Weekly StateVitals Update: Volume 20 (May 19, 2025)
National
House Energy & Commerce Reconciliation Proposal & State Implications for Medicaid. Early last week, the U.S. House Energy & Commerce Committee released its reconciliation proposal with Medicaid cuts in excess of $600 billion over the next decade. The federal package has significant implications for state Medicaid programs, legislatures and their state budgets, and for state health policy stakeholders. MultiState has provided an overview on StateVitals of possible state-level implications of the most financially or administratively complex provisions within the bill. As part of the proposal, the most significant provisions impacting states include:
Requirements on states to no longer simply accept self-attestation of residency and address location but instead require state Medicaid programs to utilize reliable data sources to verify home addresses.
Elimination of good faith waiver utilization for payment reduction related to certain erroneous excess Medicaid payments.
Requires Medicaid expansion states to increase the frequency of eligibility determinations for the expansion population to every six months.
For states that provide Medicaid coverage for immigrants lacking documentation, a reduction in FMAP for the expansion population from 90 to 80 percent.
Modifies presumptive eligibility requirements that enables individuals to only receive one month of retroactive eligibility instead of the current three months.
Freezing states’ provider taxes at existing rates and prohibiting states from establishing new provider taxes after enactment.
Limiting state directed payment programs from exceeding the total published Medicare payment rate.
Amends the uniform tax requirement and what is considered generally redistributive for managed care organization taxes.
Requires states to establish community engagement requirements for the expansion population.
While there are other meaningful provisions impacting states, inclusive of the ACA and Marketplace considerations, these provisions as listed are provided further detail in the StateVitals Deep Dives website.
California
Governor Newsom Proposes PBM Reform and Efforts to Reduce Prescription Drug Costs. As part of his revised 2025-2026 Revised Budget, Governor Gavin Newsom (D) teed up two significant policy proposals pertaining to prescription drugs, PBMs and reproductive healthcare. Under the revised budget, the first significant proposal would enhance oversight of PBMs by:
Requiring PBMs to be licensed and regulated by the Department of Managed Health Care (DMHC).
Requiring PBMs to report operational and financial information to the state, inclusive of audited statements and detailed drug pricing data.
Requiring PBMs to hold a fiduciary duty to their contracted clients.
Authorizes DMHC to review PBM contracts and perform regular financial audits.
Beyond that proposal, the Governor also intends to expand the authority of CalRx, a state initiative aimed at driving affordability of prescription drugs, to purchase brand-name drugs. The intent is that this would allow the state enhanced flexibility to acquire drugs necessary for medication abortion. Both proposals are likely to receive relatively decent receptions with the General Assembly, given past work by the legislative body particularly on PBM oversight.
Governor Newsom Seeks Cut to Funding for Health Care Coverage for Immigrants Lacking Documentation. As part of his revised 2025-2026 budget, Governor Gavin Newsom (D) is proposing to roll back funding for part of the state’s healthcare program that provides Medicaid-like coverage for undocumented immigrants. Under the revised budget proposal, the Governor’s office proposes to freeze enrollment in the program beginning in 2026. The freeze would not impact coverage for currently enrolled individuals. Beginning in 2027, undocumented immigrants would have to pay a $100 monthly premium for access to coverage. The Governor’s office estimates this could save the state $5.4 billion by the 2028-2029 fiscal year. Senate Majority Leader Lena Gonzalez (D-Long Beach) has already indicated that members of the Latino Caucus would not support the proposal.
Governor Newsom Releases $3.3 billion in Grant Funding for Behavioral Health Services. This past week, Governor Gavin Newsom (D) released $3.3 billion in grant funding to expand access to behavioral health services across California. The funding is a result of Proposition 1 approved by voters in 2024. The funding is expected to create 5,000 additional residential treatment beds and create 21,800 outpatient treatment slots for behavioral health services. Notably, the funding is distributed between 124 entities, inclusive of non-profit and social service agencies, local governments, and providers. The next round of funding will be $800 million to be distributed to behavioral health treatment facilities with the application expected to go live by the end of this month.
Florida
Governor to Veto Bill Expanding Medical Malpractice Claims. This past week, Governor Ron DeSantis (R) has iterated his intent to HB 6017 passed by the Legislature, which would have repealed a prohibition on certain family members from seeking medical malpractice claims. Specifically, the bill removes a prohibition on the recovery of noneconomic wrongful death damages in medical negligence cases by the deceased’s children who are 25 years of age or older and parents of a deceased child who was 25 years or older at the time of death. Governor DeSantis has indicated that his concern that allowing such a measure to become law would cause insurance premiums for physicians and hospitals to “skyrocket.” DeSantis suggested that lawmakers could revisit the bill by establishing limits on the monetary awards.
