Weekly StateVitals Update: Volume 22 (June 2, 2025)
National
CMS to Enhance Oversight on States Leveraging Federal Medicaid Dollars to Provide Coverage for Undocumented Immigrants. This past week, the Centers for Medicare & Medicaid Services (CMS) sent a letter out to state Medicaid programs announcing its intent to increase oversight of states leveraging federal Medicaid funds to provide Medicaid and other related health care coverage and services for undocumented immigrants. In the letter, CMS aligns this initiative under President Trump’s Executive Order entitled, “Ending Taxpayer Subsidization of Open Borders.” Enhanced oversight activities by CMS are expected to include:
Refined evaluations of state Medicaid spending reports;
In depth reviews of select states’ financial management systems; and
Assessing existing eligibility rules and policies to close loopholes and strengthen enforcement.
In the letter, CMS encourages states to update all existing internal controls, eligibility systems and cost allocation policies to ensure compliance with federal law and how federal Medicaid dollars may be spent. The letter notes that any improper spending identified would be subject to recoupment.
Arkansas
Lawsuits Filed to Block Law Prohibiting PBMs From Owning Pharmacies. As expected, this past week, two parties filed two separate lawsuits in the Eastern District Court of Arkansas that seek to block implementation of HB 1150 enacted this past session in Arkansas. In one of the filings, Express Scripts argues that the law poses an unconstitutional restriction on interstate commerce due to its burden on those businesses that operate outside of the state of Arkansas. As enacted, the law prohibits pharmacy benefit managers (PBMs) from obtaining permits to operate retail or mail-order pharmacies in Arkansas. In its complaint, CVS notes that in addition to the interstate commerce concerns, the new law also violates the equal protection clause by prohibiting CVS and other PBM-affiliated pharmacies from operating in Arkansas while exempting any Arkansas-based pharmacy that is affiliated with a PBM from that same prohibition.
California
Senate Passes Gold Carding Bill. This past week, the Senate unanimously passed SB 306 and sent it over to the Assembly for consideration. The measure as engrossed would establish a gold carding program that would exempt physicians from having to request prior authorization for certain services if the health plan approved those services at least 90 percent of the time in the previous calendar year. The measure also establishes transparency requirements that insurers must adhere to, including posting on their website a list of covered services that were subject to prior authorization in the previous calendar year and the insurer’s approval rate for each covered service. The bill is likely to receive credible consideration in the Assembly given previous Assembly efforts this session to reform prior authorization practices.
Illinois
General Assembly Advances PBM Reform at the End of Session. In the remaining days of session this past week, the Illinois General Assembly enrolled HB 1697 as amended. The bill is comprehensive in nature and includes numerous reform provisions that have been seen in other states to establish guardrails on how pharmacy benefits managers (PBMs) operate and with the intent to sustain independent pharmacies. Such provisions in the bill include:
Establishes a grant to the statewide retail association representing pharmacies that will enhance access to pharmacies and pharmacists services in rural and urban areas of the state.
Prohibits a health insurer or PBM from requiring a covered individual from making payment for a drug at the point of sale in an amount that exceeds the discounted price through a voucher or no-cost drug program.
Prohibits PBMs from conducting spread pricing.
Prohibits PBMs from steering a covered individual.
Requires that a PBM must remit 100 percent of any amounts paid by a manufacturer, wholesaler or other distributor of a drug to the plan sponsor, covered individual or employer.
Prohibits a PBM from limiting a covered individual’s access to drugs by designating the covered drug as a specialty drug.
Establishes reporting requirements for PBMs to the state, each health benefit plan sponsor and insurer to be done annually of utilization, claims and spend data, rebates received, and gross spending and net spending, among other elements.
Establishes a registration fee of $15 per covered individual that a PBM must pay to the state.
With the General Assembly adjourned, the bill now goes to the Governor’s desk. The Governor is highly likely to sign the measure into law given PBM reform was a priority of his throughout the legislative session and a highlight he focused on during his February State of the State address.
