Weekly StateVitals Update: Volume 26 (June 30, 2025)
California
Governor Agrees to Fewer Healthcare Cuts in Revised Budget. This past week, Governor Gavin Newsom (D) largely reached agreement with legislative leadership for a $321 billion spending plan that will likely go before the Legislature for sign-off ahead of a July 1 start of the fiscal year. Notably, the agreed upon budget does not provide the Governor with his recommended cuts to undocumented Medi-Cal long-term care benefits, overtime pay for home health aides and funding for reproductive health providers. Further, the budget is not expected to reinstate an asset test that threatened to disenroll some Medicaid members off the rolls who were elderly or disabled. However, the budget is expected to freeze enrollment by adults without legal status in the state’s Medicaid program beginning January 2026.
Colorado
Opioid Settlement Funds to be Used for a Fund to Buy Naloxone. This past week, Attorney General Phil Weiser announced that funds from the state’s opioid settlement fund will be directed to a statewide fund that has the directed purpose to buy naloxone in bulk. The announcement came as the state was set to receive $230 million in funding from the federal government for public health programming, inclusive of naloxone bulk purchasing. While Attorneys General have sued the federal government to retain the aforementioned funding, Attorney General Weiser has indicated the state did not want to take any chances on ensuring access to the bulk purchasing process. In total, Colorado has secured agreements that commit $870 million from pharmaceutical companies to combat the opioid epidemic.
Delaware
Governor Signs Executive Order to Protect Gender Affirming Care. Recently, Governor Matt Meyer signed Executive Order #11 into effect. The executive order prohibits any state agency from rendering medical records, data or billing information, or identification of any individual utilizing state resources that would assist in any criminal or civil investigation against an individual who has received or provided gender-affirming care. Notably, the executive order also establishes a protection for healthcare professionals by prohibiting the disbarment of any licensee solely due to them having provided gender-affirming care. The executive order comes on the heels of a Supreme Court of the United States decision last week finding that state laws which ban puberty blockers and hormone treatments for transgender teens are constitutional. At least 14 other states and the District of Columbia have either had their Governors issue similar executive orders or their Legislatures have passed similar legislation that attempt to shield patients and physicians from legislation in other states that restrict gender-affirming care.
Iowa
Recently Enacted PBM Reform Challenged in Court. This past week, the Iowa Association of Business and Industry filed a lawsuit in federal court challenging the constitutionality of SF 383, the state’s recently enacted pharmacy benefits manager (PBM) reform law. The group argues that the law violates the U.S. Constitution because it places undue restrictions on free speech and should be preempted by the federal Employee Retirement Income Security Act (ERISA). The lawsuit seeks remedies of blocking enforcement of the law and obtaining a declaration from the court that the law is invalid. The group’s motivation behind filing the lawsuit rests with conversations with PBMs, in which PBMs have indicated to the group that the law will increase healthcare expenses for its membership and residents of Iowa.
Maine
Legislature Enrolls PDAB Legislation. The Maine Prescription Drug Affordability Board’s (PDAB) legislation, LD 697, received approval from the Legislature this past week and it’s now in front of the Governor’s desk for signature. The bill would authorize the PDAB to assess strategies and make recommendations to reduce prescription drug costs, spending, and cost barriers, including an assessment of UPL authority, PBM regulation, and reference-based pricing. Additionally, the measure would add one non-voting member with health data expertise to the PDAB to advise the board on cost-reduction strategies.
New Hampshire
Ambulance Surprise Billing Bill Heads to Governor’s Desk. Following agreement by both the House and Senate, SB 245 is enrolled and headed to the Governor’s desk for her signature. Under the agreed-upon language, 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 through the end of 2027. Beginning in 2028, the reimbursement rate will be at a rate established by the Commissioner of Insurance based on an actuarial study and for each year after will increase by the rate of inflation. At the same time, insurers would not be prohibited from applying any cost-sharing for out-of-network provider utilization. By most accounts, the Governor is likely to sign the bill into law.
North Carolina
Senate Mini Budget Proposed with Funding for Key Medicaid Program. While the House, Senate and Governor’s office continue to negotiate on a full fiscal year budget, it has become increasingly difficult to reach agreement prior to a July 1 deadline. As a result, the Senate has proposed a supplemental budget by amending HB 125 and passed it over to the House for consideration this week. The Senate’s proposed supplemental budget would sustain state operations with some key investments in healthcare. Notably, the bill would appropriate $30 million in funding for the Health Opportunities Pilot, a Medicaid program that funds interventions for health-related social needs. Previous budget proposals had cut funding for the program entirely and the Department of Health and Human Services had even gone so far as to announce that the program would cease operations beginning July 1. Additionally, the supplemental budget, if passed by the House, would fund a Medicaid rate rebase to obtain close to $640 million in annual funding. This would be an increase from the starting point of $500 million that House and Senate lawmakers were initially considering. Other provisions in the supplemental budget include:
Establishes a Rural Residency Education and Training Fund for students in the University of North Carolina system.
$1 million appropriation to purchase bulk naloxone.
$14 million cut to regional mental health services management organizations (compared to a $20 to $30 million cut proposed by the Legislature in their original budgets)
$6 million cut to the Transitions to Community Living Initiative, which transitions individuals with mental health and developmental disabilities from institutional settings to community settings with support services.
