Weekly StateVitals Update: Volume 12 (March 24, 2025)
Alabama
Senate advances PBM reform. This past week, the Alabama Senate voted unanimously to approve SB 252. The measure would prohibit pharmacy benefit managers (PBMs) from reimbursing independent pharmacies at a rate less than pharmacies’ cost to acquire the medication or the amount paid by the Alabama Medicaid program. The Medicaid amount currently includes a $10.64 dispensing fee. PBMs continue to raise concerns that any increase in reimbursements would inevitably result in consumers and businesses paying higher health insurance premiums. As it currently stands, the measure would go into effect on October 1, 2025 and has a sunset date of October 1, 2027 unless it is extended by the Legislature. The bill now heads to the House for consideration.
California
Administration requests Medicaid supplemental funds. Following a $3.44 billion loan granted last week by the General Assembly to help sustain unexpected Medicaid costs, Governor Gavin Newsom’s (D) administration is requesting an additional $2.8 billion from the General Assembly to cover expected costs through the remainder of the fiscal year. Over the past week, much of the discussion in the General Assembly in California has focused on the reasons for the unexpected shortfall, including: the rising costs of pharmaceutical drugs, a larger aging population that was retained in Medicaid following the COVID-19 PHE, and continued coverage of undocumented immigrants. Relative to the last variable, it’s estimated that coverage has cost the state $2.7 billion more than previously expected. Pharmaceutical prices account for approximately $540 million of the overrun costs and the aging population and other variables cover a remaining nearly $1 billion in added costs. As a result of this year’s shortfall, the Governor proposed an increase in excess of 11 percent to the state’s Medicaid and public health insurance programs.
Connecticut
State faces a Medicaid budget shortfall. Joining a litany of other other states, the Department of Social Services testified before the Medical Assistance Program Oversight Council and announced the state was facing a $290 million Medicaid shortfall in the current fiscal year. Costs are largely driven by Medicaid enrollment that is still higher than pre-pandemic numbers and increased utilization as a result of lower utilization during the pandemic. Despite this shortfall, the state has managed to retain Medicaid spending as a lower share of its entire state budget than its peer states (23.6% of total compared to 27.6% on average in other states). During the committee hearing, there was no reference towards any next steps as to how the Legislature may approach any fix to the budget shortfall.
Florida
Medical malpractice measure receives hearing. This past week, SB 734 received a hearing and was favorably voted out by an 8 to 2 margin by the Senate Appropriations Committee on Health and Human Services. The measure would expand the application of the Florida Wrongful Death Act and allow that if a wrongful death due to medical negligence occurs, then the parents and children of the deceased may recover noneconomic damages. During the committee hearing, providers argued that this measure would increase their already substantial cost for medical malpractice insurance, of which are claimed to be the highest in the country already. Additionally, providers fear that if this bill passes, it would further exacerbate a provider shortage in rural areas due to the higher litigious risk within the state. The measure previously passed the Judiciary Committee in the Senate on a 9 to 2 vote.
Indiana
Medicaid reform bill amended in House committee. This past week, SB 2 was amended by the House Committee on Public Health and passed out of committee by a party-line 8 to 4 vote. Notably, a provision that would have capped enrollment in the Medicaid expansion program to either the lesser of the number of individuals that ensures financial participation does not exceed the level of state appropriations or 500,000 enrollees was cut out from the now amended bill. The measure still retains numerous reforms to the Medicaid program, inclusive of:
Requires the Medicaid Oversight Committee to be provided an annual report on improper Medicaid payments and expenditures, recovered funds and other data elements pertaining to fraud.
Prohibits state agencies and contractors and other affiliated entities from marketing the Medicaid program.
Prohibits Medicaid applicants from providing only self-attestation of meeting eligibility criteria.
Requires the state to provide hospitals with performance standards that they may use in making presumptive eligibility determinations.
Establishes work requirements for the Medicaid expansion population of twenty hours per week, with certain alternative pathways provided relative to exemptions, volunteering or medical treatment programs.
Establishes a poison pill for the Medicaid expansion program that if federal financial participation ever falls below 90 percent, the program may be terminated.
The Committee also considered two amendments that would, first, increase the exemption list from those required to adhere to work requirements and, second, allow for some advertisement of the Medicaid program. Neither made their way into the amended bill. The bill now heads to the House Ways and Means committee for consideration.
