Weekly StateVitals Update: Volume 5 (February 3, 2025)
National
Known implications for states from the since rescinded OMB freeze of federal financial assistance. Last week, the Office of Management and Budget released an internal memo that called for a comprehensive review of certain public assistance programs, grant and loans programs, or other public aid programs, inclusive of a temporary pause on funding activities. Based on an internal memo circulated by Politico, the list of programs subject to at least internal review (and the potential pause in funding) includes a myriad of healthcare-related programs impacting states. This includes, but is not limited to:
Alzheimer’s Disease Demonstration Grants to States, State Vital Statistics Improvement Program, Chronic Diseases Research, Control and Prevention Grants, Grants to Increase Organ Donation, Grants to States for Healthcare Loan Repayment, Childhood Lead Poisoning and Prevention Projects, Oral Health Workforce Activities Grants, State Rural Hospital Flexibility Program, Small Rural Hospital Improvement Grant Program, State Health Insurance Assistance Programs, State Actions to Improve Oral Health Outcomes, 1332 State Innovation Waivers, Basic Health Program, Maternal Opioid Misuse Model, Certified Community Behavioral Health Clinic Expansion Grants, Money Follows the Person Rebalancing Demonstration, Transforming Maternal Health Model, and Preventative Health and Health Services Block Grant, among others.
OMB issued further clarity on impacted programs in a follow-up memo, noting that benefits inclusive of Supplemental Nutrition Assistance Programs and Medicaid, would not be impacted by this pause. Despite this, a federal judge issued an injunction through today (Monday, February 3rd) to ensure a hearing could take place to determine the authority of the White House to issue such a funding freeze. Before that hearing could take place, OMB rescinded the memo that had ordered the temporary pause on federal funding for impacted programs.
Alabama
Efforts to reform prior authorization continue without legislation. Launched last August, the Medical Association of the State of Alabama is the lead organizer of the Fix Prior Authorization campaign. The campaign, now representative of at least 30 healthcare provider systems or practices and consumer advocacy groups in the state, is in discussion with the dominant insurer in the state, Blue Cross Blue Shield of Alabama (BCBSA). For their part, BCBSA is attempting to drive compromise without the need for legislation. However, the campaign has iterated its intent to file legislation if key priorities can not be met. Notably, key priorities for the campaign include: prohibiting repeat prior authorizations for patients with chronic conditions, prohibiting retroactive denials, requiring insurers to respond within 24 hours for urgent care and 48 hours for non-urgent care. Finally, and similar to other states, the campaign is hoping to prohibit the use of AI in insurers’ prior authorization claim decisions. The Alabama Legislature is set to convene this week.
Bipartisan bill introduced to extend presumptive eligibility for pregnant individuals. Representative Marilyn Lands has introduced HB 89, which would extend presumptive Medicaid eligibility for up to 60 days to pregnant women in the state. Importantly, Rep. Lands was able to secure three Republican co-sponsors, including Representatives Collins, Ross, Dubose and Wilcox, which makes it at least feasible to have it considered in committee with Republican leadership. One impediment towards success is the fiscal note tied to it by the Alabama Medicaid Agency of an additional $1 million in spend annually (albeit, that figure is inclusive of the federal Medicaid match). With the Legislature set to convene this next week, HB 89 has been assigned to the Ways and Means General Fund Committee for initial consideration.
Arkansas
State submits 1115 demonstration amendment to include work requirements in Medicaid. Last week, Arkansas initiated a 30-day state public comment period on a proposed application to amend its 1115 Medicaid demonstration to include work requirements. Governor Sarah Huckabee Sanders (R) wrote in a letter to U.S. Department of Health and Human Services Secretary-Nominee Robert F. Kennedy, Jr., that there are 220,000 able-bodied, working age adults in Arkansas receiving free healthcare right now of which its estimated 90,000 are unemployed. The proposed amendment would require all individuals between 19 and 64 years of age who receive Medicaid through the new adult expansion group, with incomes ranging from 0 to 138 percent of the FPL, and are covered by a QHP to engage in either work, volunteer or caretaker responsibilities. Enrollees will not be required to report work requirements hours completed. The state will instead utilize data-matching algorithms to ensure that enrollees are participating in one of the allowed activities. If an enrollee fails to engage in one of those activities, they will have to engage with a success coach and develop a personal development plan to meet requirements of the program. It is expected that the amendment will be filed for consideration by the Centers for Medicare & Medicaid Services shortly after its 30-day state public comment period.
