Weekly StateVitals Update: Volume 25 (June 23, 2025)
National
Senate Finance Committee Draft Version Proposes Further Medicaid Cuts to States. This past week, the Senate Finance Committee released its draft version of its reconciliation piece. Unexpectedly, the bill aims to increase cuts to federal Medicaid revenue for states through a few alterations to the House-passed package. Notably, the bill would gradually reduce the hold harmless threshold for provider tax classes, except for nursing homes and intermediate care facilities, by 0.5 percent annually until the cap is down to 3.5 percent in 2031 for Medicaid expansion states. Whereas the House version would only prohibit new provider taxes and grandfather in existing arrangements. The Senate Finance Committee’s proposal would likely lead to a loss in federal Medicaid revenue to states between $100 and $200 billion over 10 years.
Additionally, the Senate Finance Committee proposal varies from the House-passed version relating to work requirements. The Senate’s proposal currently would exempt only guardians from work requirements whose children are ages 14 or younger (i.e., expanding the work requirements to parents of teens). Whereas, the House proposal would exempt adults with any dependent children from having to comply with work requirements. Finally, the Senate version alters the cap on state directed payment programs compared to the House version. The Senate proposal would make the payment limit at the rate of Medicare in Medicaid expansion states and would make it 10 percent above the Medicare rate in non-expansion states; whereas under the House version, existing state directed payment programs would have been grandfathered in. Yet the Senate’s version would cut payment limits for those arrangements until they reach the Medicare-linked rates as identified above. The Senate is planning to take up their final measure for consideration this week.
ALEC to Consider Model Legislation on Facility Fees and 340B Transparency. This past week, the American Legislative Exchange Council (ALEC) released its committee meeting agendas for its annual meeting this July in Indianapolis. As part of the Health and Human Services Committee agenda, ALEC intends to consider model legislation that would provide states with legislative frameworks and vehicles to prohibit health care entities and systems from charging facility fees in a multitude of circumstances and require 340B covered entities to submit an annual transparency report. Specifically, the Site Neutral Payments Act would prohibit a health system for charging a facility fee for services rendered at a location outside of its campus and for outpatient services where an evaluation and management code is utilized, regardless of the location of those services. It would additionally establish transparency requirements for consumers, a waiver process for patients to apply for making them exempt from the facility fee, and require health systems to acquire unique National Provider Identifiers for each facility or location.
The 340B Transparency and Accountability Act would require each 340B covered entity to submit an annual report to the state inclusive of aggregate acquisition cost of all prescription drugs, aggregate payment amounts received for all drugs, aggregate payment made to contract pharmacies, claims for prescription drugs, how 340B savings and utilized and other data elements. Additionally, the report would be required to be stratified by payer and the aggregate data of all 340B covered entities would be posted on a public website. These model acts will be considered during ALEC’s annual meeting in Indianapolis between July 16 and 18.
States Agree to New Opioid Settlement. Following approval by all fifty states, the District of Columbia, and the U.S. territories, a $7.4 billion settlement with Purdue Pharma has been reached. Under the approved structure of the deal, the Sackler Family would contribute $6.5 billion to the total settlement agreement. Additionally, the settlement will not force individuals who wish to pursue litigation against the Sacklers in civil court for alleged wrong-doing from giving up their rights to pursue those lawsuits if they choose to opt-out of the settlement agreement. It’s estimated that $850 million of the settlement agreement is set aside for direct victim compensation, while the remaining amount of funds will be directed to state and local governments for addiction recovery and prevention efforts.
SCOTUS Ruling Finds in Support of State Laws Banning Puberty Blockers and Hormone Treatments for Transgender Teens. This past week, the Supreme Court of the United States (SCOTUS) ruled in a 6 to 3 decision that state laws banning puberty blockers and hormone treatments for transgender teens are constitutional. The Court’s decision rests in the argument that states have flexible interpretation in determining proper standards of medical care, and there remains an ongoing debate among medical professionals regarding the risks and benefits of hormone treatments for adolescents with gender dysphoria. The decision uploads law in Tennessee and 23 other Republican-controlled states who had adopted such bans in recent years. In the minority’s dissent, Justice Sonia Sotomayor did find that the state laws at question plainly discriminate on the basis of sex.
Delaware
Budget Committee Intends to Reinstate Funding for Hospital Cost Review Board. Following a back-and-forth in recent weeks, the Joint Finance Committee has opted to restore funding to the Diamond State Hospital Cost Review Board as part of its $6.58 billion budget writing process for the next fiscal year. Two weeks previously, the Committee had held a vote to halt all funding with the intent to limit the work of the Cost Review Board. However, after receiving legal guidance pertaining to the constitutionality of reducing funding for public officer compensation of the Board, they opted to vote to restore the funding in full in advance of the budget bill being filed this past week. The Board is responsible for the annual review of hospital budgets and ensures alignment with hospitals able to meet the state’s health care spending benchmark. The Board’s creation is currently facing a legal challenge in state court with regard to its constitutionality.
Florida
Legislature Enrolls Budget with Healthcare Implications. This past week, the House and Senate finalized their $115 billion budget for the 2025 - 2026 fiscal year and sent it to Governor Ron DeSantis (R) for consideration. As part of the agreed upon budget, a number of healthcare provisions stand out, including:
Medicaid rate increases for long-term care facilities to the tune of a $176 million hike, $18 million of which will be recurring as part of the House and Senate supplemental allocations; this is on top of an already agreed upon $110 million rate increase in the budget.
An appropriation of $23.3 million for a Medicaid managed care program for individuals with intellectual and developmental disabilities, with the intent to take an existing pilot program for services and expand it into two Medicaid regions in the state.
A five-year $30 million research incubator for pediatric cancer research and clinical trials with the intent to partner with four children’s hospitals in the state.