Kentucky
Interim Legislative Task Forces Established by Legislature. This past week, legislative leadership announced their interim legislative task forces that will work in advance of the 2026 legislative session. Part of this group is the Make America Healthy Again (MAHA) Kentucky Task Force, which is to be co-chaired by Sen. Shelley Funke-Frommeyer (R-Alexandria) and Rep. Matt Lockett (R-Nicholasville). The intent of the task force will be to explore ways that Kentucky can integrate MAHA principles into state law to improve the health of residents and review strategies that the state may use to improve health outcomes. Another task force expected to form is the Artificial Intelligence (AI) Task Force, which is a continuation of a 2024 task force that will examine this year how AI is utilized in healthcare, among other industries. It’s expected that the same co-chairs from 2024 will remain, inclusive of Sen. Amanda Mays Bledsoe (R-Lexington) and Rep. Josh Bray (R-Mount Vernon).
Louisiana
House Committee Votes Against Anti-Fluoride Bill. This past week, the House Committee on Health and Welfare voted to oppose SB 2 by an 11 to 4 margin that would have prohibited the use or addition of fluoride in public water systems. Under the bill’s language, public water systems would be allowed to opt out of the prohibition only if 15 percent of registered voters in a water system service area signed a petition and a local election was called where the majority of registered voters approved the addition of fluoridation to the water system. The measure had previously passed the Senate but six Republicans joined all five Democrats on the committee to vote against the bill. While only Florida and Utah to date have passed fluoride-banning bills to date, other states have considered and eventually voted against moving similar legislation forward.
Missouri
State Supreme Court Issues New Abortion Ruling. The Missouri State Supreme Court issued a ruling this past week that requires a previous court to vacate a ruling that had allowed abortion care in the state to proceed following ballot passage of a constitutional amendment in November 2024. Two months prior, a Kansas City Circuit Court had issued a ruling that struck down existing barriers to health care facilities being able to provide abortion care in the state. Under existing state law, to obtain facility licensure a building must meet certain physical requirements and ensure clinicians perform specific exams. This licensure process disallowed a majority of abortion care providers from providing such services. The Circuit Court concluded that the licensing requirement is “facially discriminatory because it does not treat services provided in abortion facilities the same as other types of similarly situated health care.” However, the Supreme Court in its decision found that the Circuit Court should reevaluate the case using standards developed by the Court. Until the Circuit Court issues a new ruling, it’s expected that most abortion care providers will cease services in the short-term.
Nebraska
Legislature Passes Measure Reforming Behavioral Health Contract Services for Medicaid. This past week, the unicameral Legislature opted to pass LB 380 by a near unanimous margin and send it to the Governor’s desk for signature. The measure would require the Division of Medicaid and Long-Term Care out of the Department of Health and Human Services to define network adequacy in rulemaking and establish guardrails for Medicaid behavioral health contractors, such as manage care organizations, to ensure adherence to federal and state laws for coverage of mental health and substance use disorders. The bill would authorize the transparent posting to all surveys, financial analyses, contract audits and parity reports that are prepared for the state by the contractor, establishes a requirement of monthly electronic communications with all Medicaid providers of any changes related to a MCO’s contract with said provider, and requires the Division to ensure access to mental health and substance use providers through varying means, inclusive or provider rate adequacy. Additionally, the measure would establish requirements for MCOs rendering coverage for these services that include maintaining adequate provider networks, utilize generally recognized standards of care criteria and make utilization review policies public, among other items.
New Hampshire
Lawsuit Settled on Medicaid Enhancement Tax. Following a decision last year by former Governor Chris Sununu (R) to repurpose some of the federal revenue derived from the state’s hospital provider tax program, hospitals in the state had sued the administration for misuse of the tax revenue. Recently, a settlement was reached between hospitals and the state with Governor Kelly Ayotte (R) issuing a statement that hospitals would receive payments that are in line with what they had requested. During the previous administration, Governor Sununu had originally intended to cut the hospitals’ share of the federal tax revenue and redistribute some of the funds for community-based health services, inclusive of mental health. The hospitals filed suit arguing that the payment and distribution methodology was unconstitutional.
