Weekly StateVitals Update: Volume 29 (July 21, 2025)

National 

• CMS Issues State Letters Iterating New Approach on Continuous Eligibility and Workforce Initiatives for States. The Centers for Medicare & Medicaid Services (CMS) issued two letters to state Medicaid officials this past week that iterate guidance is forthcoming that will limit states from obtaining approval or renewal of section 1115 demonstrations that pertain to the following: 

  • Continuous Eligibility: Authorizing expenditure authority for continuous eligibility beyond the populations and duration for which continuous eligibility is available under existing law. Notably, for states with demonstrations already approved for expanded continuous eligibility, the state will be required to provide enrollees with notification of any changes to their current period of continuous eligibility and when that enrollee will need to undergo their next redetermination. In some cases, children are granted continuous eligibility if they are enrolled for up to six years and in other cases, past administrations have authorized up to 24 months of continuous eligibility for adults or targeted adult subpopulations according to CMS.

  • Workforce Initiatives: Authorizing Medicaid-funded workforce initiatives, of which more than $1 billion in federal commitments have been made to California, Massachusetts, New York, North Carolina and Vermont. Those states with currently approved initiatives as part of existing 1115 demonstrations will be allowed to run out their course but they will not be extended and new waiver requests will not be approved.

  In both scenarios, guidance will be forthcoming to state Medicaid directors in the coming months to make these changes official. The decisions are largely being made, based on the letter’s text, with the fiscal stewardship of federal funds in mind and to refocus future section 1115 funding on “high value activities aligned with the core mission of Medicaid and CHIP.”

• NASHP to Work With Eight States on Maternity Care Deserts Policy. The National Academy of State Health Policy (NASHP) announced it has formed a policy academy composed of eight states to work on model policy to address maternity care deserts. The eight states selected include California, Colorado, Kentucky, Ohio, Pennsylvania, Virginia, Washington and Wyoming. The two-year policy academy has support from the Maternal and Child Health Bureau in the Health Resources and Services Administration who will provide technical assistance support for these states in their efforts. While the eight states will have varying goals for what they want to achieve relative to processes, NASHP highlights new care delivery models, enhancing the perinatal workforce, increasing quality assurance and improvement practices, and strengthening payment and financing strategies for perinatal care as leading policy strategies for states to seek in their ultimate policy frameworks. 

Connecticut

• Governor Signs Bill Preserving Fluoridation Standards. This past week, Connecticut Governor Ned Lamont (D) signed HB 7287 into law. As enacted, it requires public water systems operating in the state to maintain existing levels of fluoride used in water supplies provided such levels are at the currently recommended level prescribed by the U.S. Department of Health and Human Services. The intent of the measure is to establish a state standard should the Trump Administration opt to eliminate the federal standard that is currently in effect. The bill was largely supported by health professional associations in the state, inclusive of the Connecticut State Dental Association. The bill is effective immediately. 

Iowa

• Integrated Health Home Program to Sunset. Recently, the Iowa Department of Health announced that they will phase out the state’s Integrated Health Home (IHH) program by January 2026. The program is a Medicaid network of health professionals that provide care coordination and home services to Medicaid enrollees with severe mental health diagnoses. The sunset is happening as the state prepares to roll out its new Certified Community Behavioral Health Clinics’ (CCBHC) model as part of the state’s new statewide behavioral health system this month. The CCBHC model is intended to provide the same range of mental health and substance abuse services that the IHH program would have. Currently, enrollment in the IHH program is limited to 175 children and adults. 

Kentucky

• State Submits 1115 Application to CMS to Assist Enrollees with Job Services. This past week, Kentucky submitted its 1115 demonstration application to the Centers for Medicare & Medicaid Services (CMS) that would enable Medicaid enrollees to access job training assistance services. Instead of a traditional work requirement, the demonstration would require able-bodied Medicaid expansion adults without dependents to be referred to the Department of Workforce Development for job placement services, including possible placement. Enrollees would only be contacted by the Department if they have been continuously enrolled in the Medicaid program for 12 months or more. A number of populations are exempt from this outreach by the Department, inclusive of full-time students, individuals with disabilities, caregivers and pregnant individuals. Public comments are being accepted by CMS through August 9th.  

Pennsylvania

• House Passes $50.6 Billion Budget with Healthcare Implications and Senate Guts it. Early this past week, the Democratic-controlled Pennsylvania House of Representatives passed a $50.6 billion budget (HB 1330) and sent it over to the Republican-controlled Senate for consideration. The general appropriations bill passed the House by a 105-97 margin with House Republicans noting that conversations are still ongoing. Notably the budget includes a $4.5 billion increase in spending to the Department of Human Services to assist in mitigating federal cuts to be realized over the next few years by the federal reconciliation package and prepare for necessary implementation of Medicaid work requirements and  more frequent eligibility verifications for the Medicaid expansion population. This vote was largely viewed as procedural and when it arrived in the Senate, they opted to gut the bill and send it back to the Appropriations Committee without a replacement plan.

• Governor Launches Joint Inspections for Substance Use and Mental Health Providers. This past week, Governor Josh Shapiro (D) and the Department of Drug and Alcohol Programs and the Department of Human Services launched a joint inspections process with the intent to reduce administrative burdens for substance use disorder and mental health treatment providers. Under the initiative, both Departments will be conducting annual inspections of substance use disorder and mental health treatment facilities to ensure compliance with state regulations, inclusive of staff qualifications and trainings are adequately met. The reason for the coordinated inspection effort falls in alignment with the Governor’s 2023 executive order which establishes a state Behavioral Health Council to ensure timely and appropriate care is rendered through an evidence-based behavioral health system.

South Carolina

• State Submits 1115 Demonstration Application Tying Medicaid Expansion to Work Requirements. The state recently submitted an 1115 demonstration application to the Centers for Medicare & Medicaid Services (CMS) that would expand Medicaid eligibility for caregivers provided certain work and community engagement requirements are met. Notably, the program would be called the Palmetto Pathways to Independence and would expand Medicaid coverage to parent caretaker relatives between the ages of 19 and 64 if they have incomes between 67 and 100 percent of the federal poverty level. Enrollees would also be required to meet qualifying work requirements, inclusive of working 80 hours per month, participation in certain school-related activities, demonstrated compliance with SNAP requirements for dual-eligible members, and participation in medically necessary substance abuse disorder treatment programs, among others. CMS is accepting public comments from stakeholders through August 9th. 

West Virginia

• Fourth Circuit Upholds State’s Ban on Abortion Medication.This past week, the United States Fourth Circuit Court of Appeals upheld West Virginia’s prohibition on abortion medication. The law originally imposed limits on how physicians may prescribe and dispense abortion medications to patients. The drug manufacturer of mifepristone had filed suit in 2023 contending that the state law interferes with federal regulations which should have authority over the labeling and usage of all U.S. medications. The Court found that due to the Supreme Court restoring the states’ traditional authority to regulate abortion, the objection to the suit was not due to the substance or merit of the point but to the venue. It’s unknown whether the manufacturer will appeal.