Weekly StateVitals Update: Volume 80 (August 10, 2026)
National
CMS Releases ABA Therapy Oversight Toolkit. Last Tuesday, the Centers for Medicare & Medicaid Services (CMS) launched an Applied Behavior Analysis (ABA) Toolkit to help state Medicaid and Children’s Health Insurance Program (CHIP) agencies address growing concerns about fraud, waste, and abuse (FWA) in autism services. According to CMS, between 2021 and 2025, ABA spending for Medicaid and CHIP increased by 421%, while the number of children with an autism spectrum disorder diagnosis (ASD) increased by 67%. CMS specified that the toolkit does not restrict autism services, establish new requirements, reduce obligations, or endorse a single treatment approach; instead, it serves as a guideline for suggested practices and information. CMS encourages states to use the toolkit to address clinical standards, Medicaid benefit design, payment methodologies, provider enrollment, credentialing, utilization management, and program integrity strategies designed to identify FWA. Notably, the toolkit includes a checklist to assess whether states’ ABA policies support responsible stewardship of Medicaid funds, a key factor that could impact future federal approval of and funding for state Medicaid programs.
CMS Issues Update on Medicaid Fraud War Room. Recently, the Centers for Medicare & Medicaid Services (CMS) announced the Medicaid Fraud War Room (MFWR), the federal fraud enforcement unit, had stopped $203.3 million in potentially improper Medicaid payments within the first 88 days. The program was launched in April 2026 as a collaborative enforcement effort between CMS, the White House Task Force to Eliminate Fraud, the HHS Office of Inspector General (HHS-OIG), and state Medicaid agencies. The MFWR identified 50 unique providers linked to the payments, resulting in 42 federal notices of intent to exclude and 15 state enforcement actions taken on MFWR referrals. Critically, the war room uses machine learning tools to analyze billing patterns and flag suspicious claims, marking continued federal acceptance and use of artificial intelligence (AI) to prevent Medicaid fraud, waste, and abuse (FWA). Task Force officials noted that these tools allow the team to review dozens of new Medicaid fraud cases every week and can be scaled to other federal programs
HRSA Releases Revised 340B Rebate Model Pilot Program. Recently, the Health Resources & Services Administration (HRSA) released a revised 340B Rebate Model program, which creates a voluntary pathway for qualifying drug manufacturers to provide 340B ceiling prices through rebates instead of up-front discounts for a limited set of covered outpatient drugs. Under the revised Pilot, participating manufacturers will provide rebates after validating eligible claims at the transaction level. HRSA intends for this approach to improve transparency on 340B transactions, strengthen verification of transaction eligibility before claims are issued, prevent duplicate discounts, improve data collection, and preserve program sustainability. Notably, HRSA’s revised pilot followed a Maine U.S. District Court's preliminary injunction on an earlier version of the 340B rebate pilot program. Eligible manufacturers who want to participate must submit rebate plans to HRSA by August 24, 2026; rebate plans for selected drugs will become effective January 1, 2027.
Arizona
AHCCCS Issues Long-Term Care RFP. This past Tuesday, the Arizona Health Care Cost Containment System issued a request for proposals (RFP) to reprocure its Arizona Long-Term Care System - Elderly and Physically Disabled (ALTCS-EPD) program. The agency terminated the prior procurement in September of 2025; it now seeks health plans to provide integrated physical health, behavioral health, long-term services and supports, and case management statewide. In particular, contractors must provide case management directly and prioritize home and community-based care in the least restrictive setting. Additionally, members enrolled in a fully integrated dual-eligible special needs plan must enroll with the respective Arizona Long Term Care System contractor. Proposals are due by September 24, 2026; awards are issued January 5, 2027; and three-year contracts begin October 1, 2027, with four optional one-year extensions.
