Weekly StateVitals Update: Volume 33 (August 18, 2025)

Arkansas

• Federal Appeals Court Upholds 2021 Law Banning Gender Affirming Care for Minors. In an 8 to 2 majority decision this week by the U.S. Court of Appeals for the 8th circuit, the Court upheld the constitutionality of a 2021 Arkansas law that banned gender affirming care for minors. Notably, the ruling offered an interpretation in excess of what the Supreme Court of the United States (SCOTUS) has ruled on with similar state laws in recent months by finding that parents lack unlimited authority to make medical decisions for their children. The 2021 law at issue was the first in the nation to prohibit individuals under the age of 18 from receiving puberty blockers as well as hormones such as estrogen and testosterone. Notably, the Governor at the time, Asa Hutchinson (R), had vetoed the enrolled bill but the Legislature overrode his veto. The ruling also comes after SCOTUS found earlier this summer that a similar ban in Tennessee does not discriminate on the basis of sex and is constitutional in nature in providing elected officials with wide latitude to enact legislation where there is a nexus of scientific and policy questions in play. 

Indiana

• FSSA to Adjust Medicaid Spending Assumptions. Based on recent  analysis provided by the Family and Social Services Administration (FSSA) Secretary Mitch Roob, Indiana is planning to pivot how it will provide budget forecasting for the Medicaid agency. Based on estimates that highlight Medicaid spending on a per-enrollee basis will increase by 43 percent for low-income and 72 percent for elderly enrollees over the next decade, Secretary Roob has indicated a desire to think more strategically about how to curb costs moving forward. FSSA will begin assuming that the state will only contribute two percent of its general revenue fund to fund Medicaid costs that aren’t already covered by federal Medicaid revenue streams or other pre-existing state Medicaid revenue streams. In the past, FSSA has typically relied on the state general revenue fund to make up the difference between expenses and revenues of the program. Now, that assumption of the “gap” will be built out at only 2 percent. Moving forward, the federal reconciliation package will further condense the existing revenue funds that the state relies upon beyond that 2 percent general fund assumption. It’s unknown how the state intends to reduce costs to accommodate for the expected increased per-enrollee expenditures with the implications likely forthcoming from the reconciliation package. 

• State Court of Appeals Upholds 2022 Near Total Ban on Abortion. This past week, an Indiana Court of Appeals issued a ruling that finds a 2022 law passed by the General Assembly that provides a near total ban on abortion care in the state to be constitutional. The majority found in its ruling that while there is a constitutionally protected right to abortion in cases where the life or health of the mother is at serious risk, the existing state law already provides those exceptions. The plaintiffs argued that the exception language provided under the 2022 law wasn't broad enough to accommodate the specific circumstances allowed under the constitution. The plaintiffs also argued that the law couldn’t require all abortions to be performed by licensed hospitals or their affiliated outpatient surgical centers. The Court rejected that argument, too. The 2022 law provides exceptions to the abortion ban in cases of rape or incest, lethal fetal anomalies, and risk to the health and life of the pregnant individual. Under the exception of rape or incest, the law does require that abortions be obtained within 10 weeks after fertilization while physicians may perform abortions for lethal fetal anomalies up to 20 weeks post-fertilization. 

Louisiana

• Audit Finds Medicaid Benefits Paid Out for Deceased Beneficiaries. Recently, the Legislative Auditor conducted an audit of state dollars that were paid for Medicaid coverage of deceased Medicaid beneficiaries. The audit found that the state paid out benefits for more than 1,000 individuals over a six-year period after they had died. As a result, the audit found that $9.6 million was paid to Medicaid managed care organizations over that same time period for those deceased beneficiaries. The audit recommended that the Department of Health identify whether it should incorporate third-party data sources as part of its eligibility determination process to identify deceased Medicaid beneficiaries. The Health Secretary has agreed to the audit’s recommendation and is working with the federal Administration to comply with such requests. Notably, some of these data verification processes were already going to have to be accommodated as a result of the recently enacted federal reconciliation package. It’s likely that other states may take on similar audits as they prepare to understand the fiscal implications of using additional data sources as required via the federal reconciliation package to ensure removal of deceased beneficiaries from the Medicaid rolls. 

