Weekly StateVitals Update: Volume 16 (April 21, 2025)
National
CMS issues SMD letter discouraging states not to use federal funds for gender affirming care. Recently, the Centers for Medicare & Medicaid Services (CMS) issued a new State Medicaid Director (SMD) letter that seeks to discourage states from using Medicaid funds and seek federal financial participation for gender affirming care. The letter contends that while gender affirming care has “proliferated…in recent years” there remains an “underdeveloped body of evidence…these interventions lack reliable evidence of long-term benefits for minors…[and] are known to cause long-term and irreparable harm.” CMS also reminds states of Medicaid requirements that the agency infers would provide a framework for not providing a federal match should a state continue to seek a federal match for such services, inclusive of drug utilization review program requirements that may directly be interpreted to prohibit puberty blockers. Approximately half of all states provide Medicaid coverage of some type of gender affirming care. It remains to be seen how these states will respond.
Alabama
Governor signs PBM reform bill into law. This past week, Governor Kay Ivey (R) signed SB 252 into law. The bill concerns pharmacy benefits managers (PBMs) and alters the mechanism by which independent pharmacists are reimbursed. Specifically, this legislation prohibits pharmacists from being reimbursed at a rate lower than the Medicaid reimbursement rate. This rate includes a $10.64 dispensing fee. The legislation also includes various provisions regulating PBMs and eliminates gag clauses between pharmacists and consumers. The bill goes into effect October 1, 2025.
Arizona
Arizona submits 1115 amendment to CMS. The Arizona Health Care Cost Containment System recently submitted a Section 1115 demonstration amendment request to the Centers for Medicare & Medicaid Services. The amendment would provide three core updates to the state’s Medicaid program. First, it proposes to add a work requirement for the Medicaid expansion population. Second, it proposes a lifetime limitation of a total of five years of Medicaid benefits for the expansion population. Finally, it would impose cost-sharing requirements for members for non-emergency use of emergency departments and the use of ambulance services for nonemergency transportation or when such ambulance services are not medically necessary. The federal public comment period is open until May 10th. Notably, the lifetime limitation for the Medicaid expansion population, unless you meet certain criteria, was required as a result of SB 1092 passing in 2015.
Arkansas
Medicaid MLR bill heads to Governor. This past week, the House passed SB 527 by a 72 to 3 margin to advance to the Governor’s desk for signature. Notably, the bill codifies work requirements of which the state has already submitted an 1115 demonstration amendment request for. Additionally, the bill establishes a requirement for individual qualified health insurance plans to adhere to a medical-loss ratio of at least 85 percent, an increase from existing statute of 80 percent. The bill also requires that the Dept. of Human Services track all pharmacy rebates obtained by health plans participating in the state’s Medicaid expansion program and ensure that an amount equal to the pharmacy rebates are remitted to the state on a quarterly basis. It’s expected that Governor Sarah Huckabee Sanders (R) will sign the bill.
Waiver submitted to USDA requesting ban on soft drinks and candy from SNAP. Governor Sarah Huckabee Sanders (R) this past week announced that Arkansas has released a waiver for a state public comment period and intends to eventually submit to the U.S. Department of Agriculture (USDA) to prohibit individuals enrolled in the Supplemental Nutrition Assistance Program (SNAP) from using program benefits to purchase soft drinks and candy. The Sanders Administration pointed to studies that found a link between the overconsumption of sugary and high processed foods to chronic diseases, including obesity, diabetes, heart disease and hypertension. The waiver submission is open for public comment for a 30-day period. While Arkansas is the first state to submit such a waiver, Idaho and Indiana have both indicated their intent to do the same.
California
Governor signs $2.8 billion Medicaid supplemental budget. Following a request nearly three weeks ago from Governor Gavin Newsom’s (D) administration, the Legislature signed off and the Governor signed legislation to provide the Medicaid program with an additional $2.8 billion to cover expected costs through the remainder of the fiscal year. Much of the discussion in the General Assembly in California has focused on the reasons for the unexpected shortfall, including: the rising costs of pharmaceutical drugs, a larger aging population that was retained in Medicaid following the COVID-19 PHE, and continued coverage of undocumented immigrants. Relative to the last variable, it’s estimated that coverage has cost the state $2.7 billion more than previously expected. Both Governor Newsom and legislative leaders have indicated that they have no intent of rolling coverage back but do recognize that difficult choices pertaining to benefits and coverage may have to be made in advance of the next fiscal year.
