Weekly StateVitals Update: Volume 71 (June 1, 2026)
Alaska
Legislature Passes Healthcare Bills to Fulfill Rural Health Transformation Program Commitments. Recently, at the end of its legislative session, the Legislature passed two bills aimed at fulfilling requirements tied to the state’s anticipated share of the $50 billion federalRural Health Transformation Program (RHTP). The first,HB 110, would ease out-of-state licensing for physicians, physician assistants, psychologists, social workers, and EMS personnel by joining interstate licensing compacts — a commitment the state’s Department of Health made in its federal RHTP application. The bill passed the House unanimously but advanced in the Senate by a narrower 13–7 margin, with some bipartisan majority members opposing the measure over concerns about ceding state authority to set its own licensing standards. The second bill,HB 195, would authorize pharmacists to treat minor and chronic conditions, another RHTP incentive-based policy. Both bills now await action from Governor Mike Dunleavy (R), whose office stated he would evaluate the legislation. Alaska is on track to receive more than $1 billion from the program over five years.
California
Federal Public Comment Period on CalAIM 1115 Waiver Renewal Request. This past Tuesday, the Centers for Medicare & Medicaid Services (CMS) opened a public comment period on California’s request to renew the California Advancing and Innovating Medi-Cal (CalAIM) section 1115 Medicaid demonstration for five years with certain modifications. The state submitted its renewal request on May 11, 2026, seeking authority to continue existing programs and establish two new ones: an Employment Services program, which would provide pre-employment and employment-sustaining services to certain beneficiaries, and a Bridge Care Pilot, which would offer home and community-based services to older adults with Medicare who have significant care needs and incomes above Medicaid eligibility limits. The state also seeks continuation of reentry services, substance use disorder services, contingency management, traditional health care practices, coverage for out-of-state former foster care youth, and the Global Payment Program, among other waiver and expenditure authorities. The public comment period runs through June 26, 2026.
Connecticut
Governor Signs Bill Overhauling CON Program. This past week, Governor Ned Lamont (D)signed Public Act No. 26-68, a budget bill that, among other things, overhauls Connecticut's Certificate of Need (CON) program and eliminates the current requirement for hospitals to obtain CON approval before terminating a service line. The bill establishes a new notice-based process for hospital service line pauses and terminations. Under the new framework, hospitals may temporarily pause a service line for up to 90 days without notice or approval, but must provide 90 days' advance written notice to the Department of Public Health, the Office of the Attorney General, the Department of Social Services, the Office of the Healthcare Advocate, and to additional state agencies for certain providers. Hospitals must also submit a Service Line Access Plan at least 60 days before the effective termination date, detailing prior utilization, alternative sites and travel times, transportation needs, continuity of care protocols, and patient notification plans. A mandatory public hearing will be held following notice submission, and an established CON Panel will review the Access Plan and issue a final decision, which is subject to civil penalties for noncompliance. The provision goes into effect January 1, 2027.
Illinois
Legislature Enrolls Bill Prohibiting Certain Downcoding Practices. This past week, the Legislature enrolled SB 3114, which establishes the Transparency in Downcoding Act. The bill to be effective January 2028 prohibits health insurers from implementing any policy or using any algorithm or other automated process that bypasses evaluation of all information submitted by the billing health care professional to downcode a claim. While insurers may use automated tools to flag claims that may warrant a downcoding review, all final downcoding determinations must be made or reviewed by a natural person. Additional provisions prohibit downcoding based solely on reported diagnosis codes, prohibit targeted or discriminatory downcoding practices against providers who routinely treat patients with complex or chronic conditions, establish notification requirements and a dispute process for downcoded claims, and require all managed care organizations to comply with the Act's requirements. The bill now heads to the Governor’s office where he is expected to sign it into law.
Iowa
Governor Signs Healthcare Legislation into Law. This past week, Governor Kim Reynolds (R) signed SF 2480 into law. The measure implements a 5-cent sales tax on vapes and alternative nicotine products, with the first $3 million expected to go to clinical trials, lab research and research activities for pediatric cancer treatment. Notably, the bill received criticism during debate on the House floor, with democratic lawmakers contending that the bill failed to set the tax high enough to deter substance usage. They also pointed out that the bill’s fiscal note highlighted how the tax won’t generate $3 million per year under budget year 2030.
Additionally, the Governor also signed HF 2635 into law. While dealing with utilization review, the bill allows AI-based algorithms to conduct initial reviews of prior authorization requests, but it prohibits AI as the sole basis for denying, delaying, or downgrading a prior authorization request based on medical necessity. The measure also specifies, among other provisions, that the insurer’s denial of a prior authorization request must be made by a physician or other health care provider in the same or similar specialty as the requesting provider.