House leadership has indicated that they will not concur with the Senate’s plan and instead passed a narrower spending proposal (HB 192 & SB 177), which would also sustain the planned cut to the Health Opportunities Pilot Program, in addition to less funding ($500 million) for the Medicaid rebase. If agreement can’t be reached by the two chambers, it’s likely that spending will continue into the new fiscal year at last year’s levels.
Conference Committee Appointed on Healthcare Reform Bill. This past week, a conference committee was established to begin House and Senate negotiations on HB 434. As originally passed by the House, the bill had been just a prior authorization reform effort. However, the Senate amended and opted to pass it with a myriad of provisions in addition to prior authorization, including:
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.
A priority for lawmakers in both chambers, an agreement between both chambers remains a priority.
Ohio
Legislature Enrolls Budget Bill and Sends to Governor. This past week, the Legislature enrolled their budget bill for FY2026-2027, HB 96, and sent it to the Governor for his signature. As enrolled, the budget would have a multitude of policy implications for healthcare and, specifically Medicaid. Provisions of interest include:
Implements a trigger law to Medicaid expansion, requiring the state to end Medicaid expansion coverage if the federal match were to fall below 90 percent.
Requires Medicaid eligibility redeterminations every six months for enrollees in the Medicaid expansion population.
Establishes a Rural Ohio Hospital Tax Pilot Program and assessment, with the intent to permit counties to establish a local hospital assessment to provide the nonfederal share of Medicaid payments.
Establishes limitations and guardrails for a Medicaid state directed payment program, inclusive of a cap of no more than 50 state directed payment programs during a fiscal biennium and to one state directed payment program per identified provider class.
Repeals state law requiring the Ohio Department of Medicaid to seek federal approval on a waiver that would provide continuous Medicaid enrollment for eligible children from birth through age three.
Prohibits a contract between a Medicaid MCO and 340B “grantee” from including a payment rate for a prescribed drug that is less than the payment rate for health care providers that are not 340B grantees.
Prohibits Medicaid coverage for gender-affirming mental health care and diversity, equity and inclusion initiatives.
Prohibits a medical practice specializing in primary care that is owned or operated by a hospital or hospital system from requiring a self-pay individual or third-party payor to pay a facility fee in connection with any primary care service.
Requires 340B covered entities that are nonprofit hospitals to submit a report to the Ohio Department of Health on an annual basis beginning on July 1, 2026 that highlights the aggregate acquisition costs for all 340B drugs dispensed or administered, payments received, prescriptions dispensed, charity care costs, and other provisions.
The full budget incorporates other provisions of interest to healthcare stakeholders. The Governor has a deadline to sign today to ensure the budget aligns with the new fiscal year beginning on July 1.
Oklahoma
Executive Order Requires State to Examine and Implement MAHA Initiatives. Following the lead of other states, Oklahoma Governor Kevin Stitt (R) announced this past week that his Administration will seek federal permission to exclude soft drinks and candy from the list of items that may be purchased under the federal supplemental nutrition assistance program (SNAP). Authorized under Executive Order 2025-13, the Governor also raises the question as to whether mandatory fluoridation of public drinking water is appropriate and the appropriateness of using common artificial food coloring, such as Red Dye 40. The executive order requires the Department of Health and Department of Equality to stop public endorsements of fluoridation of public water systems but the Governor iterated in the order that each local municipality will have the autonomy to make a decision whether or not to continue the practice. The Executive Order also establishes the Make Oklahoma Healthy Again Initiative and Advisory Council to promote clean living, physical activity, and preventative health.
South Carolina
SCOTUS Rules in Favor of South Carolina Prohibiting Planned Parenthood from Receiving Medicaid Dollars. This past week, the Supreme Court of the United States (SCOTUS) found that federal Medicaid law does not prohibit states from making determinations about which providers may be qualified providers to be Medicaid-eligible. Originally, the state had removed Planned Parenthood clinics from the state’s Medicaid roster. Planned Parenthood sued arguing that Medicaid patients are protected under federal law in being able to choose their own healthcare providers. Lower courts had repeatedly ruled in Planned Parenthood’s favor. However, the Supreme Court ruled in a 6 to 3 opinion that the federal law does not clearly and unambiguously provide individuals the right to sue to enforce the any qualified provider measure. It’s possible that other Republican-controlled states will take the opinion of the court in building the rationale to take similar action with their own Medicaid programs.
Oregon
Explanation of Why PBM Reform Bill Failed to Advance. Prior to the Legislature adjourning for its annual session, the body failed to advance the significant reform effort of pharmacy benefits managers (PBMs) through HB 3212. The measure received both a public hearing and work session with efforts to find compromise among stakeholders before it ultimately remained stuck in House Rules. Notably, the bill would have required PBMs to reimburse retail pharmacists at least the cost of the drug’s ingredients and also pay dispensing fees, among other provisions. However, lawmakers this past week indicated that the measure ultimately failed to advance for two key reasons: (1) there was concern it would run afoul of the state constitution due to using a cost benchmark to determine payments, which would have required the state to use a process developed by a non state government actor and (2) legislative analysis that suggested the bill wouldn’t improve payments for retail pharmacies to the extent claimed. Based on comments made, lawmakers intend to bring back the issue for consideration in 2026.