Idaho
State court ruling loosens abortion prohibition. In a recent state court ruling, the fourth judicial district court found that while the Idaho constitution does not grant the right to an abortion, abortion care must not be prohibited if pregnancy complications could cause a woman’s death regardless of the immediacy or assuredness of such a possibility. Such care is allowed so long as the risk of the woman's death doesn’t arise from the risk of self-harm and the manner of pregnancy termination is one that best facilitates the unborn child’s survival outside the uterus. It’s unclear whether Attorney General Raul Labrador (R) will appeal the decision at this time.
Indiana
Governor issues new executive orders to study healthcare. As part of an event with the Secretary of the U.S. Department of Health and Human Services, Robert F. Kennedy Jr., and Dr. Mehmet Oz, the Administrator for the Centers for Medicare & Medicaid Services, this past week, Governor Mike Braun (R) released nine new executive orders related to healthcare. The focus of the executive orders are on limiting expenditures on public assistance programs, encouraging work requirements for those enrolled in public assistance programs, and requiring several studies on healthcare-related issues. Some of the executive orders include:
Executive Order 25-52: Aligns work opportunities and training programs for able-bodied SNAP recipients.
Executive Order 25-56: Requires the Department of Health to conduct a comprehensive assessment on the health impacts of artificial food dyes and additives.
Executive Order 25-57: Requires the Secretary of Health and Family Services to conduct a comprehensive study related to diet-related chronic disease in Indiana.
Executive Order 25-60: Requires the Secretary of Family and Social Services Administration to submit a detailed report to the Medicaid oversight committee concerning improper payments from the Medicaid program.
Governor Braun has consistently utilized executive orders since taking office in January to lay out his health policy priorities. Many of the policies outlined in the executive are similarly being explored by other states.
Senate concurs with House amendments to Medicaid reform measure. After clearing through the House last week, the Senate voted down party lines to concur with House amendments to SB 2 and send it to the Governor’s desk for his signature. The measure, as has been previously summarized in past editions, would enhance oversight on improper Medicaid payments and expenditures, limit marketing of the Medicaid program, restrict what the state may consider for eligibility redeterminations, establish work requirements for the expansion population, and implement a poison pill to cut the expansion program if federal funding ever dips below 90 percent. The bill will hit Governor Mike Braun’s (R) desk in the coming days and he is expected to sign the measure into law.
Iowa
State intends to submit an 1115 waiver amendment to implement Medicaid work requirements. Despite the Legislature having yet to pass SF 615 which would require the state to implement work requirements for the state’s Medicaid expansion population, Governor Kim Reynolds (R) announced this week she plans to move forward with an 1115 amendment request to add work requirements for the Medicaid expansion program. Notably, SF 615, if eventually delivered to the Governor and enacted, would also require elimination of the expansion program if work requirements were rejected by the federal government from implementation. However, as part of the state’s 1115 amendment request currently under a state public comment period, it proposes a 100 hour per month requirement for individuals to remain eligible for coverage. Under the proposed waiver, it would call for the Medicaid program to conduct compliance checks every six months, with a requirement for Medicaid members to submit verification information of their compliance. The state public comment period is open through May 15.
Senate subcommittee advances $42 million proposal to combat opioid crisis. As part of the state’s Opioid Settlement Fund, a Senate appropriations subcommittee voted to approve Senate Study Bill 1226 and send it to the full Senate Appropriations Committee for consideration. Among other provisions, the bill would appropriate $12 million for Community and Family Resources, which is an addiction and recovery and treatment center in Fort Dodge and an additional $30 million to Iowa Dept. of Health and Human Services for any efforts that would abate the opioid crisis in the state. The chair of the subcommittee, Sen. Tim Kraayenbrink (R-Fort Dodge) indicated that it’s unlikely this will be the final version of the provisions of dispersing these funds, but wanted to ensure a framework was established for consideration.
