Weekly StateVitals Update: Volume 11 (March 17, 2025)
California
Medicaid program facing $3.4 billion shortfall. The California Department of Finance disclosed last week in a letter to lawmakers that the state obtained a $3.44 billion loan from the state general fund to sustain payments to Medi-Cal providers, the state’s Medicaid program. It’s expected that the loan will ensure Medi-Cal can cover its obligations through the end of March and the program warned lawmakers that additional funding is likely needed to cover expenses through the end of the fiscal year (June 30). The Department of Health Care Services iterated in the past that Medicaid costs have risen as a result of increased enrollment by seniors, less disenrollment than expected following the COVID-19 PHE, increased pharmaceutical spending, and expanding coverage for immigrants. For the immediacy, it remains unclear how state legislative leadership intends to address the budget shortfall.
Colorado
House Committee advances mental health coverage bill. Following its continued interest in reforming coverage and care of mental health diagnoses, the House Committee on Health Care and Insurance voted favorably to report SB 25-042 out of committee and to the full House. The measure, sponsored by Representative Mary Bradfield (R-El Paso County) in the House, would require insurers to cover up to 60 days of inpatient mental health care for qualifying patients. Existing law requires insurers to provide coverage only up to 15 days of inpatient care. Apart from inpatient coverage, the bill would require the Department of Public Safety and Behavioral Health Administration to convene a stakeholder group that would identify known resources and programs and publish information on existing crisis response programs and alternative response options for consumers experiencing a mental health crisis. The measure previously passed the senate in mid-February and is similarly expected to receive bipartisan support on the House floor in the coming weeks.
Connecticut
PBM reform measure heard in committee. This past week, HB 7192 was given a hearing in the Joint Committee on Human Services. The measure is a collection of recommendations from the bi-partisan Prescription Drug Task Force which was established by Governor Ned Lamont (D) last year to address rising drug costs. The measure would largely enhance requirements on pharmacy benefit managers (PBMs) by, among other elements:
Requiring PBMs to owe a fiduciary responsibility to any contracted health carrier or plan sponsor.
Prohibiting contracts between a pharmacist, health plan and PBM to include a provision charging a plan a price for any pharmacy services that differs in how that PBM pays the contracted pharmacy for those services.
Prohibiting contracts between a pharmacist, health plan and PBM to include a provision that charges a plan a fee condition on (1) the wholesale acquisition cost or any other price metric, (2) the amount of savings, rebates and other fees realized, or (3) the amount of premiums charged or any other cost-sharing requirements.
Given the interest by the Governor in the Task Force, it’s likely that the measure will receive continued consideration. Following the hearing, one of the Task Force’s members, Senator Matt Lesser (D-Middletown) held a press conference with news media where he discussed the intent and pragmatism of the measure.
FQHCs petitions state for violating Medicaid reimbursement requirements. This past week, the Community Health Center Association of Connecticut (CHCAC) filed a declaratory ruling request to the Department of Social Services requesting the agency to adhere to existing state and federal law pertaining to Medicaid reimbursement rates. Specifically, the request argues that the Department has failed to provide state-required review of, and justified increases of, Medicaid rates based on changes to services provided by Federally Qualified Health Centers (FQHCs). The filing comes after more than a year of negotiations with the Department to identify agreeable rate increases for FQHC encounters. Ultimately, the filing initiates a 90-day period that the Department has to respond to the request. Following that 90 days, and if the CHCAC disagrees with the agency’s response, they may then pursue a lawsuit through the state court system that could require the state to provide an increase in reimbursement rates. Throughout negotiations, the CHCAC has argued that a 23 percent increase in rates would accurately reflect the rising costs of providing care. In its last attempt to drive agreement, the state had offered a 4.5 percent increase.