Connecticut
Lawmakers and Comptroller proposed Medicaid reimbursement hikes. Last week, Senator Matt Lesser (D-Middletown) and Representative Jillian Gilchrest (D-West Hartford), co-chairs of the Human Services Committee in the General Assembly, unveiled a plan to increase Medicaid reimbursement to providers by $250 million over three years. The proposal comes as a result of continued uncertainty as to what executive or congressional actions might be taken at the federal level to reduce Medicaid funding incoming to the state. This unveiling also comes after the state’s Comptroller, Sean Scanlon, had released the 2025 Healthcare Cabinet Report which included recommendations pertaining to increased reimbursement rates for providers, hospitals and other facilities. Notably, the Comptroller also included a recommendation that the state should preserve continued access for providers to the 340B program despite current risks due to pharmaceutical company restrictions. Legislation should soon be filed by Sen. Lesser and Rep. Gilchrest with their plan.
Illinois
House sponsor of PDAB bill expects advancement this session. Representative Nabeela Syed (D-Palatine) iterated last week that she believes the House Democratic Caucus will find the support necessary to get HB 1443 passed by the Chamber this year. The measure would authorize the development of a Health Care Availability and Access Board, with the similar purpose found in prescription drug affordability boards authorized already in 10 other states. Notably, the measure would authorize the Board to establish an upper payment limit based on Medicare-negotiated levels. The unwritten House Democratic Caucus rules stipulate that the House Speaker, Chris Welch, wants at least 60 democratic votes before he will allow a bill to come to the floor. Given that the Speaker signed on as a co-sponsor to a similar effort last session with Rep. Syed, it is highly likely to be considered on the House floor if that 60-vote threshold is reached.
Maine
Lawmakers to introduce bill to protect 340B covered entities. Senator Donna Bailey (D-York) and other lawmakers announced their intent to introduce bipartisan legislation that would protect 340B covered entities from efforts by drug manufacturers to limit access to prescription drugs at covered entities’ and their contract pharmacy locations. Notably, the bipartisan group of lawmakers pointed to Alabama as one state that has closed “loopholes” allowing drug manufacturers to limit access to drugs for 340B covered entities and their contract pharmacies. The Pharmaceutical Research and Manufacturers of America (PHRMA) responded to the announcement by noting that there are examples of 340B savings not reaching directly to the patient at the point of sale and that it leads to reduced sales tax across states. The bill has yet to be formally introduced with a filed bill number. However, advocates believe it will go to the Joint Standing Committee on Health Coverage, Insurance and Financial Services for hearings in the next few weeks.
Minnesota
Settlement with Novo Nordisk to cap insulin. Attorney General Keither Ellison announced last week that the state had reached a settlement with the Novo Nordisk to cap monthly out-of-pocket payments for insulin at $35 per month for the next five years. This cap will apply regardless of insurance status. The state had previously reached similar settlements with two other larger insulin manufacturers following a 2018 lawsuit filed by the state seeking relief from unaffordable drug prices. Since then, at least 25 states have taken action – mostly through legislative means – to cap the out-of-pocket cost of insulin. In 2022, insulin covered by Medicare was similarly capped at $35 per month.
Mississippi
House passes CON reform. Last week, the House of Representatives passed HB 922 and sent it over to the Senate for consideration. The measure would exempt a litany of the following facilities from adhering to certificate of need requirements, including:
chemical dependency services and facilities, hospital-based end stage renal disease facilities, intermediate care facilities, intermediate care facilities for individuals with intellectual disabilities, psychiatric residential treatment facilities, magnetic resonance imaging services, and diagnostic imaging services.
The bill would also enhance by double the capital expenditure limits that hospitals can spend on renovations or equipment without obtaining a certificate of need approval. Additionally included is a provision that authorizes hospitals to use existing dialysis facilities for outpatient renal care as opposed to just in-patient. Those with concerns about the measure suggest that it could expand Medicaid spending by enabling rapid growth of healthcare service offerings within the state. The measure passed the House on a 107 to 5 vote.
