Weekly StateVitals Update: Volume 66 (April 27, 2026)
National
CMS Issues Medicaid FWA letters to Governors and State Medicaid Directors. This past Thursday, the Centers for Medicare & Medicaid Services (CMS) Administrator, Dr. Mehmet Oz, sent letters to all 50 governors and state medicaid directors urging them to “undertake a swift revalidation of Medicaid providers of services at high risk of waste, fraud, abuse, and corruption.” Dr. Oz asked the governors and directors to notify CMS if they intend to carry out the revalidation and to include a proposed timeline by May 7, 2026. The letters sent to state medicaid directors also requested that state Medicaid agencies “develop and submit a comprehensive two-year provider revalidation (PR) strategy” that includes “a proposed methodology and timeline for conducting off-cycle provider revalidation, with a focus on high-risk providers, including providers without an NPI [National Provider Identifier]” within 30 days. Dr. Oz warned that failure to carry out the swift revalidation would be considered by CMS as it evaluates the likelihood of fraud in each state.
Connecticut
Senate Engrosses Bill Restricting Private Equity Interference With Hospitals. Last Wednesday, the Connecticut Senate engrossed SB 196, which prohibits hospitals from entering into a sale-leaseback transaction involving their main campuses. Specifically, the bill prohibits a real estate investment trust from purchasing a hospital and its assets and then leasing back the real property. The bill would also require hospitals to submit annual attestations to the Commissioner of Public Health stating that no private equity entity has a controlling interest in the hospital or interferes with the professional judgment or clinical decisions of the hospital's health care providers. The bill now awaits consideration in the House.
Delaware
Senate Enrolls Bill Removing COPA Requirement for Major Medical Equipment Purchases. Last Tuesday, the Senate voted unanimously to enroll HB 17, which would repeal the Certificate of Public Review (COPA) requirement for purchasing major medical equipment. This bill comes in support of the state’s Rural Health Transformation Program grant application. In October, the entire Delaware legislature signed a letter indicating their approval for reforming the state’s certificate of need (CON) process for rural and underserved areas. The bill is now headed to Governor Matt Meyer’s (D) desk for signature. While Governor Meyer has not indicated whether he will sign the bill, in his last State of the State address, he highlighted the need to reform the state’s CON program to increase health care access and competition.
Idaho
Rural Health Transformation Committee Begins Process to Award RHTP Funding. Last Wednesday, legislators in the newly formed Rural Health Transformation committee held their first meeting. The committee, consisting of 10 Republican legislators, is tasked with providing recommendations to the Department of Health and Welfare to award and administer the state’s $186 million in Rural Health Transformation Program funding. In last week’s meeting, committee members reviewed timelines and requirements for awarding the funds. Looking ahead, the department is expected to release requests for proposals and competitive subgrant applications by June. While the next meeting date has not yet been posted, information on upcoming committee meetings and agendas can be found on the state legislature’s website.
Kentucky
1115 Reentry Demonstration to be Implemented. Recently, Governor Andy Beshear (D) announced that the state would move forward with a 2024-approved 1115 waiver demonstration to provide Medicaid coverage for state residents leaving incarceration. Notably, under the federal waiver, residents leaving incarceration will be covered by Medicaid for one year and receive one month’s supply of any medication prescribed to them while in state custody. The program is not subject to enrollment caps and will also be applicable for juveniles in youth development centers when they are released. Eligible individuals will be determined to qualify for Medicaid and receive coverage 60 days prior to release.
Louisiana
Attorney General Murrill Asks 5th Circuit Court to Block Mail-Order Abortion Medication. Last Monday, Attorney General Liz Murrill (R) announced she had filed a motion to stay the 2023 Food and Drug Administration (FDA) rule that removed in-person dispensing requirements for mifepristone. The motion, filed with the U.S. Court of Appeals for the Fifth Circuit, would enjoin the rule change that authorized telehealth prescriptions and mail-order dispensing of mifepristone. Notably, the filing follows a recent ruling from the U.S. District Court for the Western District of Louisiana, which issued a stay on the lawsuit challenging the FDA rule change, granting the Trump Administration’s request to pause the case until the FDA completes a safety review of mifepristone. Under Fifth Circuit rules, the FDA and other appellees have until Monday, April 27, to respond to the motion, while the Court may issue a response before then. Meanwhile, the District Court is awaiting the FDA to complete its safety review of Mifepristone and submit a progress update by October 2027.