Senate Committee passes House health care cost reform measure. Following passage by the House, the Senate Committee on Health and Provider Services opted to move HB 1004 forward by a 10 to 1 margin. The sponsor, Rep. Martin Carbaugh (R-Ft. Wayne), has iterated that the measure isn’t in its final form. However, as passed by the Senate Committee, the measure would do the following:
Establishes a Hospital Facility Fee Excise Tax imposed when a hospital charges a facility fee that exceeds 265% of the hospital's Medicare facility fee.
Authorizes a Medicaid assessment structure by establishing a state directed payment program for hospitals and a managed care assessment fee.
Requires hospitals to charge amounts for services or items at or below 300% of the nonprofit hospital’s modified Medicare reimbursement rate, otherwise it would forfeit its status as a nonprofit hospital.
While the measure will require additional transparency requirements for non-profit hospitals, it’s likely some of the language will be amended before it hits the Senate floor for a vote. The measure now heads to the Senate Committee on Appropriations.
Idaho
Governor signs Medicaid reform into law. Governor Brad Little (R) has signed HB 345 into law. The bill was a negotiated Medicaid reform package would:
Require cost-sharing from enrollees as a condition of participation at levels developed by other states and up to the maximum charged by other states.
Transition of the Medicaid program to managed care.
Establish work requirements for able-bodied adults enrolled in Medicaid expansion, requiring 20 hours or more of work per week, averaged monthly, inclusive of numerous exempted populations.
Establishes site-neutrality requirements, ensuring that reimbursement rates for hospital outpatient departments and hospital-acquired physician practices are reimbursed at the same rate as physician-owned medical practices for equivalent outpatient services.
The bill takes effect immediately. The bill’s fiscal note estimates that with these provisions in place, it’s estimated to save the state $15.9 million FY2026, with that figure to continue to increase with the transition to Medicaid managed care.
Iowa
Appropriation subcommittees advance the Governor's healthcare measure. Subcommittees of both the House and Senate Appropriations committees advanced HF 754 and SF 575 out to the full committees for consideration. The measures are companion bills that would tackle a number of priorities for Governor Kim Reynolds (R), including:
Consolidating Iowa’s five existing student loan repayment programs for healthcare providers and increasing the funding from $4.2 million to $10 million.
Establish 115 new residency slots at Iowa teaching hospitals, with the intent to draw down $150 million in federal funding to do so.
Establishing authority for Medicaid rate setting flexibilities with the intent to allow rural health care systems to develop regional partnerships, which would require federal approval from the Centers for Medicare & Medicaid Services.
Unbundling Medicaid maternal payment rates to providers, with an infusion of $642,000 to help increase those unbundled rates for services for mothers and infants.
The measures now head to the full Appropriations committees in the respective chambers for consideration and inclusion within the upcoming budget bill.
Senate subcommittee considers Medicaid work requirements bill. Less than two weeks after introduction, SF 599 was provided a hearing in a Senate Committee on Appropriations Subcommittee. The measure would require the state to implement work requirements for the state’s Medicaid expansion program, in addition to other public assistance programs such as food aid through the Supplemental Nutrition Assistance Program. For Medicaid work requirements, the requirements would apply to the Medicaid expansion population between 19 and 65, with only limited exceptions – individuals with disabilities, parents of children under six, people with high-risk pregnancy, and those in substance abuse treatment programs. As part of the measure, it would require elimination of the Medicaid expansion program if work requirements are not a condition of eligibility. The measure heads to the full Senate Appropriations Committee for potential inclusion in the state budget framework.
Kentucky
Medicaid reform measure is enrolled. Before the General Assembly adjourned, the Senate was able to pass HB 695 and send it to the Governor’s desk for consideration. The measure was introduced and pushed through the General Assembly on the intent to drive efficiency and lower costs of the state’s Medicaid program by providing the General Assembly with enhanced oversight of the program. Among numerous other requirements established on the Department of Medicaid Services for reporting to the General Assembly, the measure would:
Requires the state Medicaid agency to seek approval from the General Assembly prior to making any change in eligibility, coverage or benefits under the Medicaid program, inclusive of submitting any federal waiver application or pursuing a state plan amendment. Exempt from this requirement are any Medicaid directed or supplemental payment programs approved prior to the effective date of this measure and the Medicaid preferred drug list.
Requires the Medicaid agency to submit a waiver application to the Centers for Medicare & Medicaid Services to establish a community engagement waiver program.
Establishes a requirement that any Medicaid managed care contract must require the MCO to collect Medicaid expenditure data by categories of services paid and submit to legislative and administrative bodies for review.
Authorizes the Medicaid program to be administered under more than one delivery system model.
Establishes a Medicaid Oversight and Advisory Board, with the intent to provide legislative oversight and recommendations to the General Assembly regarding the Medicaid program.
