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CLIENT ALERT: Medicare Trust Fund to Run Out of Funding Beginning in 2026, Likely to See an Increase in Audits, Overpayment Demands and Extrapolations

Client Alert

Pursuant to a Medicare Trustee Report released on June 5, 2018, the Medicare trust fund will run out of funding beginning in 2026, which is three years earlier than previously expected.  Although the Trustee’s report requests that Congress and the President act with urgency to remedy this problem, in the short term, we expect to see an increase in government payer audits, overpayment demands, and extrapolations.

 

If implemented in full strength, these overpayment demands and extrapolations can result in payers recovering millions of dollars from providers, which may be returned to the trust fund.  In the alternative, payers and their contractors may allege overpayments so that providers agree to a settlement requesting the provider to accept pennies on the dollar for the true amount owed to the provider.

 

Either way, it is now more crucial than ever before that providers take action when government payers and their contractors seek to conduct pre- and post-payment audits and otherwise seek the refund of overpayments.

 

BMD’s Healthcare Department can meet with you to discuss your options if your practice is facing pre- and/or post-payment audits and denials.  If you are subjected to an overpayment, including an extrapolation, our experienced team can strategize your appeal and arguments for success in challenging the overpayment allegations.

 

If you have any questions concerning payer audits, appeals, overpayments, and extrapolations, or the administrative appeal process in general, please contact  Amanda L. Waesch, Esq. (alwaesch@bmdllc.com) or Bryan E. Meek, Esq. (bmeek@bmdllc.com), attorneys in Brennan, Manna & Diamond’s Provider Relations, Audits, Appeals, and Negotiations Unit, a division of BMD’s Healthcare Department.

 


DOT Non-Domiciled CDL Rule

A new rule from the Federal Motor Carrier Safety Administration (FMCSA) will significantly narrow eligibility for non-domiciled Commercial Driver’s Licenses (CDLs) beginning March 16, 2026. The rule limits eligibility to holders of H-2A, H-2B, and E-2 visas and eliminates Employment Authorization Documents (EADs) as qualifying proof of work authorization. As a result, many lawfully present and work-authorized immigrants, including refugees, asylees, DACA recipients, and Temporary Protected Status holders, will no longer be able to obtain or renew a non-domiciled CDL. The change is expected to affect roughly 194,000 drivers nationwide and has prompted multiple legal challenges, including a pending emergency stay request before the United States Court of Appeals for the District of Columbia Circuit.

FinCEN Residential Real Estate Reporting Rule Now in Effect

FinCEN’s new Residential Real Estate Reporting Rule, effective March 1, 2026, requires certain real estate transfers to be reported to combat financial crimes. Transfers of residential property to entities or trusts without financing may require a Real Estate Report.

Department of Education Proposes Redefinition of “Professional Degree,” Excluding Nursing and Limiting Graduate Loan Borrowing

The U.S. Department of Education has issued a Notice of Proposed Rulemaking that would redefine “professional degree” programs under the One Big Beautiful Bill Act. The proposal excludes nursing from the recognized list and would impose new borrowing limits for graduate students while eliminating the Grad PLUS program. Public comments are due by March 2, 2026.

First-of-Its-Kind Federal Ruling Finds Use of Consumer AI Tool May Destroy Attorney-Client Privilege

On February 10, 2026, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York issued a first-of-its-kind ruling finding that documents generated by a criminal defendant using a consumer AI platform were not protected by attorney-client privilege after being shared with counsel. The court treated the AI tool as a third party, concluding that entering sensitive information into a publicly available platform may waive confidentiality. The ruling also suggests that the work product doctrine may not apply where AI-generated materials are created independently by a client rather than at counsel’s direction. The decision signals that parties should exercise caution when using consumer AI tools in connection with legal matters.

Your Golden Chance for H-1B Lottery Registration - March 2026

USCIS H-1B registration opens March 4–19, 2026. U.S.-based employees on valid nonimmigrant status are exempt from the $100,000 fee for change of status petitions. The new weighted lottery favors higher-skilled and higher-paid employees, improving odds for advanced degree holders and Wage Level 3 or 4 workers.