North Carolina
House and Senate Pass Bill Covering Medicaid Shortfall and Introducing Program Integrity Measures. This past Wednesday, the North Carolina House and Senate voted 112-1 and 48-1, respectively, to pass HB 696. If enacted, the bill would allocate $319 million in Medicaid rebase funding to cover the remainder of the fiscal year. Additionally, the legislation includes several provisions to combat potential Medicaid fraud, waste, and abuse (FWA), increase the frequency of current state reporting periods, and limit Applied Behavior Analysis (ABA) therapy. Among other provisions, the bill:
Directs the Department of Health and Human Services (DHHS) to develop a Medicaid integrity, cost-savings, and efficiency plan.
Limits self-attestation for Medicaid eligibility determinations.
Implements Medicaid community engagement requirements.
Directs the state auditor to review Medicaid and related workforce programs.
Requires DHHS to submit annual reports to the Joint Legislative Oversight Committee on Medicaid and the Fiscal Research Division on FWA data.
Requires citizenship and immigration status verification during enrollment and redetermination periods.
Authorizes PHPs to exclude individual providers who do not meet quality standards, do not accept network rates, or jeopardize the quality of care, program integrity, or Medicaid cost-effectiveness from their networks.
Requires providers to remain subject to the prepayment claims review process until they meet an 80% clean claims rate for three consecutive months, up from 70%.
Raises Medicaid copayments to the maximum allowed under federal law.
Increases Medicaid eligibility reviews from quarterly to monthly.
Imposes a one-time 2026 fee assessment on private acute care hospitals.
Several of the bill's provisions, such as the Medicaid funding, would apply retroactively, while others are scheduled to take place later in 2026 and 2027. The bill is now scheduled for enrollment in the near future and will then be sent to Governor Josh Stein’s (D) desk for signature.
Pennsylvania
Appellate Court Finds Ban on Medicaid Abortion Coverage Unconstitutional. Last Monday, in a 4-3 decision, the Pennsylvania Appellate Court found that the state’s ban on Medicaid payments for abortions violates the state’s constitution’s Equal Rights Amendment and equal protection provisions. The case was brought by seven reproductive health providers who argued that patients have a fundamental right to make their own reproductive decisions. Currently, Pennsylvania Medicaid only covers abortion services in circumstances of rape, incest, or if the mother’s life is at grave risk, limitations that the providers argued violated enhanced reproductive health protections under the state’s constitution. In 2024, the state’s Supreme Court ruled that the coverage exclusion was presumptively unconstitutional under the state’s Equal Rights Amendment as sex-based discrimination, but still remanded the issue back to the appellate court. A spokesperson for Attorney General Dave Sunday’s (R) office indicated the office is reviewing the Appellate Court’s opinions. The state can appeal the case up to the state Supreme Court by May 20, 2026.
South Carolina
Legislator to Block Debate on Recently Advanced Strict Abortion Ban Bill. Last Tuesday, the Senate Medical Affairs Committee voted 8-4 to advance SB 1095, which prohibits abortions from conception and establishes felony penalties for anyone who performs or assists with an abortion and misdemeanor penalties for a woman who undergoes one. The vote was along party lines, with the exception of Senator Tom Davis (R), who vowed to prevent the bill from being debated on the Senate floor. In 2022, Sen. Davis threatened a filibuster on another bill that banned abortions from conception, successfully preventing it from being voted on. Sen. Davis has indicated he does not expect the bill to reach a floor vote this time around either. If it reaches a floor vote, legislators would have only nine days to pass the bill before the regular session adjourns on May 7.