Georgia
Teledentistry Bill Signed into Law. Recently, Governor Brian Kemp (R) signed HB 567 into law, which expands access to the use of teledentistry in the state. A priority of the Georgia Dental Association, American Association of Orthodontists and other dental professionals, the bill authorizes a myriad of services through teledentistry that may be performed, inclusive of consultations, second opinions, triage, evaluations and referrals. The bill also requires that patients receive an in-person examination prior to receiving certain teledentistry services, such as services or treatments that are not reversible or otherwise result in an increased risk to the patient. A previous iteration of the bill was vetoed last year by Governor Kemp.
Iowa
Legislative Advances Medicaid Work Requirements Bill. The Senate and House passed SF 615 this past week. The bill would implement Medicaid work requirements for the state. Notably, the legislative proposal would require enrollees in the expansion population to work at least 80 hours each month to remain eligible for the program. Uniquely, Governor Kim Reynolds (R) and her administration already have started the state public comment process on an 1115 amendment application that would require Medicaid expansion enrollees to comply with a 100 hour per month work requirement. Under the proposed waiver from the Reynolds administration 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. However, under the SF 615, the bill also contains a provision that would eliminate the expansion program outright if work requirements were to ever be approved but then later revoked by the federal government.
Legislature Enrolls PBM Reform Bill. This past week, the Iowa Legislature sent SF 383 to Governor Kim Reynolds (R) for her signature. A priority for independent pharmacists this past session, the measure is likely to result in increased reimbursement to an extent for pharmacies. At the same time, business interests, including small business associations and chambers of commerce have criticized the bill arguing it's likely to drive up prices of prescription drugs. As part of the bill, provisions include but are not limited to:
A prohibition on pharmacy benefits managers (PBMs) and insurers from discriminating against a pharmacy or pharmacist with regard to their participation, referral, reimbursement of a covered service or indemnification of a pharmacist acting within their scope of practice.
A prohibition on PBMs from: limiting patient choice of pharmacy provided the pharmacy is in-network, pharmacies from joining the network if they meet the same terms and requirements as other in-network pharmacies, unreasonably designate a prescription drug as a specialty drug, require covered enrollees to exclusively access prescription drugs through mail order pharmacies, and impose a variation on reimbursement or enrollee out of pocket costs that is dissimilar to what is purchased through a mail order pharmacy.
Establishes a prohibition on PBMs from imposing different cost-sharing on enrollees based on the pharmacy where they are provided services.
Requires 100 percent of all rebates received by the PBM to be passed through to the insurer or the employee health plan sponsor.
Prohibits a PBM from reimbursing a retail pharmacy in an amount less than the national average drug acquisition cost and requires a dispensing fee of $10.68.
Requires PBMs to utilize pass-through pricing.
The bill now heads to the Governor’s desk where it is expected to receive her signature.
Kentucky
Cabinet for Health and Family Services Releases 1115 Community Engagement Proposal. The Kentucky Cabinet for Health and Family Services (CHFS) and Department for Medicaid Services (DMS) announced this past week their intent to file an 1115 work referral demonstration with the Centers for Medicare & Medicaid Services (CMS). Under the proposal, DMS would refer eligible Medicaid expansion enrollees who have been enrolled in Medicaid for at least 12 months to the state Education and Labor Cabinet’s Department of Workforce Development (DWD) to assist those members with job placement assistance programs. The intent would be to have DWD support individuals who agree to receive support by connecting them with apprenticeships, career development, education, employment and training, and provide case management services to support them in their career advancement. A litany of exemptions exist from the referral requirement, inclusive of care for a dependent, individuals with a diagnosed substance use disorder or serious mental illness, a chronic disease, an acute medical condition, pregnant individuals, individuals who lack housing and other qualifying criteria. The state public comment period began last week and remains open through June 12, 2025.
Michigan
State Judge Strikes Down State’s 24-Hour Waiting Period Requirement for Abortions. A state court of claims judge struck down Michigan’s 24-hour waiting period that patients were required to adhere to prior to getting an abortion in response to a lawsuit. The judgment found that the state law conflicts with a constitutional amendment that enshrined the right to an abortion in 2022. The same judge had previously blocked the 24-hour waiting requirement last year. As part of the judgment, the decision also struck down a requirement in the same law that required providers to give patients fetal development charts and information on alternatives to abortions.