Idaho
Senate passes negotiated Medicaid expansion reform bill. Following passage by the Idaho House of Representatives the previous week, the Idaho Senate passed HB 345 by a 29 to 6 margin. The bill was the second, and successful, attempt to broker a negotiation with legislative leadership as to how best to reform the state’s Medicaid expansion program. As enrolled the measure would provide for the following:
Require cost-sharing from enrollees as a condition of participation at levels developed by other states and up to the maximum charged by other states.
Transition of the Medicaid program to managed care.
Establish work requirements for able-bodied adults enrolled in Medicaid expansion, requiring 20 hours or more of work per week, averaged monthly, inclusive of numerous exempted populations.
Establishes site-neutrality requirements, ensuring that reimbursement rates for hospital outpatient departments and hospital-acquired physician practices are reimbursed at the same rate as physician-owned medical practices for equivalent outpatient services.
If signed into law by the Governor, it would take effect immediately. The bill’s fiscal note estimates that with these provisions in place, it’s estimated to save the state $15.9 million FY2026, with that figure to continue to increase with the transition to Medicaid managed care. Once formally sent to his desk, Governor Brad Little (R) will have five days to either sign the bill into law, veto it, or allow it to become law without his signature.
Kentucky
General Assembly passes bill authorizing exceptions to state’s abortion ban. This past week, the General Assembly enrolled HB 90 with last minute amendments to establish protected exceptions to the state’s near total ban on abortion care. The underlying measure provided for licensure and an exemption of certificate of need requirements for freestanding birth centers. Added to the measure was an amendment that authorizes physicians exercising reasonable judgment relative to abortion care in cases of lifesaving miscarriage management, emergency intervention for sepsis and hemorrhaging, procedures necessary to prevent the death or substantial risk of death of the pregnant woman, removal of an ectopic pregnancy, and treatment of a molar pregnancy. The bill is now headed to Governor Andy Beshear (D) who expressed concern as to whether this bill made the abortion ban more restrictive than what’s currently interpreted under existing law.
Louisiana
Audit on state spending for the Medicaid MCIP program released. This past week, an audit conducted by the Louisiana Legislative Auditor’s office raised questions about the state’s spending for the $2.9 billion Medicaid Managed Care Incentive Payment (MCIP) Program. The program was authorized following a change in federal regulations in 2016, which authorized Medicaid managed care organizations (MCOs) to participate in incentive based arrangements that provide payment of up to 5 percent above the actuarially defined and approved capitation payments. The payments were based on MCOs’ abilities to meet specific targets and performance measures, inclusive of driving quality-based outcomes. In the audit, the legislative auditor raised questions and concerns relative to some spending trends that were identified:
$437.2 million in payments were distributed for purposes that were not directly related to improving Medicaid patients’ health (inclusive of submitting reports timely and correctly and holding annual meetings).
$1.1 billion of funds were used for activities other than payments to hospitals, which the legislative auditor raised concern as to whether those funds were then being utilized to fund program services to improve quality and meet performance measures.
$1.5 billion of the funding were spent on performance metrics and goals that were assessed by an outside party and not the state, itself.
Stakeholders pushed back against the audit arguing that the audit fails to report on the actual performance of the program and whether it has achieved its goals. The Department of Health has responded that they intend to make the changes as recommended by the legislative auditor to enhance accountability in the MCIP program.
Maine
DHHS begins temporary withhold of Medicaid payments for providers. Following failed negotiations to drive approval of a supplemental budget by the Maine Legislature, the Department of Health and Human Services implemented a system last week to begin capping or withholding Medicaid payments for providers. Following their announcement on February 26 outlining the proposed steps, effective March 12 the state is taking the following steps:
Paying hospital prospective interim payments (PIPs) at only 70% of the normal level
Hold payment for all hospital claims greater than $50,000
Hold payment for large retail pharmacies and large DME supplies
Hold payment for out-of-state providers of hospital, ambulance, pharmacy and DME services
This comes as the state faces a $118 million Medicaid funding shortfall for the current fiscal year and Republican lawmakers have requested concessions from Democrats on Medicaid reform before moving forward with a budget fix. It’s unclear when an agreement will be reached but any emergency supplemental budget will require Republican support to get the bill to the Governor’s desk.