$15 million appropriated for supporting hospitals that perform intestinal transplants.
Authorization for the Agency for Health Care Administration and the Department of Health to seek approval from the Centers for Medicare & Medicaid Services for a prospective payment system for behavioral health ambulatory services that are rendered by certified community behavioral health clinics.
The budget agreement ends a weeks-long standoff between the two legislative chambers that saw them staring down a July 1 government shutdown date if an agreement failed to be reached.
Iowa
1115 Demonstration Application to Implement Work Requirements Submitted to CMS. This past week, the Centers for Medicare & Medicaid Services received the application from Iowa to implement work requirements for its Medicaid expansion population. The application aligns with SF 615 which was passed earlier this year, requiring the Administration to pursue implementation of work requirements. As part of the application, Iowa is requesting that all Medicaid expansion enrollees between 19 and 64 must meet one of the following requirements:
Work at least 100 hours per month or earn wages monthly at least to the state minimum wage multiplied by 100 hours;
Enroll in an educational/job skills program;
Enroll and remain compliant with Iowa’s Temporary Aid to Needy Families for SNAP work requirements; or
Have been exempted from work requirements.
Exemptions from those work requirements include individuals who are pregnant, individuals who are disabled, medically exempt under the Medicaid program, caretakers of children under the age of six, receiving unemployment compensation, participating in a substance use disorder treatment, or who otherwise provide proof of good cause. The state will conduct compliance verification checks every 12 months and intend to begin implementation on January 1, 2026.
Idaho
Supreme Court Rules that AG Must Revise Abortion Ballot Initiative Language. This past week, the Idaho Supreme Court found that the Attorney General and the Division of Financial Management failed to comply with good faith requirements in drafting abortion ballot initiative language and a coinciding impact statement. Advocacy organizations in the state had committed to pursuing a legislative ballot initiative that would establish residents’ rights to abortion, contraception and fertility treatment in the state beginning in 2024 with the intent to obtain placement on the ballot for voters in 2026. As part of the drafting of that ballot initiative, proponents claimed that the state-written short ballot title of “fetus viability” conflicts with the term fetal viability that would be used in the long title. Additionally, the fiscal impact statement for the initiative claims that Medicaid costs would increase under the ballot initiative, which proponents argue lacks merit. The Supreme Court sided with proponents, finding that evidence in the court record did not support the conclusions drawn for the fiscal impact statement and that the short ballot title left our key elements of the initiative, such as how abortions would be permitted after viability in cases of health emergencies and that providers would be provided protection from liability for performing abortions. The language in both cases is required to be submitted by Monday, June 23.
Maine
Legislation Adopted to Establish Physician Associate Title. Following a two-year campaign by the Maine Academy of Physician Associates, LD 1166 was enacted into law. The measure will change the existing protected and licensed title of “physician assistant” to “physician associate.” This effort arose after the American Academy of Physician Associates had opted to adopt the physician associate title as their official one for the profession back in 2021 and have since had Oregon also enacted legislation making the change in that state official. The intent with the title change is to enhance patient understanding of physician associates expertise and their role in patient care, however it is not intended to create a change in scope.
Michigan
House Passes Nurse Licensure Compact. Following similar efforts from past years, the Michigan House of Representatives have passed HB 4246 over to the Senate for consideration. The measure would add Michigan to the enhanced Nurse Licensure Compact, enabling nurses to practice across state lines with the administrative requirement to obtain a new state licensure if they are practicing in a state that is also part of the compact. Michigan has historically had a difficult time getting this measure across the finish line as opponents have argued that it would weaken the state’s ability to enforce its own licensure and training standards and organized labor remains concerned that it may weaken their collective bargaining power within the state. The measure now heads to the democratic-led Senate and has been assigned to the Regulatory Affairs Committee for consideration.
New Hampshire
Legislature at Odds with Governor on Budget with Healthcare Implications. On Thursday of this past week, New Hampshire Governor Kelly Ayotte (R) indicated that she would veto the budget deal that lawmakers had recently reached an agreement on (HB 1 | HB 2) if sent to her as is. While the Governor has other concerns included within the budget pertaining to first-responder retirement benefits and education, healthcare has its own concerns of the Governor’s. Notably, the House passed a $46 million cut to the Department of Health and Human Services (DHHS), while the Senate passed a $51 million cut to DHHS. The cuts would require DHHS to find those dollars in savings without directing DHHS how to do so. In Governor Ayotte’s original budget request, there was no request for DHHS funding cuts. The Legislature faces a June 30 deadline to reach a spending agreement, which may necessitate a short-term continuing resolution if legislative leadership and the Governor are unable to find agreement.
Rhode Island
340B Bill Passes the General Assembly. Following concurrence by the House on a Senate substitute, H. 5634 was adopted and enrolled by the General Assembly and sent to the Governor for his signature. As enrolled, the measure would prohibit health insurers, pharmacy benefits managers (PBMs), and manufacturers from, among other provisions:
Establishing lower reimbursement rates for a 340B covered entity or contract pharmacy for a 340B drug than non-340B drugs.
Prohibit fees, chargebacks, adjustments or conditions of reimbursement to 340B covered entities that differ from non-340B entities.
Deny or limit participation in pharmacy networks based on 340B status.
Impose requirements related to frequency or scope of audits due to one’s 340B status.
Limitations on claim modifiers and submission, re-submission and adjudication of claims.
Interfere or limit a 340B covered entity’s choice to use a contract pharmacy for distribution or dispensing.
The bill also prohibits manufacturers from interfering with the acquisition or delivery of a 340B drug to a contract pharmacy. Finally, the bill requires 340B covered entities to submit annual reports to the General Assembly and Governor’s office on transparency of their savings related to the 340B program and how such savings are invested in the community.