Arkansas
Department of Human Services Asks to Continue ARHOME Through 2028. Last Wednesday, Arkansas Department of Human Services (DHS) Secretary Janet Mann sent a letter to the Centers for Medicare & Medicaid Services (CMS) requesting to extend the Section 1115 demonstration waiver for Arkansas Health and Opportunity for Me, or ARHOME, through the end of 2028. This request follows CMS’s verbal rejection of DHS’s request for a five-year renewal through 2031, leaving the program set to expire on December 31. ARHOME uses Medicaid dollars to purchase private insurance coverage for eligible adults within the state’s expansion population and covers over 200,000 individuals. Governor Sarah Huckabee Sanders’ (R) office noted that she intended to work with legislators on a new model next session, which is scheduled to meet on January 11, 2027. Regarding the two-year extension request, DHS spokesperson Gavin Lesnick noted that CMS signaled it would support efforts for a smooth transition of Medicaid expansion members and that DHS “looks forward to productive discussions on the extension in the near future.” As it stands, CMS officials have not confirmed whether the extension request will be granted.
Idaho
Legislators form the Idaho Health Insurers Working Group. Recently, Idaho legislators formed a new task force called the Idaho Health Insurers Working Group, following concerns about health insurance, claim denials, and a recent contract expiration with an East Idaho hospital. The task force is charged with studying health insurers’ performance in the state, including claim denial rates, expected provider reimbursements, prior authorization-related treatment delays, and outstanding unpaid claims, as well as making recommendations for policy solutions to “poor health insurer performance”. Representative Dustin Manwaring and Senator Mark Harris co-chair the task force of eight; the first meeting is scheduled for August 11 at 11 am MDT.
Illinois
Governor Pritzker Enacts 340B Legislation. Last Friday, Governor JB Pritzker (D) signed two pieces of 340B legislation into law, which cover contract pharmacy protections and hospital transparency requirements. HB 2371 and HB 4327. Both bills received strong support from the legislature, passing unanimously in the Senate while the House voted 113-1 to pass HB 2371 and 106-8 to pass HB 4327. HB 2371 prohibits pharmaceutical manufacturers from interfering with covered entities’ or contract pharmacies’ acquisition of a 340B drug or requiring covered entities and pharmacies to perform specified actions. However, HB 2371 also includes transparency provisions, establishing reporting requirements for covered entities and requiring the Department of Healthcare and Family Services (HFS) to submit reports to the legislature on dispensed and administered 340B drugs. Additionally, HB 2371 authorizes enforcement through the Attorney General. HB 4327 is a study bill, requiring the Department of Insurance to submit a study to the legislature on how covered entities and manufacturers participate in the program, and requires all entities and manufacturers to comply with information requests. Both laws took effect on Friday, August 7.
Indiana
FSSA Expands Medicaid Coverage of GLP-1 Treatments Under BALANCE Model. Recently, Governor Mike Braun (R) announced the Indiana Family and Social Services Administration (FSSA) will participate in the federal BALANCE model to expand Medicaid coverage of GLP-1s for beneficiaries with obesity. The expansion’s eligibility requirements and implementation timeline are expected to be announced later, once the agreement is finalized. Under the model, drug manufacturers will also provide beneficiaries with a lifestyle support program.
Massachusetts
Governor Healey Announces Health Care Affordability Recommendations. Last Monday, Governor Maura Healey (D) announced the Health Care Affordability Working Group’s recommendations for health care affordability in the state. The group, which consists of various healthcare leaders across the state, issued 12 recommendations:
Adopting innovative health care models
Accelerating hospital discharges as soon as medically appropriate
Identifying a list of “low-value” care services that are expensive and do not improve patient care
Funding nurse workforce recruitment and retention programs
Increasing educational investments for health care worker trainings
Partnering with the legislature to enact primary care legislation that reduces costs
Directing state agencies to leverage their purchasing power for prescription drugs
Setting prices for hospital services provided through the state employee health plan, known as the Group Insurance Commission (GIC)
Establishing out-of-network payment rates to reduce surprise billing and patient out-of-pocket costs
Directing the Department of Insurance to evaluate new strategies to address rising premiums
Improve the health information data exchange system
Create an AI advisory group to establish rules and transparency around its use for coding, claims review, and coverage decisions.