Maryland
PDAB measure is approved by the Senate. The Maryland Senate voted 35 to 12 this past week to pass SB 357, which enhances the authority of the state’s Prescription Drug Affordability Board (PDAB). The votes three weeks after the House voted on its own PDAB measure (HB 424), yet some differences exist between the two bills requiring further engagement by both House and Senate leadership before they are able to send a version to the Governor for his signature. Notably, SB 357 includes enhanced representation from pharmaceutical manufacturers and similar entities on the Stakeholder Council. Additionally the measure includes enhanced reporting requirements relative to the rationale and effects of establishing an upper payment limit compared to HB 424. Given the interest by both stakeholders, the PDAB and lawmakers to move forward with a solution, it remains increasingly likely that a compromise is brokered before session adjourns.
Michigan
Senate passes 340B and medical debt reform legislation. Recently, the democratic-controlled Michigan Senate passed both SB 94 and SB 95 over to the House for consideration. SB 94, sponsored by Senator Sam Sing (D-East Lansing) would establish prohibitions on pharmaceutical manufacturers for how they price and distribute prescription drugs to 340B covered entities and their contract pharmacies. Notably, the measure also includes a reporting requirement for 340B covered entities to submit a report to the Dept. of Health and Human Services on an annual basis that discloses any recent audits of their participation in the 340B program, certification of existing compliance with the 340B program, and a description of the 340B program’s impact in the covered entity’s community. The bill further establishes reporting requirements on manufacturers on any prescription drug that exceeds $40 for the cost of one course of treatment. SB 94 is “tied” to SB 95, meaning that if SB 95 is not enacted, neither can SB 94.
SB 95, sponsored by Senator Johnathan Lindsey (R-Cass County), would prohibit hospitals that are not in material compliance with the federal price transparency laws from initiating or pursuing a collection action against a patient for any debt owed for items and services. The measure provides a six month delayed effective date for critical access hospitals. It’s unclear whether tying SB 94 to this measure will mitigate its advancement in the republican controlled House.
Mississippi
Senate passes PBM reform bill back to the House. This past week, the Mississippi Senate amended and passed HB 1123 by a margin of 46 to 4. The bill mirrors much of what the House had proposed in its version and would establish limitations on what pharmacy benefits managers (PBMs) charge for prescription drugs and enhanced reporting requirements on PBMs, manufacturers and insurers. Specifically, the measure would prohibit PBMs from charging an insurer more for a drug than what pharmacists are paid. Additionally, PBMs would be required to submit reports to the state Board of Pharmacy detailing rebates received from manufacturers and any affiliate pharmacies that they may have a financial interest in. For manufacturers and insurers, the bill requires manufacturers and insurers to submit reports to the Board of Pharmacy detailing wholesale drug costs and spending. In aligning with the House’s version, the Senate dropped a few provisions from its version, including a provision that would have required PBMs to reimburse prescription discount card claims in seven days. As passed the bill has the support of the House and is expected to be agreed to and then sent to the Governor for enactment.
Missouri
House passes prior authorization reform and gold carding bill. This past week, the House of Representatives passed HB 618 over to the Senate for consideration. Notably, the bill would authorize all providers who have at least a 90 percent approval rate over a previous 12 month evaluation period on services to be exempt from prior authorization of those services. Uniquely, the bill would also exempt hospitals from prior authorization requirements on most services covered by insurers if they (1) have a value based agreement with the insurer, (2) the hospital has a score of three or higher on the Center of Medicare & Medicaid Services Five-Start Quality Rating System, or (3) at least 91 percent of the hospital’s prior authorization requests were approved or would have been approved by the insurer under the requisite evaluation period. At the same time, critical access hospitals would be exempt from complying with the aforementioned criteria and would still be eligible to obtain prior authorization exemption. The measure has been read into the Senate record and is awaiting committee assignment.
