Weekly StateVitals Update: Volume 24 (June 16, 2025)
National
CMS to Propose Rule on State Directed Payments. Following a White House statement from President Trump that called for the Centers for Medicare & Medicaid Services (CMS) to limit the role of State Directed Payment programs to ensure Medicaid payments do not exceed rates higher than Medicare, CMS sent proposed rulemaking this week to the Office of Management and Budget for review with the intent to carry such a directive out. As has been previously covered as part of StateVitals’ analysis of the proposed reconciliation package in the Senate, disruption to State Directed Payment programs stand to significantly impact federal revenue that state budgets rely upon for their Medicaid programs. State Directed Payment programs are typically leveraged to enhance Medicaid reimbursement for providers, enabling providers to remain enrolled in Medicaid and serve said enrollees.
California
Legislature Offers Proposed Budget with Healthcare Implications. Following a mid-May proposal from Governor Gavin Newsom (D) to amend the state’s 2025-2026 budget that would have rolled back funding for providing Medicaid coverage for undocumented immigrants, legislative leadership announced a budget proposal that would take a slightly alternative approach. Notably, Senate President Pro Tem Mike McGuire (D) and Assembly Speaker Robert Rivas (D) announced a budget agreement between the two chambers that would sustain some coverage for undocumented immigrants that the Governor had proposed to cut. For instance, legislative leadership has proposed an asset threshold of $130,000 for eligibility of undocumented immigrants who are seniors to access Medicaid coverage whereas Governor Newsom had proposed an asset threshold of $2,000. Other changes to Medicaid coverage for undocumented immigrants include lowering premium amounts that the Governor had proposed, delaying the cutting of dental benefits, and allowing immigrants already covered to re-enroll within six months if coverage is lost for not paying a premium.
Beyond coverage for undocumented immigrants, legislative leadership agreed with the Governor’s proposal to eliminate Medicaid coverage for weight loss medications, such as Ozempic. The proposed budget also calls for using more than $1 billion from Proposition 35 (i.e., the managed care organization tax authorization) to help accommodate increased Medicaid costs. Finally, the Legislature opted against acquiescing to the Governor’s request to move $500 million in tobacco-tax funded dollars to the general fund. Those funds have been earmarked for services inclusive of women’s health. The Legislature will continue negotiations with the Governor over the coming weeks.
Connecticut
FQHCs Withdraw Medicaid Rate Petition. Following passage by the Legislature of its 2026-2027 biennial budget two weeks ago, the Community Health Center Association of Connecticut (CHCAC) opted to withdraw its petition originally submitted to the state insisting the state was in violation of federal law governing Medicaid reimbursement rates. The passed budget allocates $26.4 million over three years specifically to increase how the state pays federally qualified health centers (FQHCs) and address concerns of the CHCAC. Based on the federal match rate, if left unchanged, it would bring in an additional $121 million over three years to the FQHCs. Notably, the budget passed includes procedural language that specifies how FQHCs can apply for increased Medicaid reimbursement rates depending on the type, intensity, duration or amount of services provided to patients.
Iowa
Governor Signs PBM Reform into Law. This past week, Governor Kim Reynolds (R) signed SF 383 into law. A priority for independent pharmacists this past session, the measure is believed to result in increased reimbursement to an extent for pharmacies. 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.
As Governor Reynolds noted in her transmittal letter in signing the letter, Iowa joins Texas, Georgia, Indiana and Montana in passing similar legislation this year.
Louisiana
Legislature and Governor Go Back and Forth on Efforts to Reduce Prescription Drug Prices. When the Louisiana Legislature adjourned its session this past week, the Senate opted against passing a conference committee report (CCR) to HB 358. The CCR would have prohibited pharmacy benefit managers (PBMs) from acquiring a permit to operate a pharmacy within the state. The CCR passed the House by a 88 to 4 margin and was backed by Governor Jeff Landry. In lieu of the CCR language, the Senate instead opted to adopt their own alternative measures related to prescription drug pricing. For instance they enrolled SR 209, which directs the Department of Health to study the potential impact of the CCR language from HB 358. Additionally, the Legislature had previously passed HB 264. As enrolled, the bill requires PBMs to submit an annual transparency report to the Department of Health, prohibits them from using effective rate pricing for local pharmacies, charging certain fees, retaining any portion of rebates received from a manufacturer, and other transparency elements.