In response to the recommendations, Governor Healey also signed Executive Order No. 657 on Monday, which directs Mass Health to increase its investments in primary care to 12 percent of total medical spending by the end of 2028. The working group is expected to finalize any additional actions by the end of the year.
Maine
DHHS Releases $30 Million in RHTP Funding for Rural Hospital Resiliency. Recently, the Maine Department of Health and Human Services (DHHS) and the Office of Affordable Health Care released $30 million in Rural Health Transformation Program (RHTP) funding for rural hospitals. Through the Rural Hospital Efficiency Fund, the state aims to support the long-term financial health and sustainability of 11 hospitals. The funding will be distributed in two phases: an initial $3 million to assist with developing individual sustainability plans, and a later $27 million to support the identified efficiency projects. Funding will run from September 2027 to August 2027; participating hospitals will submit sustainability plans by January 2027, and approved projects will be implemented by August 2027.
Federal Judge Dismisses Challenge to 340B Law. Recently, Maine’s U.S. Magistrate Judge John Nivison dismissed AstraZeneca’s challenge to Maine’s 340B law (LD 1018), enacted in June 2025. The law prohibits drug manufacturers, insurers, and pharmacy benefit managers from discriminating against pharmacies and providers and requires participating hospitals to submit annual participation reports covering drug procurement and payment data. AstraZeneca’s suit argued the law was preempted by the Constitution’s Contracts Clause and Takings Clauses. However, Judge Nivison held that the allegations, if proven, could still not establish that Maine’s law posed more than a modest impediment to the 340B program’s goals and drug manufacturers’ participation. Nivison also reasoned that Maine’s statute affected all drugs, patented or not, and that AstraZeneca was a voluntary participant in the 340B program. This motion follows a long line of challenges against state 340B laws, including a recent U.S. District Court Judge’s denial to pause a permanent injunction for North Dakota’s 340B law, HB 1473, while the state appeals.
New Mexico
Governor Lujan Grisham Announces $50 million in Rural Health Care Rewards. Last Tuesday, Governor Michelle Lujan Grisham (D) announced that 41 rural health care providers and facilities would receive $50 million in funding from the state’s Rural Health Care Delivery Fund. The current cycle supports primary care, behavioral health, maternal-child services, and specialty care. While this funding was separate from the state’s Rural Health Transformation Program (RHTP), there are still open opportunities to provide administrative and operational support for the Rooted in New Mexico and Rural Health Data Hub initiatives.
Texas
AG Ken Paxton Investigates AAP over Alleged Vaccine Promotion for Financial Gain. This past Wednesday, Attorney General Ken Paxton (R) announced he was investigating the American Academy of Pediatrics (AAP), alleging the organization may be promoting childhood vaccines for financial gain. The investigation follows AAP’s July 2025 lawsuit against the changes to the Centers for Disease Control and Prevention’s (CDC’s) Vaccine Schedule and the Advisory Committee on Immunization Practices (ACIP), which reduced the number of recommended vaccines for children. In August of 2025, AAP published its own evidence-based immunization schedule for infants, children, and adolescents, and advocated for insurance coverage of the recommended vaccines. AG Paxton’s investigation seeks to determine the basis for AAP’s vaccine recommendations and its impact on the broader landscape of childhood vaccine recommendations. Notably, this is the second investigation AG Paxton has opened against childhood vaccine recommendations; he issued over 20 Civil Investigative Demands to different stakeholders this past January.
Virginia
CMS Approves SUD and Foster Youth Medicaid Eligibility Section 1115 Demonstration Renewal. Recently, the Centers for Medicare & Medicaid Services (CMS) approved a five-year extension of Virginia’s “Building and Transforming Coverage, Services, and Supports for a Healthier Virginia (BTCSSHV)” section 1115 demonstration. Through the renewal, the state may continue to provide substance use disorder (SUD) treatment in institutions for mental diseases (IMD). Additionally, the renewal extends Medicaid eligibility for former care youth under age 26 who aged out of foster care in another state or tribe, and sunsets the High Needs Support component of the demonstration. The demonstration is now effective from August 1, 2026, through December 31, 2031.