Montana
Judge strikes down two abortion bills from 2023. Following a protracted legal dispute, a county district court judge issued a decision this past week that strikes down two abortion bills passed into law by the Legislature in 2023. HB 544 would have prohibited abortions by any provider type except for a doctor. The measures also would have required prior authorization, a physical examination and supporting documentation of medical necessity prior to accessing abortion care. HB 862 would have prohibited abortion care for Medicaid patients unless it might be an exception of either being the result of rape or incest or if it was necessary due to the mother being in danger of death. In the decision, the district court judge noted that the state can’t opt to determine which medical procedures it condones if they have already determined to run a Medicaid program. Additionally, the judge found that most of the steps required as a result of HB 544 lacked merit based on known medical best practices. It’s likely that this ruling will be appealed.
New Hampshire
Senate passes Medicaid work requirement bill. This past week, the New Hampshire Senate voted to adopt SB 134 by a 16 to 8 margin. The measure, sponsored by Senator Howard Pearl (R-Loudon), would require the state to implement work and community engagement requirements as a condition of eligibility for the state’s expansion population. Notably, the bill leaves interpretation up the state Administration as to what such work requirements may look like and merely requires the state to submit a Sect. 1115 demonstration waiver as the authorizing vehicle. If passed by the House and signed into law by the Governor, this would be the state’s second attempt to implement work requirements. The state attempted to back in 2019 and legislatively authorized a requirement of 100 hours per month as a condition of eligibility. The state opted to reverse course and end the requirement after only 8,000 of the 25,000 enrollees subject to the requirement complied and documented their hours. Given the priority by Governor Kelly Ayotte (R) to reduce Medicaid costs, it’s likely this measure will be given significant consideration in the House.
New Mexico
Senate passes prior authorization reform. The New Mexico Senate passed SB 39 recently, which would prohibit prior authorization and step therapy practices by insurers and pharmacy benefit managers (PBMs) for medications that are prescribed for on and off-label use for the treatment of rare diseases. The bill also requires that medical necessity determinations must be made by the insurer within seven days, or 24 hours in cases where it is an urgent request and failure to provide such approval may seriously jeopardize a person’s life or health. This measure follows similar efforts in Illinois and Oklahoma to limit the use of prior authorization and step therapy for patients with rare disease diagnoses. The bill now heads to the House where it’s likely to receive a positive reception, assuming value can be seen despite the fiscal impact between $5 and $13 million to the state.
Tennessee
Senate passes Medical Ethics Defense Act. Recently, the Tennessee Senate passed SB 955 over to the House for consideration. The measure, introduced by Senator Ferrell Haile (R-Gallatin), intends to provide healthcare providers with authorization to not participate in or pay for a procedure, treatment or service that violates their conscience. An amendment added during the committee process would prohibit such authorization in cases where patients are in imminent danger of harming themselves or others. The measure also creates a narrow exception for religious healthcare providers to make certain administrative decisions and establish guidelines that providers must adhere to if it holds itself publicly as an entity with a religious purpose or mission. The bill is expected to be considered in the House in the coming weeks; a companion bill, HB 1044, is currently sitting in the Health Committee.
Utah
Governor to sign bill banning fluoride. Following passage of HB 81 by the Legislature, the Governor has announced his intention to sign the bill into law. The measure would make Utah the first state to prohibit any individual or entity of state or local government from adding fluoride to water in or intended for public water systems. The measure also establishes the requirement that guidelines must be developed for pharmacists to prescribe fluoride, and authorizes pharmacists to prescribe as such. Throughout the process, the dental community was largely opposed to the measure, speaking of the increased risk for poor health outcomes, while water conservancy districts largely spoke in favor of the bill.