However, as Governor Landry desires an Arkansas-like prohibition on PBMs controlling or owning pharmacies in the state, he has already iterated his intent to call a special session focused on lowering prescription drug prices. The intent is for the legislature to once again provide consideration to the HB 358 CCR language when that special session convenes. It’s unknown when the special session may be called.
Legislature Enrolls Measure Expanding Authority for Pursuing Out-of-State Doctors Rendering Abortion Care. Last week, the Louisiana Legislature enrolled HB 575, sponsored by Rep. Lauren Ventrella (R-Greenwell Springs), which is called the Justice for Victims of Abortion Drug Dealers Act. The bill builds from existing state law that already allows women to sue physicians that perform abortion on them in the state. Specifically, this measure would authorize the mother of the fetus to sue any person or entity who knowingly performs, causes or substantially facilitates an abortion, inclusive of the administering, prescribing, dispensing, selling or coordinating the sale of an abortion-inducing drug to an individual in Louisiana. The bill came as a response to enhance and expand the existing law which was leveraged by the state’s Attorney General to indict a New York physician and a mother of a pregnant minor for an abortion-related case of said minor. The Governor is expected to sign the measure into law.
Medicaid Eligibility Verification Bill Enrolled. Following the lead of a few other states this session to align with the Trump Administration’s approach to Medicaid eligibility and spending policy, the Louisiana Legislature enrolled SB 130. The bill intends to implement integrity measures that ensure only residents of the state that are in need of such services and are eligible for said services receive Medicaid coverage. As enrolled, the bill requires the Department of Health to adopt and implement the following measures:
Prohibits accepting Medicaid eligibility determinations from the state’s state-based exchange and instead requires the Department to verify eligibility determinations on their own accord.
Prohibits the Department from relying solely on ex parte renewals, and requires the state to withdraw any waivers submitted to the federal government that authorizes said ability.
Prohibits the Department from accepting self-attestation of Louisiana state residency for initial eligibility determinations or renewals
Authorizes the Department to use an enhanced income verification platform to verify recipient eligibility and to enter into data matching agreements to cross-check households enrolled in Medicaid with other state data sets to confirm eligibility.
The measure now moves to the Governor’s desk where Governor Jeff Landry (R) is expected to sign the measure into law.
Massachusetts
Senate Supplemental Budget Bill Increasing Hospital Funding to See Floor Vote this Week. Following a favorable report from the Senate Ways and Means Committee, it’s expected that the full Senate will vote on S. 2529 this week. The bill is based on a $756 million spending request from Governor Maura Healey (D) back in April and appropriates $532 million, of which $340 million is directed for hospitals and community health centers. Notably, provisions in the bill include $174 million for fiscally strained acute care hospitals, $35 million in payments for fiscally strained community health centers, and $134.5 million for the Medical Assistance Trust Funds, which renders payments to acute care hospitals with higher care delivery to Medicaid members. The bill would also establish a Health Safety Net Trust Fund, which intended to improve the reimbursement model for acute hospitals and community health centers.
Minnesota
Legislature Advances Budget Bills to Governor. The Legislature took action to advance budget bills this past week during a one-day special session called by the Governor. Notably, from a healthcare perspective, the $66 billion funding package as passed by the Legislature will cut coverage for undocumented adult immigrants under MinnesotaCare. As negotiated by legislative leadership and the Governor’s office, the agreement will leave children still eligible for the program. It’s estimated that more than 20,000 undocumented immigrants are currently enrolled in the program, with more than 76 percent of enrollees being above the age of 18. The bill now heads to the Governor’s desk for his signature.
Montana
State Supreme Court Strikes Down 2021 Abortion Limitations. This past week, the Montana State Supreme Court issued a ruling that three abortion restrictions passed by lawmakers in 2021 were unconstitutional. The trio of restrictions would have prohibited abortions after 20 weeks, increased restrictions on accessing medications to induce abortion services, and require providers to offer to patients the chance to view an ultrasound and listen to a fetal heart tone before making their decision on abortion care. In its ruling, the Supreme Court found that a state district court ruling was correct in finding the laws impermissibly infringing upon an individual’s right to privacy under the Montana constitution. Additionally, the court upheld a 1999 ruling and interpretation that case law does not define viability by the gestational age of a fetus and instead provides that viability is a medical determination made on a case-by-case basis.
