Weekly StateVitals Update: Volume 87 (September 28, 2026)
National
37 States Join CMS Medicaid Quality Initiative. Last Friday, the Centers for Medicare & Medicaid Services (CMS) announced that 37 states are joining the Investing in Health Outcomes Initiative, which focuses on standardizing quality measurements in Medicaid and the Children’s Health Insurance Program (CHIP). The new initiative follows a CMS analysis of managed care programs in May 2026, which found substantial variance in reporting requirements across states that corresponded to 260 unique quality measures largely focused on processes and utilization. CMS noted this made it difficult to compare performance across states. In the new initiative, states can commit to a voluntary Medicaid Quality Pledge with four principles: prioritizing health outcomes over process, streamlining quality measure inventories, using near-real-time data for quality measurement over claims and chart abstraction, and aligning financial accountability with outcomes-oriented measures. Critically, these principles will serve as the basis for future state Medicaid quality implementation efforts. Participating states are committing to use the principles to develop targets for health outcomes and outcomes-oriented measures for state quality strategies and upcoming procurements.
Medical Organizations and Medicaid Enrollees Challenge Community Engagement Requirements. Recently, a group of prominent medical organizations and Medicaid enrollees from five states sued the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) over medical frailty exclusions for Medicaid community engagement requirements. The plaintiffs argue CMS’ Interim Final Rule (IFR) severely restricts who qualifies for the exclusion. Additionally, they state that verification processes will lead to administrative delays and threaten coverage for people with serious or chronic health conditions, including cancer, diabetes, HIV, substance use disorders, and other behavioral health conditions. The IFR limits the medical frailty exclusion to individuals in one of five statutory categories and requires that a person’s condition "significantly impair" their ability to comply with community engagement requirements, limiting cases where diagnosis alone is sufficient grounds for an exemption. Plaintiffs filed the lawsuit in the U.S. District Court for the District of Maryland and include Medicaid enrollees from Kentucky, Illinois, Indiana, Missouri and North Carolina.
State Attorneys General Contest Federal Vaccine Policy Changes. Last Tuesday, a coalition of 22 attorneys general and Pennsylvania Governor Josh Shapiro (D) submitted a letter to the U.S. Department of Health and Human Services (HHS) request for information (RFI) on federal vaccine recommendations. The letter argues that HHS’ efforts to weaken the childhood vaccine schedule and replace federal vaccine experts have undermined public trust, decreased states’ reliance on federal vaccine recommendations, and could lower vaccine rates. The coalition urges HHS to examine its role in contributing to public distrust, preserve the Advisory Committee on Immunization Practices’ (ACIP) role in vaccine recommendations, and retain the three-tier recommendation structure for vaccines. HHS issued the RFI after President Trump’s August Executive Order 14420 called for splitting the MMR vaccine into single-disease shots and reducing the number of diseases covered by routine childhood vaccine recommendations from 17 to 11 while downgrading several others to “Shared Clinical Decision Making” status. Over the past year, HHS has repeatedly pushed for the new recommendations. So far, federal courts have blocked HHS’ efforts, and states have taken legislative action to choose which vaccine authority to follow. Attorneys General Kris Mayes (D) of Arizona and Rob Bonta (D) of California are co-leading the coalition and are joined by Colorado, Connecticut, Delaware, Hawaiʻi, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and Pennsylvania.
Arkansas
Governor Sanders Announces $54.6 million for Preventative Health and Rural Healthcare Workforce. This past Thursday, Governor Sarah Huckabee Sanders (R) announced the state had awarded $54.6 million in Rural Health Transformation Program (RHTP) grants in the second and final round of first-year awards. $27.4 million will go toward Arkansas’ Healthy Eating, Active Recreation & Transformation (HEART) initiative, and $27.2 million will be provided through the Recruitment, Innovation Skills, and Education for Arkansas (RISE AR) initiative. The HEART initiative aims to improve health outcomes and preventative care access through projects that support community-based nutrition, physical activity, and chronic disease management. RISE AR focuses on supporting the rural healthcare workforce, funding projects to expand physician residencies and other clinical training programs, recruiting health care professionals, and providing specialized training for rural hospitals and clinics.
California
Governor Newsom Vetoes Bill to Extend Prior Authorization Validity. Recently, Governor Gavin Newsom (D) vetoed AB 539, which would have required prior authorizations for services requested by in-network providers to remain valid for at least one year, or a shorter period specified by a provider. In his veto message, Governor Newsom noted that while he appreciated the attempt to reduce administrative burdens, AB 539 would apply prior authorizations too broadly and limit health plans’ ability to reassess a service’s medical necessity as a member’s condition changes. Governor Newsom reasoned this broad application could lead to overutilization, inappropriate continuation of services, and unnecessary costs, and that it conflicted with existing clinical guidelines and utilization management controls. In the meantime, several other prior authorization and utilization management bills currently await Governor Newsom’s signature, including AB 1887, SB 1094, AB 1843, and SB 964.
