Weekly StateVitals Update: Volume 78 (July 27, 2026)

National

• CMS Issues Proposed Rule on Medicaid Provider Tax Limits and Enhanced Reporting Requirements. This past Thursday, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to implement the healthcare-related tax provisions of HR 1. As required by the act, CMS proposes to replace the current state Medicaid tax collection limit of 6% of net patient revenue attributable to permitted classes of health care items and services. Effective October 1, 2026, the rule would establish new indirect hold harmless thresholds for healthcare-related taxes based on the net patient revenue attributable to taxes imposed as of July 4, 2025. For Medicaid expansion states, the limits would phase down from 5.5% in federal fiscal year 2028 to 3.5% in 2032, with exemptions for taxes on nursing and intermediate care facilities for individuals with intellectual disabilities. Additionally, the rule would eliminate the prospective use of the 75/75 test, expand permissible taxable classes to include health insurers other than managed care organizations, and create a zero threshold for when no qualifying tax was in place by July 4, 2025. CMS estimates the changes will reduce state provider-tax revenue by approximately $198.7 billion from 2026 to 2035. Public comments are due by September 21, 2026.

• HHS Defers Over $1 Billion in Medicaid Payments to California and Minnesota. Last Tuesday, the U.S. Department of Health and Human Services (HHS) announced that it is deferring approximately $867.5 million in federal Medicaid payments to California and $199 million to Minnesota amid ongoing Medicaid fraud, waste, and abuse investigations. HHS indicated that financial reviews of potentially fraudulent claims required additional review before the federal matching funds were released. In particular, the Centers for Medicare & Medicaid Services (CMS) reviewed claims for California’s in-home care programs and 14 high-risk service areas in Minnesota that require additional documentation. The deferral will continue until California and Minnesota provide documentation showing the claims meet federal Medicaid requirements.

Arkansas

• Attorney General Griffin Sues Drug Manufacturers Alleging 340B Contract Pharmacy Violations.  Last Tuesday, Attorney General Tim Griffin (R) filed a complaint against 22 defendants, including 13 drug manufacturers, their related entities, and a data management firm, for violating Act 1103 of 2021. The complaint alleges the companies imposed restrictions on contract pharmacies that prevented them from accessing discounted drugs under the 340B program. Arkansas was the first state to enact a law protecting contract pharmacies’ access to 340B discounts on drugs, which was contested by PhRMA in 2024 but ultimately upheld by the Eighth Circuit Court of Appeals. Since 2021, nearly half of the states have passed similar 340B contract pharmacy access laws, prompting a slew of challenges from several drug manufacturers. Arkansas’ current lawsuit seeks to fine defendants $10,000 per violation of the Arkansas Deceptive Trade Practices Act and will be contested in the Polk County Circuit Court.

Delaware

• Governor Signs Bills to Control Prices,  Expand Access, and Prohibit Private Equity Hospital Purchases. This past Monday, Governor Matt Meyers (D) signed a trio of healthcare bills to set hospital price caps, expand financial assistance for patients, and temporarily ban private equity hospital purchases. SB 1 establishes hospital price caps for inpatient and outpatient services. The price caps will be phased in beginning in 2029 and will reach 250% of the Medicare reimbursement rate by 2033. Additionally, the legislation requires commercial health insurers to spend 11.5% of medical costs on primary care and removes the expiration date on existing cost containment and primary care spending requirements. The second bill, SB 13, requires free hospital care for patients with incomes at or below 300% of the federal poverty level and discounted care for patients with incomes up to 500% of the federal poverty level. Lastly, SB 313 establishes a temporary moratorium on private equity firms from acquiring or controlling nonprofit acute care hospitals until July 1, 2028.

Georgia

• Department of Community Health Releases Claims Processing and Financial Management RFP.  Recently, the Georgia Department of Community Health (DCH) released a request for proposals (RFP) for a vendor to provide Medicaid Management Information System (MMIS) claims processing and financial management services. Notably, the opportunity is limited to suppliers who have been previously awarded contracts through the National Association of State Procurement Officials (NASPO) ValuePoint MMIS Claims procurement. DCH requests that the supplier utilize SaaS to adjudicate, edit, price, and determine reimbursement amounts for Medicaid healthcare claims, in addition to providing financial management and reporting, a call center, and federal reporting. Proposals are due by 3:30 PM ET on August 17, 2026, and contracts can run for up to 10 years with options for renewal.

Massachusetts

• Division of Insurance Approves Double-Digit Health  Insurance Premium Increases.  This past Wednesday, Governor Maura Healey (D) announced the Division of Insurance (DOI) posted finalized merged market rate increases for 2027, reflecting an average premium increase of 10.4%. The finalized rates follow negotiations with seven health insurers, including Insurance Commissioner Michael Calijouw’s decision to reject a proposed 25.7% rate increase by Fallon Community Health Plan after deeming it “excessive.” The insurer may choose to pursue an administrative appeal process with the state. Governor Healey’s office estimates the rate negotiations will save businesses and residents $72 million in health care premiums in 2027. These efforts were made possible by last year’s enactment of healthcare affordability legislation, S.3012, which authorizes the Insurance Commissioner to increase his consideration of affordability during his review of merged market rate filings.

Michigan

• Governor Whitmer Signs Several Healthcare Bills into Law. Last Wednesday, Governor Gretchen Whitmer (D) announced she signed 10 pieces of healthcare legislation to expand access to care and lower costs. Within the package, notable pieces of legislation include: 

  • SB 415, which  requires Medicaid coverage for group prenatal care services

  • SB 105, which requires health insurers to provide one payment method for dentists and dental therapists that does not incur extra fees

  • SB 501 / HB 4101, which allows Michigan to join the Physical Therapy Licensure Compact

  • HB 4103 / HB 4104, which allows Michigan to join the Occupational Therapy Licensure Compact

  • HB 4309, which allows Michigan to join the Physician Assistant Licensure Compact.

  Additionally, Governor Whitmer signed the state’s Fiscal Year 2027 healthcare budget bill (SB 878) earlier in the week, which includes approximately $402 million in funding for additional staffing, administration, and program support to help the state comply with Medicaid and SNAP community engagement and eligibility requirements.