Governor to oppose Medicaid expansion. In the Governor’s state of the state address, Governor Tate Reeves (R) announced his intent to oppose efforts to expand Medicaid. Specifically noting that with the impending federal changes coming to the program, it’s likely states will have to take on a greater share of the cost to run the program. This puts the Governor at odds with the House Speaker, Jason White (R-West), who is trying to actively advance Medicaid expansion through the Legislature. Notably both Senate and House committees of jurisdiction passed shell bills out of their respective committees this week to ensure vehicles existed for any Medicaid expansion proposal.
Montana
Governor Gianforte seeks to invest in transforming behavioral health care delivery. As part of his proposed budget, Governor Greg Gianforte (R) plans to spend approximately $100 million of funds set aside by a 2023 law to revamp the behavioral healthcare system. However, the Governor has also proposed to spend an additional $32.5 million for capital projects. Those projects include moving a 12-bed intensive behavior center for individuals with developmental disabilities to either Helena or Butte, establish a step-down facility of 16 beds in Helena to serve adults who have been committed to the state hospital but no longer require intensive psychiatric services, and upgrades to the state hospital’s infrastructure and buildings. These investments are the result of recommendations from the state’s Behavioral Health System for Future Generations Commission. These investments are expected by state officials to increase the quality of care for patients, enhance access to care for services, and incentivize an enhanced workforce to engage in state-run facilities.
Nebraska
Nebraska grapples with unintended consequences of federal rulemaking on behavioral health access. In 2023, the Centers for Medicare & Medicaid Services (CMS) issued its 2024 Physician Fee Schedule final rule. The final rule for the first time allowed Marriage and Family Therapists and Mental Health Counselors to enroll in Medicare Part B and bill Medicare for services. Behavioral health providers serving dual eligible beneficiaries are now seeing losses in revenue because Medicare’s providers rates are less than the rates paid by the state Medicaid program. Before this rule went into effect, as the payer of last resort, Medicaid would cover services rendered. However, now that Medicare covers such services, providers are required to bill Medicare first for those services if an individual is Medicare eligible. As described by one provider in Nebraska, it resulted in a near 50 percent loss in payments and established a practice where Medicare members are now on waiting lists.
CMS has rendered guidance to the state by offering potential approval of a state plan amendment concept that would allow Medicaid to cover the difference between its rate and Medicare’s rate. However, the state has opted not to do so citing parity for payment and fairness, not the direct cost savings the state realizes. As a result, LB 55 has been introduced this year which would appropriate $1.5 million for additional reimbursement to mental health providers who see dual eligible patients. It’s likely the measure will receive consideration at some point this session.
North Carolina
House Republicans to introduce prior authorization reform legislation. After failing to successfully get prior authorization reform through the Legislature in 2023 and 2024, Republican lawmakers intend to file similar legislation in 2025. The North Carolina Medical Society is advocating to reintroduce the same language, this time with a comprehensive coalition of providers and consumer advocacy groups. If similar to past legislation, the likely introduced measure would establish a gold carding program, standardized clinical review criteria, establish time requirements that insurers must adhere to for prior authorization determinations, prohibition of utilization review in certain circumstances, and limitations on retrospective review and denials, among other levers. While the House unanimously passed this legislation in 2023, the Senate opted against taking up the measure. Comprehensive in nature, it’s unclear whether the Senate would be more open to considering this reform in 2025.
North Dakota
Trial pertaining to gender affirming care ban begins. Following the enactment of a 2023 law that made it a crime healthcare provider to render certain gender-affirming care, a legal challenge to that law is now being heard in state district court. Under the enacted law, physicians performance of sex reassignment surgeries on minors are punishable by up to 10 years in jail or a misdemeanor charge for providers prescribing hormone treatments or puberty blockers to minors. Plaintiffs seek to remove those penalties and prohibit a ban based on the grounds that the law is unconstitutional as it prohibits access to essential and life-savings health care needs. Courts have already blocked enforcement of similar bans in Montana and Arkansas, with ongoing litigation occurring in other states. To date, twenty-five states have adopted similar bans.
