Weekly StateVitals Update: Volume 40 (October 6, 2025)

National

• CMS Issues Guidance on Medicaid Managed Care Payments for Emergency Services of Undocumented Immigrants. The Centers for Medicare & Medicaid Services (CMS) issued a new state Medicaid director letter this past week which provides an updated interpretation of how Medicaid funds may be used to cover emergency services for undocumented immigrants. Up until this point, CMS has historically provided federal Medicaid matching funds for care and services that are deemed necessary for the treatment of an emergency medical condition for an individual that met all other Medicaid eligibility requirements except for documentation status. Under the new interpretation, CMS will limit federal Medicaid payment for services that are tied to the treatment of an emergency medical need of which is rendered to undocumented immigrants. Specifically, federal payments will only be made for care and services that are actually furnished. This requires the state to maintain documentation to support any claim for federal financial participation, and CMS may request documentation as support for any claims. However, in its letter, CMS is clear that this funding roll back will not apply to Medicaid managed care payments, including risk-based capitation payments. 

Colorado

• Governor Reinstates Prior Authorization Requirements for Behavioral Health Services. This past week, Governor Jared Polis (D) and the Department of Health Care Policy and Financing announced their intent to reinstate prior authorization requirements for outpatient mental health care. In 2022, the Legislature and Governor enacted SB 22-156, which prohibited Medicaid health plans from requiring  prior authorization for outpatient psychotherapy services. Under the new policy, prior authorization will be required for patients seeking in excess of 24 sessions over the course of a 12-month period. The move, which becomes effective January 1, 2026, is expected to save the state $6.1 million in its first six months of implementation and is part of a series of Medicaid cost savings moves that is intended to mitigate the impact of Medicaid revenue cuts from the One Big Beautiful Bill Act enacted into law this past summer. When the Legislature had reconvened for a special session to discuss potential budget reductions, it was noted that prior authorization in Medicaid was one possible way to realize cost savings. 

• PDAB Approves First Ever UPL. On Friday, the Colorado Prescription Drug Affordability Board (PDAB) voted to adopt regulations establishing an upper payment limit (UPL) for Enbrel, an injectable biologic used to treat autoimmune and inflammatory conditions. The PDAB decided to utilize Medicare Maximum Fair Price (MFP) as a benchmark and set the UPL just above MFP at $600 per 50 milligram/milliliter unit. The PDAB opted to have the UPL go into effect January 1, 2027 in response to stakeholder feedback on implementation concerns. Colorado is one of 4 states that have a PDAB with UPL authority, and is the first PDAB to set a UPL.

Idaho

• State DOGE Task Force Extends Consideration of Medicaid Expansion Repeal. This past week, the DOGE Task Force in Idaho continued its review of the state’s Medicaid expansion program. During the meeting, the Task Force was provided with an overview of the Medicaid expansion program and provided the opportunity to ask questions. While nothing of significance arose during the Task Force meeting, the Deputy Director of Medicaid for the state was provided with a directive by the Task Force Co-Chair Rep. Josh Tanner (R) to come back to the Task Force with recommendations to cut costs (and ultimately enrollment) to the program, in addition to the existing proposals already outlined in a submitted 1115 waiver application to the Centers for Medicare & Medicaid Services. The next meeting for the Task Force will be October 23rd. 

Maryland

• PDAB Initiates Process on Approving UPLs for Two Drugs. This past week, the Maryland Prescription Drug Affordability Board (PDAB) directed the PDAB’s staff to initiate the process that would be legally required to approve upper payment limits (UPLs) on drugs Jardiance and Farxiga. However, the PDAB also provided direction to staff that they should continue to explore alternative methods beyond a UPL to keep the drugs’ costs down, including WAC inflation penalties, patient navigator programs, and PBM compensation reform. Critics of UPLs stated during the PDAB meeting that UPLs may backfire by removing the incentive for pharmaceutical manufacturers and pharmacy benefit managers (PBMs) to negotiate on prices. Additional information on next steps, including potential UPL frameworks and methodologies, will likely be made available during the PDAB’s next meeting on November 17, 2025.

Michigan

• Legislature Enrolls Budget that Sustains Healthcare Spending. This past week, the Michigan Legislature adopted Sub. for HB 4706, the state’s budget. As enrolled, the annual budget proposes to maintain a relatively stable stance on healthcare spending with full funding estimated for the Medicaid program and Health Michigan Plan. Additionally, the budget also includes funding to restore the Specialty Network Access Fee (SNAF) funding pool, rural and obstetrics stabilization pools, and the Michigan Clinical Consultation and Care program. Additionally, funding for the state’s Maternal Levels of Care verification process and standards program was retained. The bill is now being sent to the Governor’s desk for her signature.

New Mexico

• Special Session Addresses Health Care. This past week, Governor Michelle Lujan Grisham (D) convened a special session where the Legislature addressed issues related to food assistance spending, determined how the state will approach its application for the Rural Transformation Program and infuse additional funds into rural healthcare, and authorizing an expansion of state insurance subsidies for its Marketplace in lieu of the possibility that the enhanced Advance Premium Tax Credits (APTCs) are not extended by Congress. Notably, the state’s Rural Health Care Delivery Fund will receive an additional $50 million in state funds that can be used for grants for rural healthcare providers, in addition to any federal funds acquired by the Rural Transformation Program. The intent of the state-only funds is to have them directed to Medicaid providers. Related to Marketplace coverage, the Legislature is considering appropriating $17 million in subsidies for enrollees. Additionally, SB 3 was enrolled which stands to authorize the Department of Health to purchase COVID-19 vaccines for children, in addition to allowing the Department to use additional sources for vaccination policy than solely federal authorities. The ability for the additional funding comes as New Mexico experienced higher than expected oil production which has created a budget surplus for the state this past year.

North Dakota

• State Medicaid Program to Cover Services via Community Health Workers and Community Paramedics. This past week, the Health and Human Services Department announced its intent to file a state plan amendment to the Centers for Medicare & Medicaid Services (CMS) to add additional covered services to its Medicaid program. Specifically under the SPA, the state is proposing to cover all services rendered by community health workers and community paramedics that would be eligible for Medicaid reimbursement if rendered by another provider. The state notes that Medicaid expenditures for these services are estimated to increase by approximately $20,000 over the next 12-month period. Additionally, the state will be submitting a SPA to remove the end date for coverage of Medication-Assisted Treatment (MAT) services. 

For additional information and updates on state activity this past week relative to state COVID-19 vaccine guidance, StateVitals Subscribers can check out our guidance tracker.