New York
Legislature Advances Medical Aid in Dying Act. This past week, the Senate advanced S. 138/A. 136 to Governor Kathy Hochul’s (D) desk for her signature. The bill would allow an individual with a terminal illness or condition to be prescribed pharmaceutical drugs intended to end their own life if their prognosis is six months or less to live. The process to do so aligns with procedures in other states that have passed similar laws wherein it requires the individual to make a formal request of the medication in writing, have two witnesses sign the request to mitigate the possibility of coercion, and receive approval by two physicians. As heard in other states, the opposition during the Senate debate largely arose from either religious grounds or a desire to improve end-of-life care in the state.
Oregon
Governor Signs Legislation Limiting Corporate Investment and Management in Healthcare. Governor Tina Kotek (D) this past week signed SB 951 into law. Despite opposition from state healthcare associations and multi-national corporations, like Amazon, the Governor iterated that she is hopeful this law will serve as a model for other states seeking to limit the role of corporate investors in healthcare. Specifically, the bill prohibits a management services organization from owning or controlling a majority of shares in a professional medical entity in which they have a contract to provide management services and in other circumstances. Additionally, the bill would prohibit the use of noncompete agreements by said companies and require that all officers of professional corporations that are formed for the purpose of practice medicine to be medical licensees. Notably, hospitals, long-term care or residential care facilities, telemedicine providers, mental health or substance use disorder crisis lines, coordinated care organizations, or Program of All-Inclusive Care for the Elderly (PACE) organizations, among others, are exempt from these limitations for their ownership or control of a medical entity as of January 1, 2026.
Pennsylvania
Senate Passes Pharmacy Disclosure Bill. This past week, the Senate unanimously passed SB 95 and sent it over to the House for consideration. The underlying bill authorizes an EMS provider to dispense naloxone or a dose package unless certain conditions apply. However, added to the bill was an amendment by Senator Vincent Hughes (D-Philadelphia) requiring pharmacies to disclosure to consumer upon request the: (1) retail price of brand name and generic equivalent medications; (2) the co-pay amounts for brand name and generic medications for those with insurance; and (3) information about how to obtain affordable coverage through the state’s health insurance exchange. Senator Hughes has indicated his intent is to ensure consumers have the ability to assess all options when purchasing prescription drugs.
House Passes Measure to Limit Private Equity in Healthcare. As the Senate passed their own healthcare initiatives last week, the House passed HB 1460 by a 121 to 82 margin. As passed by the House, the bill authorizes the Attorney General with oversight authority of mergers and acquisitions involving health care systems to determine whether a covered transaction is against the public interest. The measure also establishes a notification process that a health care entity must adhere to in notifying the Attorney General about a proposed covered transaction and obtain a written decision from the Attorney General that the transaction is not against the public interest. Notably, if the Attorney General determines the transaction would be against the public interest, they may commence litigation to block the transaction or enter into a voluntary agreement with both transacting parties to mitigate the negative impacts. It’s unclear how the Republican-controlled Senate will respond to the measure.
West Virginia
Governor Morrisey Indicates Likelihood of Special Session on PEIA. This past week, Governor Patrick Morrisey (R) told media outlets that he is hoping to hold a special legislative session later this year to address growing concerns with the state’s Public Employees Insurance Agency (PEIA), the state (and some local) employee insurance plan. The move comes after it is expected that PEIA premiums will increase by 14 percent for state employees and by 16 percent for local government employees beginning in July. For retirees, PEIA is expected to increase premiums by 12 percent. One of the motivating factors behind the premium increases, besides the rising cost of health care, is inflation tied to prescription GLP-1 drugs that treat obesity and diabetes. The special session to address rising premiums via PEIA is expected to happen in July although no specific solutions or engagement steps have been iterated to date as to how the Governor or Legislature may address the rising costs.