Tennessee
House Enrolls Bill Restricting Joint PBM, Pharmacy, and Health Insurer Ownership. Last Tuesday, the Tennessee House voted 86-7 to enroll SB 2040, which would prohibit a person or entity from owning a pharmacy benefit manager (PBM) and a pharmacy or health insurer within the state beginning July 1, 2028. In its current version, the bill contains several exemptions from the prohibition. Specifically, it:
Specifies that the prohibition only applies to entities with more than 5% ownership interest.
Exempts hospitals and health-system pharmacies from the definition of a PBM.
Exempts independent pharmacies, allowing them to provide mail-order, specialty, or delivery services directly to patients.
Exempts orphan drugs with limited distribution or drugs with a risk evaluation and mitigation strategy (REMS) with limited distribution.
Exempts employers operating a pharmacy or providing pharmacy benefits solely for their employees.
Exempts pharmacy services provided under a contract with the federal government for administering healthcare programs by the Department of War (DOW), Department of Veterans Affairs (VA), Indian Health Service (IHS), or Office of Personnel Management (OPM).
Authorizes affiliated pharmacies found in violation to continue operations through December 31, 2028, if they are pursuing a documented arms-length transfer.
Notably, this bill would significantly impact CVS Health, the only company in the state that owns both a pharmacy and a PBM. Republican legislators initially introduced the bill following an audit by the Tennessee Department of Commerce and Insurance, which found CVS Caremark and other PBMs reimbursed affiliated pharmacies for drugs at notably higher rates than non-affiliated pharmacies. In 2025, Arkansas passed similar legislation (Act 624) that would have banned PBM ownership of pharmacies, prompting CVS and several other PBMS to sue, with CVS threatening to close its almost 20 pharmacies in the state. Ultimately, a federal judge blocked the law from taking effect, indicating it likely violated the Commerce Clause and is likely preempted by the Department of Defense program TRICARE. However, unlike the Act 624, the Tennessee bill provides exemptions for federal healthcare programs. CVS has previously warned that SB 2040 would force the closure of 134 of its pharmacies in the state, and is expected to file a lawsuit if Governor Bill Lee (R) signs the bill into law.
Sixth Circuit Affirms ERISA Exemptions from Pharmacy Anti-Steering Laws. This past month, the U.S. Sixth Circuit Court of Appeals affirmed that the Employment Retirement Income Security Act (ERISA) preempts self-funded ERISA employer health plans from key provisions of two of the states' pharmacy benefit manager (PBM) laws. Public Chapter 569 (effective 2021) prohibits PBMs from interfering with patients’ choice of pharmacy by offering financial incentives or steering, or by offering different copays for contracted pharmacies. Public Chapter 1070 (effective 2023) applied these provisions to ERISA plans and directed PBMs to implement any-willing-provider requirements, allowing any licensed pharmacy that would accept the same network terms as other pharmacies. McKee Foods Corporation argued that these provisions impermissibly interfered with ERISA plan design and administration. The Court agreed with McKee, affirming the District court’s finding that the state cannot force ERISA plans to accept “any-willing-pharmacy” into its network or restrict the use of financial incentives to steer beneficiaries. Zooming out, the Sixth Circuit’s ruling brings into question the enforceability of state PBM legislation, which will likely come up once more if Tennessee enacts SB 2040.
Virginia
Legislature Rejects Governor Spanberger’s Amendments to Prescription Drug Affordability Advisory Panel Bill. Last Wednesday, members of the General Assembly voted unanimously to reject Governor Abigail Spanberger’s (D) amendments to SB 271/HB 483. In particular, legislators opposed Spanberger’s enacting clause that would have delayed the effectiveness of the new Prescription Drug Affordability Advisory Panel’s Medicare Maximum Fair Price (MFP) controls unless the 2027 General Assembly decides to reenact the provisions. Now, the bills are headed back to Governor Spanberger, who can either sign the originally passed version of the bill, veto it, or allow it to become law without her signature after 30 days.