New Jersey

• Acting Governor Signs Two Bills Safeguarding Access to Substance Use Treatment. This past week, New Jersey Acting Governor Tahesha Way (D) signed into law A.3974/S.3952 and A.3973/S.3952. A.3974/S.3952 reclassifies patient brokering (i.e., practice of receiving financial incentives in exchange for referring patients to specific treatment centers or facilities) as a third-degree crime, imposes a $50,000 penalty that is mandatory for any violation, and requires restitution for impacted patients or insurers. The bill also establishes clarification that the law applies to both for-profit and not-for-profit health care facilities, inclusive of recovery residences. These elements were inspired by a report from the State of New Jersey Commission of Investigation. The other measure, A.3973/S.3952, prohibits the use of deceptive marketing practices by addiction treatment providers. Notably, all advertising by such providers is required to be accurate, complete, and transparent about services offered, where they are being offered, and any affiliations the provider has. 

New York

• Department of Health Adopts Certificate of Need Changes. Recently, the New York Department of Health finalized amendments to its regulations governing the state’s Certificate of Need (CON) process. Notably, it establishes a process where routine or non-clinical projects or expansions with a capital cost below $12 million will only be subject to a limited review or will receive exemption from the process altogether. Additionally, construction projects that are less than $30 million are authorized to proceed under an architectural self-certification process instead of being subject to Department of Health review. Importantly, for the Department, it also requires that any CON applications required under a single project must be submitted as a single entry as opposed to piecemealing the CON applications over time. Despite these changes, CON applications pertaining to clinical services, bed additions or the establishment (or re-establishment) of operators are still subject to full CON review regardless of cost. While this should expedite some CON processes and applications, it’s unclear how significant in scope the changes will be for the Department to process the new workstream. 

North Carolina

• DHHS Issues Letter in Response to Stopgap Budget. Following the enactment of a stopgap budget by the General Assembly and Governor Josh Stein (D) earlier this month, the Department of Health and Human Services (DHHS) issued a letter to the General Assembly detailing how they plan to comply with reduced Medicaid revenue from both the state general fund. Notably, DHHS estimates that the additional $600 million appropriated to cover increased Medicaid expanses will be inadequate to cover the full costs of the program in the long-term. Expecting to run low on funding in the Spring (assumption of a $319 million shortfall), DHHS is taking steps now to prepare for any further financial setback. To do so, the Department plans to reduce Medicaid reimbursement rates in the following ways: 

  • A 10 percent cut for applied behavioral analysis, psychiatric residential treatment facilities, and  inpatient and outpatient physical health services, among other services. 

  • An 8 percent cut for personal care services, inpatient and outpatient behavioral health services, hospice and other similar services. 

  • A 3 percent cut for all providers not impacted by the 10 or 8 percent cuts. 

  • A 1.5 percent reduction for Medicaid managed care organizations (in addition to the actuarial adjustments based on the aforementioned provider cuts).

  Notably, the letter also highlights that DHHS may cut optional coverage for GLP-1s under Medicaid, unless they are prescribed for diabetes or heart disease. DHHS intends to initiate implementation of these cuts by October 1. In its letter, DHHS noted that these cuts can be reversed if the General Assembly opts to appropriate the requested funds before the October 1 deadline. The General Assembly and Governor’s office continue to work on a long-term budget agreement.

Ohio

• Bill to Seek to Address GLP-1 Costs for State Employees. In the near future, it’s expected that Representatives Dontavius Jerrells (D-Columbus) and Josh Williams (R-Sylvania) will introduce legislation that seeks to mitigate out-of-pocket costs for state employees acquiring GLP-1 medications. The proposal would remove the use of pharmacy benefit managers (PBMs) from handling the reimbursement of the medications and instead allow state employees to purchase the drug directly from the manufacturer and then receive a rebate. This process by cutting out PBMs is expected to save the state between $6 and $12 million annually according to the sponsors of the measure. Notably, state employees would be eligible to receive reimbursements for drugs purchased out-of-pocket for up to $500 per month in the first year and $250 per month in the second year of treatment. State employees qualify for the reimbursement only if their BMI is 30 or greater, have a physician’s diagnosis documented, and provide documentation of out-of-pocket payment. Utilization is authorized for only two years before those eligible employees may reapply for continued reimbursement. It’s unclear at this time when the bill will be formally introduced and where it will be assigned.

Oregon

• State to Delay 1115 Medicaid Re-Entry Program. Despite approval from the Centers for Medicare & Medicaid Services (CMS) in July 2024, the state has now opted to halt its implementation of a re-entry program that would provide Medicaid coverage for incarcerated individuals 90-days pre-release. The state cites the unknown fiscal implications of the federal reconciliation bill that was enacted in July. Originally, the program was set to launch in late 2025 for juveniles and in early 2026 for incarcerated adults. The Oregon Health Authority has iterated that it plans to revisit the project timeline and ensure that when it is implemented, the program is adequately resourced. The waiver program is currently set to expire in 2027.