Senate advances measure to require medical and dental schools prioritize Iowa students. After passing the House in March, the Senate opted to move by a vote of 34 to 11 HF 516. The measure would require that 80 percent of all students admitted to the University of Iowa’s medical and dental colleges are either Iowa residents or are students at Iowa-based colleges. Additionally, the measure would require the University of Iowa residency program to offer medical residency interviews to any applicant that has ties to Iowa and is working in a high-need field. While the intent of the bill is to spur workforce development and retain Iowa-trained physicians of the state, opponents of the measure have argued that may enable either school to admit candidates who are less qualified than others due to their Iowa ties. The measure has amendments that will need to be concurred with by the House.
Senate passes prior authorization bill. The Senate adopted HF 303 by a unanimous vote this past week. The measure would require insurers and any utilization review organizations to respond to prior authorization requests for urgent requests within 48 hours and nonurgent requests within 10 calendar days. However, if there are complex or unique circumstances or if the utilization review organization is experiencing abnormally high volume of prior authorization requests, they can provide a response within 15 calendar days. Notably, the bill also requires insurers to review all existing prior authorization requirements and remove those requirements on requests that are routinely approved with such frequency that it would not otherwise promote quality or reduce spending to justify their continued use. Finally, the measure requires all insurers to implement a pilot program that would exempt a subset of providers from prior authorization requirements dependent on certain criteria established by the health plan; a psuedo-gold carding mechanism. The bill is now back in the House for concurrence which is expected to occur.
Missouri
Constitutional amendment to ban abortion passes the House. Despite a constitutional amendment being approved by voters in November 2024 rolling back Missouri’s previous abortion ban, the House of Representatives voted to advance a proposed constitutional amendment (HJR 73) to ban most all abortion care. The constitutional amendment was approved by a 94 to 50 vote margin with two Republicans, including Speaker Jon Patterson (R-Lee’s Summit), voting with 48 democrats to not advance the measure. The measure is now over in the Senate. If the Senate approves, it would go back to voters for another vote. Under the measure as it currently is written, it would reinstate a near-total abortion ban except for cases of medical emergencies, fatal fetal anomalies and for survivors of rape and incest, if such abortion care were rendered within the first 12 weeks of gestation.
Nevada
Assembly committee passes bill establishing a psychedelic therapy pilot program. The Nevada Assembly Committee on Health and Human Services advanced AB 378 recently, which would establish a pilot program authorizing some patients to legally access substances inclusive of psilocybin, DMT, ibogaine and mescaline. Notably, authorized uses of these psychedelics would be limited to military veterans and first responders with certain mental health conditions. During the committee hearing, some members were adamant about further limiting the scope of the bill to only apply to veterans who were discharged with a diagnosis of PTSD from the military. As written, the pilot program would be run under the Dept. of Health and Human Services. The bill now goes before the full Assembly for consideration.
North Carolina
Senate approves bill to repeal the state’s CON program. The Senate has voted on a 31 to 17 line to approve SB 370 this past week, which would repeal the state’s certificate of need (CON) requirements for most healthcare facilities and services. The bill would start with repealing the need for CON to establish or expand certain healthcare facilities and services starting in 2026 and gradually over time remove all other requirements related to CON in the state. As expected, the North Carolina Healthcare Association provided testimony during the most recent Senate hearing positioning themselves in opposition to the measure. However, the Senate remains committed to this as a priority given their budget proposal last week included provisions to accommodate for the implementation of CON repeal.
Senate budget proposal includes a multitude of healthcare implications. This past week, the Senate released their budget proposal (SB 257) for the biennial budget and it includes numerous healthcare investments. Notably close to 290 positions from the Dept. of Health and Human Services would be cut, most of which are hard-to-fill positions at the state’s hospitals and health care facilities that largely serve individuals with mental health diagnoses and developmental disabilities. Also included is an $87 million appropriation for a Healthy Opportunities Program, a pilot program that would provide services to address health related social needs to Medicaid members of rural areas. Other items of interest include an appropriation of $638.5 million to build a freestanding children’s hospital and budget adjustments for the state to move forward with a Medicaid work requirement, as has previously been highlighted.
