State Health Policy Updates to Watch in August 2026
Key Takeaways
- Idaho launched a Health Insurers Working Group in August 2026 to investigate claim denials, prior authorization delays, and unpaid claims, with recommendations for policy solutions expected after upcoming meetings.
- Illinois enacted healthcare legislation in August 2026 covering the 340B drug program, private equity oversight, and prescription drug distribution. HB 2371 prohibits manufacturers from blocking 340B entities' access to discounted drugs, while HB 5000 requires 30-day notice for private equity transactions involving healthcare facilities.
- Indiana implemented a 6-month moratorium on new home and community-based services waiver providers starting August 1, affecting multiple Medicaid waiver programs and potentially extending for additional 6-month periods.
- Massachusetts Governor Maura Healey responded to affordability recommendations by directing MassHealth to increase primary care investments to 12% of total medical spending by 2028, part of a broader effort to address rising healthcare costs.
- A federal judge dismissed legal challenges to South Dakota's 340B law in August, ruling that the state can prohibit drug manufacturers from interfering with contracts between 340B entities and pharmacies.
Idaho Health Insurers Working Group Launches Policy Review
On August 11, the Idaho Health Insurers Working Group held its first meeting. The new legislative task force is charged with studying claim denial rates, expected provider reimbursements, prior authorization-related treatment delays, and outstanding unpaid claims, as well as making recommendations for policy solutions to "poor health insurer performance." The next meeting is scheduled for September 15 at 10 am MDT.
Illinois Enacts New Healthcare Legislation
On August 7, Illinois Governor J.B. Pritzker (D) enacted 75 bills, including legislation covering the 340B program, private equity in healthcare, and drug distribution.
340B Program Protections and Transparency
HB 2371 prohibits drug manufacturers from interfering with covered entities' or contract pharmacies' acquisition of 340B drugs and mandates transparency requirements for covered entities.
Private Equity Oversight in Healthcare Facilities
Additionally, HB 5000 subjects transactions involving private equity companies with ownership or control of health care facilities to mandatory 30-day notice requirements.
Prescription Drug Distribution Changes
Finally, HB 4953 authorizes manufacturers and wholesale distributors to deliver prescription drugs to a licensee's business address or an authorized entity, instead of only the premises listed on the license.
Indiana Imposes Moratorium on Waiver Providers
On August 1, the Indiana Health Coverage Programs (IHCP) implemented a 6-month moratorium for home and community-based services 1915(c) waiver providers. The moratorium covers 24 services, including those within the Indiana PathWays for Aging (PathWays), Health and Wellness (H&W), Traumatic Brain Injury (TBI), Community Integration and Habilitation (CIH), and Family Supports (FS) waivers. Current applications under review for H&W, PathWays, and TBI waivers will still be processed, while those for CIH and FS waivers will not. Crucially, IHCP indicated it may extend the moratorium for further 6-month increments.
Massachusetts Advances Health Care Affordability Initiatives
On August 3, Massachusetts Governor Maura Healey (D) announced the Health Care Affordability Working Group's recommendations for health care affordability in the state. The group issued 12 recommendations covering innovative health care models, quicker hospital discharges, "low-value" care, nursing recruitment, health education investments, primary care legislation, state purchasing pools, hospital price caps, out-of-network payment rates, rising premiums, health information data exchange, and a healthcare AI advisory group. In response, Governor Healey signed Executive Order No. 657, directing MassHealth to increase primary care investments to 12% of total medical spending by the end of 2028.
Federal Court Upholds South Dakota 340B Law
On August 7, a federal judge dismissed three lawsuits challenging SB 154, South Dakota's 340B law prohibiting drug manufacturers and wholesale drug distributors from interfering in contracts between 340B entities and pharmacies. In his dismissal, he found that 340B participation is optional, the state's law does not unfairly burden interstate commerce, and it does not alter how the federal statute is structured because SB 154 addresses drug delivery rather than pricing. The decision follows recent lawsuits against Illinois' 340B law and another dismissal of challenges against Maine's 340B law. The Eighth Circuit Court is expected to review any notices of appeal in the coming month.
Track Health Care Policy
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340B Drug Pricing Program
The 340B Drug Pricing Program is a federal program that requires drug manufacturers to provide outpatient drugs at significantly reduced prices to eligible healthcare organizations and covered entities that care for many uninsured and low-income patients. Covered entities include certain hospitals, federally qualified health centers, and other safety-net providers. The program allows these entities to stretch scarce federal resources and reach more eligible patients by reducing their drug costs.
1915(c) Waiver
A 1915(c) waiver is a Medicaid program that allows states to provide home and community-based services (HCBS) to individuals who would otherwise require institutional care in a hospital, nursing facility, or intermediate care facility. These waivers enable states to offer long-term care services in community settings rather than institutions, supporting individuals with disabilities, elderly populations, and others who need ongoing care. States can target specific populations and design services tailored to their needs while maintaining cost-effectiveness compared to institutional care.
Frequently Asked Questions
What did Illinois HB 2371 do regarding the 340B drug program?
Illinois HB 2371 prohibits drug manufacturers from interfering with covered entities' or contract pharmacies' acquisition of 340B drugs. The legislation also mandates transparency requirements for covered entities participating in the 340B program.
What are the notice requirements for private equity healthcare transactions in Illinois under HB 5000?
Illinois HB 5000 subjects transactions involving private equity companies with ownership or control of health care facilities to mandatory 30-day notice requirements. This applies to private equity transactions affecting healthcare facility operations in the state.
Why did Indiana implement a moratorium on home and community-based services waiver providers?
Indiana implemented a 6-month moratorium starting August 1, 2026, covering 24 services across five waiver programs including PathWays for Aging, Health and Wellness, Traumatic Brain Injury, Community Integration and Habilitation, and Family Supports. The Indiana Health Coverage Programs may extend the moratorium for additional 6-month increments.
What happened with the legal challenges to South Dakota's 340B law SB 154?
A federal judge dismissed three lawsuits challenging South Dakota SB 154 on August 7, 2026, finding that 340B participation is optional, the law does not unfairly burden interstate commerce, and it addresses drug delivery rather than pricing. The Eighth Circuit Court is expected to review any notices of appeal in the coming month.
What primary care spending target did Massachusetts set in Executive Order 657?
Executive Order No. 657 directs MassHealth to increase primary care investments to 12% of total medical spending by the end of 2028. This order was issued in response to recommendations from the Health Care Affordability Working Group.