Colorado
Rising Medicaid Costs Expected to Increase Budget Deficit to $1.6 Billion by FY 2027-2028. Recently, economists presented quarterly revenue forecasts to the Joint Budget Committee, which projected the state to face a $376 million deficit this fiscal year and a $1.58 billion deficit for FY 2027-2028. The growing deficit comes as rising Medicaid costs continue to outpace the state’s revenue, limited under its Taxpayer Bill of Rights (TABOR), by almost double. Last fiscal year, the state overspent by $213 million, $200 million of which came from Medicaid. The Department of Health Care Policy and Financing expects costs to continue rising, adding $443 million in expenses to the current fiscal year, and $918 million to the next. The increases are largely driven by payments for the Community First Choice program, which expanded access to homemaker and personal care services under Medicaid. Additionally, the state is expected to lose $105 million in FY 2027-2028 due to the federal cap on state-directed payments to hospitals. Similar to last year, the proposed budget is expected to include several spending cuts to offset rising costs. Governor Jared Polis (D) is scheduled to submit his final budget proposal by November 1, 2026.
Delaware
Governor Meyer Awards $22.7 million in RHTP Grants to FQHCs. Last Thursday, Governor Matt Meyer (D) and the Delaware Department of Health and Social Services announced they awarded $22.7 million in Rural Health Transformation Program (RHTP) grants to the state’s three Federally Qualified Health Centers (FQHCs). The funding will support value-based care infrastructure, care coordination, remote patient monitoring, chronic disease management, electronic medical record systems, cybersecurity, and increased care access. These awards come as part of Delaware’s $157.4 million in first-year RHTP funding across 15 projects.
Florida
Attorney General Uthmeier Files Lawsuit Against Insulin Manufacturers and PBMs. This past Tuesday, Attorney General James Uthmeier (R) filed a lawsuit against the three leading insulin manufacturers, pharmacy benefit managers (PBMs), and rebate aggregators. Attorney General Uthmeier alleges the companies inflated published list prices for insulin and related diabetes drugs while paying rebates and fees to the PBMs in exchange for preferred formulary placement, so that both sides profited when the sticker price rose. In addition to insulin, the lawsuit covers GLP-1 and combination products including Ozempic, Trulicity, Victoza, and Soliqua. Uthmeier’s office filed the complaint in Florida’s Eleventh Judicial Circuit and brings two counts under the Florida Deceptive and Unfair Trade Practices Act and one count under the Florida Antitrust Act. Notably, this marks the second suit Uthmeier has filed against PBMs in the last 30 days, following a separate complaint alleging illegal horizontal price-fixing among PBMs.
Louisiana
Joint Legislative Committee on Budget Reviews 2027 Medicaid MCO Contract Extensions. Recently, the Joint Legislative Committee on Budget reviewed the Department of Health’s proposed contract extensions with four of its Medicaid managed care organizations (MCOs). Together, the contracts for Aetna Better Health, AmeriHealth Caritas, Humana Health Horizons, and Louisiana Healthcare Connections are valued at $16.1 billion for 2027. While the overall total is 3.77% lower than the $16.7 billion in value for 2026, each individual agreement has increased significantly, now ranging from $3.2 to $5.8 billion. These changes are driven by UnitedHealthcare leaving the state’s Medicaid market in April and Healthy Blue’s expected departure in January, which together will transition 570,000 members. Notably, this marks the final optional year of the state’s five-year contracts with the MCOs, prompting new contracts to be issued for 2028.
Missouri
Department of Social Services Awards $45 Million for Rural Hospitals, Behavioral Health, and EMS. Last Tuesday, the Missouri Department of Social Services (DSS) announced $45 million in Rural Health Transformation Program (RHTP) awards to support rural hospitals, behavioral and maternal health, and emergency medical services (EMS). The largest award of about $35 million will support minor facility improvements, equipment upgrades, and other essential infrastructure enhancements for 20 rural hospitals. DSS gave the Missouri Child Psychiatry Access Project and the Missouri Maternal Health Access Project $6.4 million to support child and maternal mental health. These programs will use the funding to quickly connect providers with behavioral health and perinatal specialists, offer patients resources and referral services, expand access to cardiometabolic care, and increase provider availability and other provider training initiatives. The final award of $4.2 million funds a year of EMT and paramedic training for 437 individuals, marking a historically large single-year increase in rural EMS training for the state. These initiatives are part of the state's $216 million in first-year funding, with additional awards expected in the coming months.
Nevada
Health Authority Releases 2025-27 Amended Managed Care Quality Strategy for Public Comment. Recently, the Nevada Health Authority released a draft of its amended 2025-27 Medicaid Managed Care Quality Strategy for public comment. The amended quality strategy aims to improve the health and wellness of Medicaid members in 2027 through several initiatives. These include increasing use of evidence-based practices for patients with chronic conditions and behavioral health conditions, reducing misuse of opioids and other medications, improving pregnant women’s and infants’ health and wellness, increasing dental service utilization, improving outcomes for individuals receiving long-term services and supports, and reducing or eliminating health disparities. Notably, Nevada is also participating in CMS’ Medicaid quality measurement initiative, which includes a quality pledge for states to use for health outcome targets and future quality strategies and procurements. Nevada’s amended managed care quality strategy is open for public comment through October 18.