Minnesota
DHS Releases RFI on Defining “Medically Frail” Under Medicaid Work Requirements. Recently, the Department of Human Servicesreleased a Request for Information seeking stakeholder feedback on how the state should define “medically frail” individuals for purposes of Medicaid work and community engagement requirement exemptions. The proposed approach would leverage available claims data from the state’s Medicaid Management Information System, including specified ICD-10 diagnosis codes, to identify Medicaid expansion adults who may qualify as medically frail without requiring additional enrollee documentation where possible. The department is requesting input on clinical criteria, data sources, equity and access considerations, operational consistency, and outreach strategies ahead of the January 1, 2027, effective date. Responses are due from interested parties by June 1, 2026.
Mississippi
Joint Committee Holds Hearing on State’s Rural Health Transformation Program Implementation. This past week, the Joint Public Health and Welfare Committeeconvened to discuss the state's implementation of its Rural Health Transformation Program (RHTP). Lawmakers were presented findings by the State Health and Value Strategies program at Princeton University, which characterized Mississippi as an "outlier" in its lack of transparency regarding how RHTP funds are being spent, noting that it was one of only two states nationwide where the governor's office plays a role in directly administering the program and one of only three states that did not seek public input when establishing its program. Earlier this session, Governor Tate Reeves (R) vetoed SB 2477, which would have imposed competitive bidding requirements and quarterly legislative spending reports on RHTP subgrantees, citing the risk of losing federally approved funding. The Governor subsequently announced that the first three RHTP grant opportunities — focused on capital investments, telehealth expansion, and healthcare technology infrastructure — will open for applications on June 15 and close July 15, with awards expected in August.
Nevada
Hospitals and Clinics Urge Legislature to Strengthen 340B Drug Pricing Protections. Recently, officials from Nevada hospitals and community health centers called on state lawmakers to bolsterprotections for the federal 340B Drug Pricing Program. During a recent legislative interim committee hearing, 340B covered entities contended that drug manufacturers have increasingly restricted the number of contract pharmacies through which 340B-priced drugs can be dispensed, making it harder for patients to access reduced-cost medications and threatening a revenue stream that hospitals and Federally Qualified Health Centers (FQHCs) rely on to fund services for underserved populations. During the hearing, it was highlighted that Nevada’s FQHCs generate approximately 12% of their revenue from the program. Proponents of enhanced protections are urging the Legislature to amend the state’s Unfair Trade Practices law to guarantee covered entities the right to receive 340B-priced drugs at any contracted pharmacy from which patients receive services. As of 2025, twenty-two states have enacted similar laws preventing manufacturers from restricting 340B-priced drugs to contract pharmacies.
New Mexico
Governor Expands Health Professional Loan Repayment Program to Address Doctor Shortage. This past week, Governor Michelle Lujan Grisham (D)announced an expansion of New Mexico's Health Professional Loan Repayment Program, increasing the allowable debt relief for physicians from $25,000 over a three-year service period to $75,000 per year over a four-year service commitment — for a total of up to $300,000. The expansion, enacted throughHB 66 passed by the Legislature earlier this year, is intended to address a shortage of more than 5,000 health care professionals statewide, with nearly 40% of the state's physicians aged 60 or older and expected to retire by 2030. Thirty-two of the state's 33 counties have identified critical gaps in care. Throughout the legislative process, the Governor’s office highlighted that New Mexico's expanded program is now the most generous state-funded physician loan repayment offer in the nation. Since 2019, participation in the program has grown by 1,213 nurses, physicians, and mental health counselors receiving student debt relief statewide with 96 percent of those program participants remaining in New Mexico to practice.
Tennessee
CVS Files Lawsuit Challenging Tennessee Law Prohibiting Joint PBM and Pharmacy Ownership. This past week, and shortly after Governor Bill Lee (R) signedSB 2040 into law, CVS Healthfiled suit in the U.S. District Court for the Middle District of Tennessee, challenging the new statute. CVS is the only company in Tennessee that owns both a pharmacy and a PBM, making it the law's primary target. In its complaint, CVS argues the law violates the Commerce Clause of the Constitution, will interfere with several federal government-funded drug programs, and is designed to advantage in-state competitors at the expense of out-of-state businesses. CVS has iterated that if the law takes effect on July 1, 2028, it would be forced to close its 134 pharmacies in the state. Notably, a similar Arkansas law was blocked by a federal judge after CVS and other PBMs filed suit, with the court citing federal preemption concerns.
Vermont
Reference-Based Pricing Bill Enrolled. This past week, the Vermont Legislature enrolled SB 190. As enrolled, the measure establishes a maximum reimbursement amount for items and services for any Vermont health benefit plans at 250% of Medicare adjusted base rates. The bill requires health insurers and hospital contracts to express rates for services as a percentage of Medicare. Aligned, the bill will provide regulatory oversight authority of outsourced hospital clinical services to the Green Mountain Care Board, which ensures their revenue and rates also fall subject to this bill’s elements and other similar consumer protections. Among other items, the bill also authorizes the establishment of a public health system performance and price transparency tool. The measure was passed by a vote of 17 to 13 in the Senate. It now goes to the Governor for his consideration.
