Weekly StateVitals Update: Volume 46 (November 17, 2025)

National

• CMS Issues Preliminary Guidance on Provider Tax Sections from OBBA. The Centers for Medicare & Medicaid Services issued preliminary guidance last week intending to provide states with implementation guardrails of recently enacted federal requirements on Medicaid provider taxes. The requirements, as passed as part of the One Big Beautiful Bill Act (OBBBA), prohibits any new or increased provider taxes. The preliminary guidance also iterates clarity on certain elements of both Sections 71115 and 71117, including how states should interpret the terms “enacted” and “imposed” provider taxes under the federal law. The guidance also outlines a transition period that will be granted to states who currently have a waiver of the uniform tax requirement for provider taxes. Notably, states with taxes on Medicaid managed care organizations will have until the end of their state fiscal year ending in 2026 to comply and all other permissible taxable classes will have until the end of 2028 to comply. Additional guidance is forthcoming on other elements of the OBBBA and further formal guidance on these two provider tax sections is expected. 

Connecticut

• Legislature Passes Children’s Behavioral Health Reform Bill. This past week, the Connecticut Legislature passed HB 8004 by a margin of 133 to 11 in the House and 27 to 8 in the Senate. The bill received considerable discussion due to a prohibition included in the language that prohibits personal information from being shared by state agencies that may assist the U.S. Immigration and Customs Enforcement in their ongoing efforts of deportation. However, beyond that and other provisions, the bill also included a number of investments related to children’s behavioral health. Notably, the bill expands required health insurance coverage by insurers for behavioral therapy for autism spectrum disorder to individuals under 26 years of age. The bill also requires a study to be performed by the state to examine and identify gaps in available programmatic needs for children’s mental health and a second study of the efficacy of an existing program at Yale University for children with intensive mental health needs. The bill now goes to the Governor who is expected to sign the measure into law. 

Michigan

• DHHS Issues GFO for Behavioral Crisis Response Initiatives. The Michigan Department of Health and Human Services (HHS) issued a grant funding opportunity this past week for initiatives aimed to establish or expand community-based crisis intervention services. The intent is to enhance behavioral health crisis services regardless of diagnosis, location or insurance status for Michigan residents. It’s also intended to allow qualifying applicants to implement new community-based initiatives or to expand existing programs due to capacity constraints. The maximum total award for the grant period (March 1, 2026 through September 30, 2027, is $9.5 million and awards are not intended to exceed $1 million per applicant. 

Maryland

• Task Force Releases Report Recommending Decriminalizing Natural Psychedelics. This past week, the Maryland Task Force on Responsible Use of Natural Psychedelic Substances issued a report that would recommend the Legislature to decriminalize natural psychedelics for medical and recreational use. The first step the report recommends is to build out a governance and oversight structure for the use of psilocybin and then move on to other natural psychedelics. As part of this first stage in working specifically with psilocybin, the report also calls for the creation of a regulatory framework, inclusive of safety protocols, data monitoring, public awareness and education campaigns, education for law enforcement and restorative justice measures for justice-involved individuals. Importantly, however, providers have urged caution to lawmakers as they undertake this issue, potentially in 2026. It’s unclear whether there would be a path forward for such a conversation in the new year beyond a pocket of lawmakers. 

North Carolina

• Medicaid Cuts to Applied Behavioral Analysis Therapy Providers Temporarily Halted. Last week, a state superior court judge granted an injunction requiring the North Carolina Department of Health and Human Services (DHHS) to pause Medicaid reimbursement cuts it had imposed in October for providers of applied behavior analysis (ABA) therapy. This comes after the parents of at least 20 children with autism enrolled in the state’s Medicaid or CHIP programs filed a lawsuit accusing DHHS of discrimination for the reimbursement cuts. Those reimbursement rate cuts came to some providers, inclusive of ABA providers, as high as 10 percent due to a budget impasse with the North Carolina General Assembly. DHHS had argued in court that it didn’t discriminate against only Medicaid or CHIP members with autism because providers unrelated to treating those with Autism also received similar cuts. It’s unclear whether the state plans to appeal. 

Oklahoma

• Preliminary Injunction Issued Blocking Part of 340B Reform Law from Implementation. This past week, a federal district judge in the Western District of Oklahoma issued a preliminary injunction preventing the Attorney General’s office from enforcing key elements related to restrictions on pharmaceutical manufacturers of HB 2048, the Legislature’s recent 340B reform measure. The implementation date for the bill was set at November 1, 2025. Notably, in the preliminary injunction order, the district judge found that the plaintiff pharmaceutical companies are likely to succeed on merits, inclusive of arguments of preemption and that the bill creates unconstitutional taking due to “confiscatory” prices. The court is delaying its ruling on other plaintiffs’ claims for the time being.  The Attorney General issued a statement this week announcing its intent to defend the new state law and push back against the injunction. Related to manufacturers, the bill prohibits manufacturers from limiting the acquisition of a 340B drug by a 340B covered entity or a contract pharmacy. The bill also requires a 340B covered entity to contract with any willing pharmacy upon mutually agreeable terms if that pharmacy is within a fifteen-mile radius of the 340B covered entity’s location. 

Pennsylvania

• Governor Signs FY2025-2026 Budget into Law. This past week, Governor Josh Shapiro (D) signed into law the state’s FY2025-2026 budget (HB 416, HB 479, SB 315, and SB 160). As part of the budget agreement, healthcare – inclusive of Medicaid – is left comparatively unscathed with cuts. However, the Governor has noted in the past that future cuts could arise as the state begins to implement the One Big Beautiful Bill Act. Additionally, one of the only significant healthcare related investments in this next year’s annual budget includes $100 million in new spending for annual mental health and school safety funding for K-12 schools. The funds will be awarded as grants to school districts for the purpose of meeting to be determined baseline criteria by an established committee that will seek to improve physical security and behavioral health in schools. 

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.