Weekly StateVitals Update: Volume 74 (June 22, 2026)

National

• CMS Releases Section 1115 Budget Neutrality Guidance. Recently, the Centers for Medicare & Medicaid Services (CMS) released a letter to state Medicaid directors, preliminarily implementing provisions from the One Big Beautiful Bill Act (OBBBA) on budget neutrality requirements for Section 1115 waivers. Effective January 1, 2027, to approve a Section 1115 waiver application, amendment, or renewal, CMS’s chief actuary must certify that a Section 1115 waiver will not increase federal Medicaid expenditures relative to no waiver. Under this change, States will submit estimates of demonstrations’ projected financial impacts instead of analyses of “with waiver” and “without waiver” expenditures. Additionally, hypothetical expenditures will be replaced with Medicaid Authorizable Populations and Services (MAPS) or populations and services that the state would otherwise cover. Moreover, while states may still continue to use Section 1115 waivers to pay for services not otherwise covered in Medicaid, they must be offset by other savings to maintain budget neutrality. CMS is expected to provide additional details, guidance, and technical assistance before January 1, 2027; otherwise, the letter’s approach will be temporarily adopted until a final rule is in place.

• HHS Announces $700 Million in Funding Opportunities for Behavioral Health Services. Last Wednesday, U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. announced a $96 million funding opportunity for the Safety Through Recovery, Engagement, and Evidence-based Treatment and Support (STREETS) program, along with $612 million in funding opportunities for additional behavioral health programs. The STREETS program will grant eight communities $3 million for four years to develop multisector care systems for people experiencing homelessness who have substance use disorders, serious mental illness, or co-occurring disorders. Zooming out, this funding opportunity aligns with the Executive Order on Ending Crime and Disorder on America’s Streets, the Great American Recovery Initiative, and the Substance Abuse and Mental Health Services Administration’s (SAMHSA’s) strategic priorities. Out of the remaining $612 million:

  • $223.1 million will go toward Certified Community Behavioral Health Clinics (CCBHCs) to enhance care, establish new locations, and help states create certification systems to prepare them to participate in the CCBHC Medicaid Demonstration Program.

  • $238.6 million will go toward the 988 & Suicide Crisis Lifeline.

  • $80 million will go toward various substance use prevention, treatment, and recovery programs, including those that support rural emergency medical services, youth prevention efforts, and services for pregnant and postpartum women.

  • $70.2 million will go toward other mental health service and support programs, including those that support care for childhood trauma, mobile crisis care, and the mental health needs of infants and young children.

• Over 500 Hospitals Found Non-Compliant with Federal Price Transparency Rules. Recently, U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. and Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz announced that HHS believes over 500 hospitals have not complied with new price transparency requirements. The requirements went into effect on January 1, and enforcement began on April 1. Notably, this comes as states have enacted hospital price transparency legislation this past session, including bills in Connecticut, Indiana, and  Wyoming.

Colorado

• FDA Approves Colorado to Import Lower-Cost Drugs from Canada. This past Monday, Governor Jared Polis (D) announced that the U.S. Food and Drug Administration (FDA) authorized Colorado to import lower-cost prescription drugs from Canada. The state has been working on the Drug Importation Program since 2019, when the legislature passed the authorizing legislation, SB19-005. The Department of Health Care Policy and Financing’s (HCPF’s) approved application estimates the program could potentially save Coloradans $46 million over 3 years based on the drugs included in the application. The state indicated it is open to working with additional drug manufacturers and requested federal support in procuring a supply of eligible drugs from manufacturers.

Florida

• Governor DeSantis Announces Medicaid Fraud Initiative. Recently, Governor Ron DeSantis (R) announced a new Medicaid integrity initiative to strengthen program oversight and prevent fraud. In particular, the initiative consists of strengthening provider screening, enhancing fraud detection technology, implementing an enrollment moratorium on high-risk provider categories like durable medical equipment suppliers and adult day care providers, conducting a comprehensive statewide revalidation of Medicaid providers, and enhancing claims monitoring and enforcement. For provider screening and fraud detection, the Florida Agency for Health Care Administration is partnering with SentiLink to launch a pilot program.

Iowa

• State Auditor Finds Alleged $100 Million in PBM Medicaid Back-End Payments. Recently, State Auditor Rob Sand (D) released a report on pharmacy benefit manager (PBM) practices related to Iowa Medicaid. The report found that PBMs received about $100 million from 2019 to 2021 by using an “effective rate” pricing model, which allowed them to reconcile prescription drug costs at the end of the year to receive “clawback” payments previously made to pharmacies. Auditor Sand highlighted data limitations that made it difficult to estimate the total amount of harm to Iowa Medicaid, including the passage of Senate File 478, the unwillingness or inability of PBMs to provide financial records, and the difficulty of separating Medicaid and non-Medicaid claims. Notably, Auditor Sand claimed that the effective rate pricing model has led to spread pricing in other states, a practice that is prohibited in the state’s Medicaid program.

Nevada

• Nevada Health Authority Announces First Round of RHTP Grant Awards. Recently, the Nevada Health Authority (NHA) announced it awarded $36 million in Rural Health Transformation Program (RHTP) grants to 25 projects. The first of four rounds of funding was for the Rural Health Flex Fund, which supports infrastructure needs, including technology, equipment,  and emergency medical transportation in rural areas. The state has yet to announce funding awards for the largest initiative, the Workforce Recruitment and Rural Access Program, which represents 40% of the state’s first-year funding, or $72 million. NHA is expected to release the remaining funding award announcements throughout the summer. 

