State Health Policy Action We’re Watching in June 2026
Key Takeaways
- Arizona is using AI to detect Medicaid fraud by launching a new system within its Medicaid agency to review provider payments and prevent fraud, waste, and abuse.
- Iowa banned health insurers from using AI to deny prior authorization requests through HF 2635, which also exempts certain cancer screenings from prior authorization and prevents penalties for out-of-network referrals.
- Missouri passed comprehensive healthcare legislation that expands Medicaid coverage, establishes prior authorization transparency requirements, strengthens hospital price transparency enforcement, and prohibits discrimination against 340B covered entities.
- Maryland's Prescription Drug Affordability Board set an upper payment limit for Ozempic at the Medicare maximum fair price for state and local government health plans after determining the drug creates an affordability challenge.
- Connecticut overhauled its Certificate of Need program through its budget bill, eliminating the requirement for hospitals to obtain approval before terminating service lines and establishing a new three-member oversight panel.
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State Legislative Response to Healthcare Policy in Spring Sessions
Several states wrapped up busy spring sessions with notable healthcare activity. Arizona is tapping AI to crack down on Medicaid fraud, while Iowa banned insurers from using AI to deny prior authorization requests. Missouri passed a sweeping package covering Medicaid expansion, hospital price transparency, and more, which is awaiting the governor's signature. Maryland moved to cap Ozempic payments under state health plans, and Connecticut overhauled its Certificate of Need program via its budget bill. Here are the health policy updates we're monitoring this month.
Prior Authorization
Prior authorization is a requirement by health insurers that healthcare providers obtain approval before performing certain medical services, procedures, or prescribing specific medications. The insurer reviews the request to determine if the service is medically necessary and covered under the patient's plan.
Certificate of Need (CON)
Certificate of Need is a regulatory process requiring healthcare facilities to obtain state approval before making major capital expenditures, expanding services, or terminating service lines. CON programs are intended to control healthcare costs and ensure adequate access to services by preventing unnecessary duplication of facilities and equipment.
340B Covered Entities
340B covered entities are healthcare organizations eligible to participate in the federal 340B Drug Pricing Program, which allows them to purchase outpatient prescription drugs at significantly reduced prices. Eligible entities typically include safety-net hospitals, federally qualified health centers, and other providers serving low-income and uninsured patients.
Upper Payment Limit (UPL)
An upper payment limit is a maximum amount that can be paid for a prescription drug or healthcare service. State prescription drug affordability boards can set UPLs to cap what state and local government health plans pay for medications determined to create affordability challenges for patients or the healthcare system.
Which States Enacted Major Healthcare Policy Changes in 2026?
How Is Arizona Using Artificial Intelligence in Medicaid Oversight?
On May 14, Arizona Governor Katie Hobbs (D) announced that Arizona's Medicaid agency, Arizona Health Care Cost Containment System (AHCCCS), will launch an artificial intelligence-informed system to review payments to providers in an effort to prevent fraud, waste, and abuse (FWA). While the initiative within AHCCCS has been in development for months, the announcement comes in response to a previous April CMS directive asking all states to revalidate "high-risk providers" in their Medicaid programs.
What New Restrictions Did Iowa Place on Insurer Use of Artificial Intelligence?
In May, Iowa Governor Kim Reynolds (R) signed HF 2635 into law. The new law prohibits health insurers from using artificial intelligence to determine whether to deny prior authorization requests. The measure also exempts certain cancer screenings from prior authorization requirements and will prevent insurers from penalizing physicians who refer patients to out-of-network providers, among other provisions.
What Are the Main Provisions of Missouri's Comprehensive Healthcare Bill?
At the end of session, the Missouri General Assembly enrolled a comprehensive health care bill (HB 2372). The measure provides for numerous reforms, with some issues having been negotiated over the past four years. The bill now heads to Governor Kehoe (R) for his signature. Key elements of the bill include: expanding MO HealthNet and private insurance coverage for various services, establishing new prior authorization transparency and interoperability requirements, strengthening hospital price transparency enforcement, broadening telehealth flexibilities, and prohibiting discrimination against 340B covered entities.
How Is Maryland Addressing Ozempic Affordability in State Health Plans?
During its May meeting, the Maryland Prescription Drug Affordability Board (PDAB) finalized its cost review study report for Ozempic, making a final determination that the drug has led to an affordability challenge. The PDAB also approved proposed regulations to set an upper payment limit (UPL) for Ozempic at the Medicare maximum fair price for state and local government health plans. In addition to the UPL, the PDAB also approved a series of non-UPL policies to address drivers of the affordability challenges for Ozempic, including a GLP-1 study, bulk purchasing/subscription model, plan design and PBM reform study, and state participation in CMMI models.
How Did Connecticut Overhaul Its Certificate of Need Program?
On May 26, Connecticut Governor Ned Lamont (D) signed the state's budget bill (SB 1) into law, which, among other things, overhauls the state's Certificate of Need (CON) program and eliminates the current requirement for hospitals to obtain CON approval before terminating a service line. The bill establishes a separate notice-based process for hospital service line pauses and terminations, and replaces the current CON process with a new system overseen by a three-member panel.
Track Health Care Policy
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Which states are using AI to detect Medicaid fraud in 2026?
Arizona announced in May 2026 that its Medicaid agency, AHCCCS, will launch an AI-informed system to review provider payments and prevent fraud, waste, and abuse. The initiative was developed over several months and responds to an April 2026 CMS directive requiring all states to revalidate high-risk providers in their Medicaid programs.
What does Iowa HF 2635 say about AI and prior authorization denials?
Iowa HF 2635 prohibits health insurers from using artificial intelligence to determine whether to deny prior authorization requests. The law also exempts certain cancer screenings from prior authorization requirements and prevents insurers from penalizing physicians who refer patients to out-of-network providers.
What healthcare reforms are included in Missouri HB 2372?
Missouri HB 2372 is a comprehensive health care bill that expands MO HealthNet and private insurance coverage, establishes new prior authorization transparency and interoperability requirements, strengthens hospital price transparency enforcement, broadens telehealth flexibilities, and prohibits discrimination against 340B covered entities. The bill passed the Missouri General Assembly and is awaiting Governor Kehoe's signature.
How is Maryland capping Ozempic costs for state employees?
Maryland's Prescription Drug Affordability Board approved regulations to set an upper payment limit for Ozempic at the Medicare maximum fair price for state and local government health plans. The Board determined that Ozempic has led to an affordability challenge and also approved non-UPL policies including a GLP-1 study, bulk purchasing models, and PBM reform studies.
What changes did Connecticut make to its Certificate of Need program in 2026?
Connecticut's budget bill (SB 1) overhauled the state's Certificate of Need program by eliminating the requirement for hospitals to obtain CON approval before terminating a service line. The law establishes a separate notice-based process for hospital service line pauses and terminations, and replaces the current CON process with a new system overseen by a three-member panel.