House Committee Votes to Pass Surprise Billing Protections. Following agreement to an amendment this past week, the House Commerce and Consumer Affairs Committee voted to pass SB 245 out of committee with a unanimous vote. The bill would prevent insurers from having to pay out-of-pocket for uncovered bills by their insurance companies for services rendered by out-of-network ambulance companies. Under the amendment, out-of-network ambulance providers would be reimbursed by the covered individual’s insurer at 3.25 times the rate of Medicare with increases for inflation beginning in 2029. At the same time, insurers would be prohibited from applying any cost-sharing that would be in excess for ambulance services from an out-of-network provider compared to if it were an in-network provider. The bill is expected to head to the House floor in the coming days.
North Carolina
House Approves Two-Year Budget Plan That Includes Significant Healthcare Provisions. This past week, the House of Representatives voted to approve a budget plan that has numerous healthcare implications in the state. In some cases, the budget plan differs significantly from the Senate’s version. Notably, the House’s budget includes:
Significant reduction in funding compared to the Senate budget plan for a new children’s hospital in the state (more than $100 million cut).
Significant reduction in funding for the Healthy Opportunities Program, a Medicaid pilot project that enables enrollees to access services to address health-related social needs.
Eliminates Medicaid coverage for weight-loss medications, inclusive of GLP-1 drugs.
An expected funding shortfall for the Medicaid rate rebase process (allocates $500 million compared to the Governor’s request of $700 million). At the same time, the House included Medicaid rate increases of 3 percent for a number of providers, including speech-language therapy services, optical and optometry services, podiatry services, clinical pharmacists, nurse midwives and chiropractic services.
Transfer $970 million from the Medicaid Contingency Reserve for Medicaid shortfalls to the State Emergency Response and Disaster Relief Fund.
$20 million funding reduction for regional mental health services management organizations.
Extend Medicaid coverage for personal care services for eligible residents at adult care homes or assisted living services.
Incorporates HB 434 into the budget package, which includes prior authorization guardrails that insurers must adhere to.
The House and Senate will work over the next month to reconcile differences with the additional intent to have more clarity from the federal government as to how the reconciliation package may impact revenue.
Senate Amends House Prior Authorization Bill. This past week, the Senate Committee on Health Care amended HB 434 from what was passed by the House. As amended, the bill became a vehicle for key provisions beyond just prior authorization. As passed favorably by the Committee on Health Care, the following provisions are included:
Requires hospitals to report their most frequently reported Diagnostic Related Groups (DRGs) for inpatient encounters on a quarterly basis. In calculating that amount, hospitals must include charges for each billable item and service tied with the DRG regardless of whether the service is performed by a provider employed by the hospital.
Under most circumstances, it requires fair notice requirements for insured patients on services that may be received in a hospital setting or on a campus, nonparticipating network status of certain providers, consumer protections available to insured patients and emergency services at a non-participating hospital, among other situations.
Establishes a requirement that hospitals must provide patients with a good faith estimate and that the final bill may not exceed 5 percent of the original estimate for such services as included in the estimate.
Prohibits the charging of facility fees unless it is charged for services rendered in specific hospital settings.
Establishes timelines for when insurers must respond to urgent and non-urgent prior authorization requests, guidelines for appeals and review processes of appeals by insurers, transparency of prior authorization policy by insurers, prohibition on the use of AI as the sole basis for denial, and some limited continuity of care provisions related to prior authorization.
The amended version of the bill needs to go through the Committee on Rules and Operations before it can hit the floor for consideration by the full Senate.
Oklahoma
Legislature Overrides Governor’s Veto on 340B Reform Bill. In the final days of session, the Legislature opted to override a veto by the Governor on HB 2048. The bill will prohibit 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. The bill also 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. The law is set to be effective on November 1, 2025.
