our team a little better, we are highlighting attorneys in each issue by asking them a healthcare-related question. We hope their responses will be insightful for you.

H. Dill Battle III - Member; Chair, Insurance Government Relations & Regulatory Practice Group; Chair, Workers' Compensation Practice Group

Charity K. Lawrence - Member

Q: As we all know, safety in the healthcare industry is of utmost importance and is gaining in prominence every single day. As attorneys who are considered top of your fields regarding workers’ compensation issues, what are your best practices for healthcare organizations when it comes to safety policies, human resources trainings, and workers’ compensation programs?

Answer: When it comes to the healthcare industry, there is special emphasis put on achieving high-quality patient care, regulatory compliance, reducing liability, and maintaining strong employee well-being and satisfaction. All of those tenets can be achieved if you have robust safety, human resources, and workers’ compensation programs.

Amazingly, some organizations have formal safety plans in place, but corners may be cut with complete compliance. The healthcare industry moves fast, and those moving parts can cause breakdowns in safety procedures. It is essential that your safety plan is comprehensive. From hazardous materials to mobilizing and moving patients to emergency response plans, your management and staff must know your expectations and how to execute appropriately. Do your safety plans take into account demands from OSHA and CDC? Do you regularly audit and assess your programs and procedures? Your staff should have no doubt how to react in any given situation.

Your employees are your front line when it comes to safety and prevention. Your human resources staff is absolutely pivotal when it comes to employee training, including understanding HIPAA, anti-harassment policies, infection control procedures, and adherence to codes of conduct and ethics.

We all know that accidents can and will happen in a healthcare setting, but how the organization and staff react to those incidents will help mitigate issues, including litigation. You cannot wait for an injury to occur and then react. Proactive injury prevention programs must be a focus. If an injury occurs, does your staff know the best practices established by your organization in terms of reporting the injury? Do you have a return-to-work process that is clearly outlined and adhered to? And are you tracking those injuries and using data analysis to help prevent injuries in the future? Can you utilize technology and artificial intelligence to help with potential pitfalls in your system? Are there any other ways you and your staff can identify potential issues before they happen?

Finally, is your staff connected with your workers’ compensation carrier and claim administrator to ensure proper claim investigation and efficient management if a workers’ compensation claim is filed?

If you have legal counsel, they should be intimately involved in all of your safety, human resources, and workers’ compensation programs. They should be an extension of your staff and can help you identify issues before they become problems. Workers’ compensation programs will vary depending on local and state guidelines. Your lawyers are well-versed in those systems and can provide training to avoid potential problems in your claim management process.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.