Missouri
General Assembly Advances Constitutional Amendment on Reinstating Abortion Ban. Following passage by the Senate this past week, HJR 73 will head back to the ballot to voters. The constitutional amendment would ban most all abortion care in the state. 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. It’s expected to head back on the ballot in November 2026 or may be called at an earlier election by Governor Mike Kehoe (R).
Nevada
Governor Introduces Healthcare Package. With a little less than a month to go before the state’s 120-day legislative session is set to wrap, Governor Joe Lombardo (R) has introduced SB 495, a healthcare package of reforms. The legislation seeks to address workforce development shortages in the healthcare industry and invest in mental and behavioral health services. Among other provisions, some provisions in the bill include:
Establishes the Health Care Workforce and Access program, which is a competitive $50 million grant program to support efforts addressing provider shortages across the state.
Requires the Department of Health and Human Services to conduct a biennial assessment of the healthcare workforce needs of the state, inclusive of identifying needed specialties, populations and geographic areas experiencing shortages.
Establishes the Office of Mental Health within the Department of Health and Human Services.
Establishes requirements on insurers, including Medicaid, to process provider credentialing applications within 60 days of receiving all of the application information necessary to do so.
Prohibiting a health system or organization’s use of a noncompete for providers.
Establishes authority for hospitals to make presumptive eligibility decisions for determining Medicaid eligibility.
Establishes limitations requirements on how insurers may use prior authorization requirements by establishing timelines for when insurers must respond to requests, transparency requirements on insurers, exempting prior authorization from covered emergency services, and establishing a god carding exemption program for providers who have a 95 percent approval rate for services requiring prior authorization over the past 24 months.
Given the timing of this introduction, it’s unclear whether this bill in its current form would be able to make it through the Legislature before the end of session. However, if the Legislature opts to move forward on it, it’s likely to be amended in some part prior to floor votes.
Oklahoma
Legislature Enrolled 340B Reform Bill. This past week, the Legislature enrolled HB 2048 and sent it to the Governor for his signature. The bill prohibits pharmacy benefits managers (PBMs), insurers, third-party payors or its agent from reimbursing a 340B covered entity for 340B drugs at a rate lower than what is paid to entities that are not 340B covered entities. Additionally, the measure prohibits the imposition of any terms or conditions on 340B covered entities that would be dissimilar to non-340B entities, inclusive of fees and other charges, dispensing fees, participation in networks, and other limitations. The bill further prohibits discriminating against a 340B covered entity in any manner that might prevent or interfere with a patient’s choice to receive drugs from that 340B covered entity and additional restrictions tied to an entity’s 340B status.
A second part of the measure prohibits pharmaceutical manufacturers from limiting the acquisition of a 340B drug by a 340B covered entity or a contract pharmacy. However, the bill requires a 340B covered entity to contract with any willing pharmacy upon mutually agreeable terms if that pharmacy is within a fifteen-mile radius of the 340B covered entity’s location.
Rhode Island
Senate Approves Bill to Cap Prescription Drug Costs. This past week, the Rhode Island Senate approved S-0468aa and sent it over to the House for consideration. As enrolled, the bill would limit the purchase price of a referenced drug at a cost higher than the maximum fair price, albeit that price does not include a dispensing fee paid to a pharmacy. The bill further requires any savings generated from this measure to be used by insurers to reduce costs to consumers. Finally, the bill also prohibits manufacturers of a referenced drug to withdraw such a drug from sale or distribution in the state in order to avoid the impact of the rate limitations set in place. The General Assembly is in session through the end of June.
Texas
Bill Requiring Hospitals to Report Care for Immigrants Lacking Documentation Stalls Out. Despite reaching the floor of the House of Representatives, HB 2587 appears to have stalled out this session. The bill would have codified an executive order that Governor Greg Abbott issued last year requiring hospitals to issue data on the estimated cost of uncompensated care for immigrants who lack documentation. However, the bill was held up due to a technicality of the bill caption not accurately reflecting the purpose of the bill. While it’s unlikely this bill will be resurrected unless it is done as an amendment to another vehicle, the original executive order requiring annual reporting from hospitals is still an order that hospitals must continue to comply with.
Governor to Request Waiver Prohibiting SNAP Dollars Spent on Processed Foods. Governor Greg Abbott (R) this past week sent a letter to the U.S. Secretary of Agriculture formally requesting a waiver prohibiting the purchase of highly processed food using Supplemental Nutrition Assistance (SNAP) benefits. While the specific waiver language and application was not included, it’s likely to follow in the coming days. However, the request is likely to be approved given the federal Administration has called on governors to submit waiver requests verbatim to this. As of this month, Arkansas, Indiana, Iowa and Nebraska have all already submitted such waiver requests.