Prior Authorization Bills Become Law. This past week, the Governor allowed two prior authorization bills (HB 1808 and HB 1810) to become law without his signature. HB 1810 pertains to prior authorizations in the Medicaid program and requirements for contracted entities, such as accessible information about prior authorization, who may make an adverse determination, and continuity of care in prior authorizations. HB 1808 is even more substantive in nature after having been amended and voted out of committee. The bill focuses on prior authorization requirements for prescription drugs, and requires accessibility of information online, requires notice of new requirements, implements determination timelines, requires prior authorizations for drugs to treat chronic conditions to be valid for 3 years, and prohibits prior authorization for drugs administered in an emergency.
Texas
Bill Outlawing Distribution of Abortion Pills Fails to Pass. Despite significant support from the Senate and an expectation it would receive consideration on the House floor this past week, SB 2880 failed to advance this legislative session. The Calendar Committee in the House never allowed the measure to receive a full vote prior to the deadline to be sent to the Governor’s desk before the Legislature adjourned. The bill would have expanded existing law that provides for a private enforcement mechanism against anyone that mails or distributes abortion pills within state or through state boundaries, inclusive of manufacturers. This bill would have allowed a private right of enforcement to sue, for up to $100,000, anyone who manufactures, mails or delivers abortion pills to or for someone in Texas. Notably, the bill also would have extended the statute of limitations for an abortion-related wrongful death case to six years and placed legal liabilities on both the court system and petitioning attorneys for challenging the law.
Legislature Advances Measure to Expand Medical Marijuana Program. After amending the bill in Committee, the Senate passed HB 46 and sent it back to the House for concurrence. As recently as this weekend, a conference committee was established to agree to a final version. With seven amendments arising through the legislative process, the bill would expand the state’s medical marijuana program to allow eligible individuals to use products inclusive of cannabis patches, lotions, and prescribed inhalers and vaping devices. Additionally, the list of qualifying conditions would expand to include chronic pain, terminal or hospice care. The Legislature is set to adjourn on June 2nd.
Legislature Enrolls Telehealth Payment Reform Bill. In its last week of session, the Legislature has enrolled HB 1052. The bill amends certain provisions related to statute governing telehealth payment and utilization in the state. Specifically, the bill redefines distant site and originating site to include wherever a health professional is providing a telemedicine services, teledentistry service or telehealth service and defines originating site as the location where an individual receives a telemedicine service, teledentistry service, or telehealth service, respectively. Notably, the measure requires a health benefit plan to cover services rendered through either of these three services if either the patient or provider rendering the service is out-of-state on the same basis and extent as if they were reimbursing an in-state provider. The bill now goes to the Governor’s desk for signature.
Legislature Enrolls Measure Authorizing Covered Individuals to Pay Out of Pocket. The Legislature enrolled HB 1612 this past week, which intends to require a hospital to accept full payment of services directly from an enrollee of a health benefit plan for covered services, if the enrollee requests to pay in such a manner. If that were to happen, the hospital is required to change the patients’ payment amounts to either an amount no more than 25 percent greater than the amounts generally billed or no more than 50 percent greater than the lowest contracted rate the hospital has with a plan, excluding Medicaid, CHIP or Medicare. The bill will now go to the Governor for his signature.
West Virginia
Executive Order Authorizing Religious Exemptions from Required School Vaccinations Challenged in Court. This past week, the American Civil Liberties Union and Mountain State Justice filed a lawsuit challenging the legality of Governor Patrick Morrisey’s (R) executive order authorizing parents to object to their children being required to receive immunizations if their objections were rooted on religious or conscientious grounds. The lawsuit requests the court to stop state education officials from enforcing the executive order and affirm that only the Legislature has the authority to implement such a directive to the state superintendent of schools. The lawsuit was filed after the Legislature had previously rejected a bill during the 2025 legislative session that would have had the same effect.