New York

• DOJ Sues State Medicaid Director, Health Commissioner, and PPL over Alleged Medicaid Fraud. This past Tuesday, the US Department of Justice filed a lawsuit against State Medicaid Director Amir Bassiri, Health Commissioner Dr. James McDonald, and Public Partnerships LLC (PPL), alleging fraud in the Medicaid consumer-directed personal assistance program (CDPAP). The DOJ claims New York preselected PPL to run CDPAP, which funneled millions of extra revenue to PPL. The New York Department of Health has contested the lawsuit and claimed that the bidding process to run the program is fair and competitive. CDPAP itself has a program budget of $10 billion and serves over 200,000 enrollees with disabilities.

North Carolina

• NC Supreme Court Rejects Petition to Bypass Court of Appeals Review of Eye Surgeon CON Case. Last Friday, the North Carolina Supreme Court’s petition list indicated it would not review ophthalmologist Dr. Jay Singleton’s certificate of need (CON) law challenge before the Appeals Court issues a ruling. Dr. Singleton has challenged the constitutionality of the state’s CON laws for years. In his complaint, Dr. Singleton contends he could perform a certain cataract surgery for 70% less than what the local hospital charges, but is prohibited from purchasing the equipment necessary because of CON rulings stating only the hospital may perform the  procedure in the defined geographic area. In October 2024, the North Carolina Supreme Court issued a unanimous ruling requiring a trial court to conduct a broad trial to determine whether the state’s CON laws are unconstitutional. In December 2025, the Trial Court upheld the constitutionality of the CON law, prompting Dr. Singleton to file a notice of appeal in January and additional paperwork to move the case back to the Supreme Court in March.

Tennessee

• PCMA Files Lawsuit Against Tennessee Law Prohibiting Joint Pharmacy, PBM, or Insurer Ownership. Last Tuesday, the Pharmaceutical Care Management Association (PCMA) filed a complaint against the recently enacted law (SB 2040) prohibiting an entity from simultaneously owning or controlling a pharmacy and a health insurer or pharmacy benefit manager (PBM). PCMA’s suit alleges the law is unconstitutional and mirrors recent complaints filed by Express Scripts and CVS. The complaints argue the law violates the Dormant Commerce Clause of the Constitution, is preempted by several government statutes, including ERISA and TRICARE, and is designed to advantage in-state competitors at the expense of out-of-state businesses. The plaintiffs seek a preliminary injunction before the law goes into effect on July 1, 2028, which CVS claims would force it to close 134 of its pharmacies in the state.

Vermont

• Governor Scott Vetoes Legislation to Implement Reference-Based Pricing. This past Tuesday, Governor Phil Scott (R) vetoed S. 190, legislation that would have authorized the state to implement reference-based pricing for health plans for public school employees and individuals purchasing plans on Vermont’s Affordable Care Act marketplace. Notably, the state already passed a measure in 2025 to authorize the healthcare regulator, the Green Mountain Care Board (GMCB), to implement reference-based pricing for all state hospitals. However, this process would not have been finalized by the start of the next hospital fiscal year in October, something legislators sought to work around by accelerating the process for the public school employees and marketplace plan purchasers. In a letter explaining his decision, Governor Scott indicated he would instead use executive action to implement provisions of his rejected proposal, H. 585. Moreover, he specified that targeting savings for specific insurance groups goes against the GMCB’s statutory purpose to share cost savings equally among insurers and the insured.

Wisconsin

• DHS Releases Grant Applications for $40 Million in RHTP Funding. Last Monday, the Wisconsin Department of Human Services (DHS) released applications for $40 million across three Rural Health Transformation Program (RHTP) grants for projects supporting care coordination, community health workers, and dental clinics. The application amounts and due dates are as follows:

  • Care coordination grant awards total $10 million, covering a 6-month planning period for which applications are due by August 21. Grant recipients will have the option to apply for the remaining 4-year program starting in February 2027, with an estimated $25 million available in first-year funding.

  • Community health care worker grant awards total $20 million for the first year of funding, with optional letters of intent due by July 1, and full applications by August 7.

  • Rural dental efficiency and access grant awards total $10 million, and applications are due July 27.

  More information on the funding opportunities can be found on DHS’s website, and technical assistance requests can be submitted via email. DHS is expected to release additional information and funding to support technological innovations for improving rural access to care, provider productivity, and patient or community health outcomes later this summer.

Wyoming

• Judge Rules Three-State Abortion Laws as Unconstitutional. Recently, Judge Thomas T.C. Campbell of the Natrona County District Court ruled that three of the state's abortion laws passed in 2025 were unconstitutional. HB 64 required people to get an ultrasound before having a chemical abortion, HB 164 prohibited prescribing or dispensing abortion medication for off-label uses, and HB 42 required surgical abortion facilities to be licensed as ambulatory surgical centers and for surgical abortions to be performed by a physician with admitting privileges at a hospital within 10 miles of the facility. In his order, Judge Campbell referenced the Wyoming Supreme Court’s January decision overturning two near-total abortion bans. The Supreme Court decision found the state’s constitution allows for people to make their own healthcare decisions, which Judge Campbell found includes the decision to obtain an abortion. Since the ruling, the Speaker of the Wyoming State House, Chip Neiman (R-Hulett), has confirmed that the state intends to appeal Judge Campbell’s decision to the Wyoming Supreme Court.