Governor Andy Beshear (D) is expected to give significant consideration to vetoing the measure. The Governor has between now and the end of the month to make a decision to do so, although Republican supermajorities in both chambers have the opportunity to override any veto when they reconvene for two days in late March.
New Mexico
House passes measure authorizing state to review healthcare M&A deals. This past week, the House of Representatives passed HB 586 by a margin of 41 to 26. The bill would provide the state’s Health Care Authority with oversight responsibility to review proposed mergers and acquisitions of hospitals and acquisitions of provider organizations by hospitals, insurers and independent health care practices. Specifically, the bill would require the Health Care Authority to determine whether the transactional activity will either negatively impact quality of patient care or providers’ working conditions. The Health Care Authority has authorization to determine whether or not the activity may proceed or if specific conditions are required of the transacting parties. Notably, New Mexico has a higher proportion of private equity-backed ownership of hospitals and physician practices compared to other states, which has proven to be a larger driver of this action. The measure now heads to the Senate for consideration.
New Hampshire
Bill to terminate the state’s vaccine purchasing mechanism receives another hearing. Two weeks following a House roll call vote of 189-181, HB 524 remains in the House and received a hearing by the House Ways and Means Committee. The measure would eliminate the New Hampshire Vaccine Association, a government established non-profit organization tasked in 2002 with being the universal purchasing program with the intent to provide access to vaccines for all children across the state. Under the status quo, it is estimated that the Association is able to receive up to a 30 percent discount on acquiring vaccines in bulk. During the committee hearing this past week, insurers raised concerns that if the vaccine association is eliminated it would likely result in increased premiums for enrolled individuals. Providers raised concerns that they would not be able to provide vaccinations to all children due to assumed costs and administrative requirements if the association is eliminated. The bill’s status and next steps remain unclear in the immediacy.
New York
Governor announces new platform to file complaints about drug price hikes and PBM oversight. This past week, Governor Kathy Hochul (D) and the Department of Financial Services (DFS) launched a new digital platform called DFS Connect. The intent of the platform is to centralize DFS’s interactions with regulated entities, such as pharmaceutical manufacturers and pharmacy benefit managers (PBMs) and consumers and pharmacies. As launched this past week, DFS Connect intends to provide a mechanism to file complaints by consumers and stakeholder businesses on prescription drug price increases that are more than 50 percent over the course of a year. DFS connect will also accept complaints with regard to actions by PBMs. Once a complaint is submitted through the platform, the consumer or business can track the complaint’s status and communicate with DFS staff. DFS emphasized that pharmacies will be able to report any perceived concerning business practices of PBMs and drug manufacturers through the platform.
North Carolina
Prior authorization reform introduced. This past week, Rep. Grant Campbell (R-Cabarrus) and Rep. Tim Reeder (R-Ayden), both physicians, introduced HB 434. Joined at a press conference on the measure by the North Carolina Medical Society and the North Carolina Healthcare Association, the legislators touted the bill’s commitment to reform prior authorization practices by insurers. Notably, the sponsors are framing the measure as a mechanism to lower healthcare costs. The bill includes the following changes to prior authorization:
Establishes clinical review criteria that must be adhered to if an insurer is going to implement prior authorization, inclusive of standards based on nationally recognized medical standards, they allow for care delivery at an appropriate frequency and setting, and they allow for deviations from the norm when justified, among other elements.
Requires that insurers must utilize a physician for all non-certifications of requests, and those physicians must consult with the patient’s provider before non-certification.
Establishes timelines for prior authorization determinations, including 48 hours of non-urgent requests and 24 hours of urgent requests, inclusive of emergency services requests which are distinct from urgent requests.
Prohibits retrospective denial or limit or restrict authorization if approval was provided within the past 45 business days.
Establishes transparency requirements (posting changes and statistics to prior authorization on insurers’ websites) and provide enrolled providers at least 60 calendar days advance notice of any changes to an insurer’s prior authorization requirements.
Establishes a gold-carding program by exempting providers with an 80% approval rate of occurrence of prior authorization requests for services based on a 12-month review period.
While the legislation addresses other elements of prior authorization, such as the continuity of care of a patient, it is one of the most comprehensive prior authorization measures introduced to date in 2025 legislative sessions. The North Carolina Senate has their own prior authorization reform measure (SB 315) introduced, albeit one that is significantly trimmed down compared to the House version.
Ohio
Ruling finds state law banning gender-affirming care for minors to be unconstitutional. The state’s 10th District Court of Appeals issued a 2 to 1 ruling this past week that reversed a lower court’s decision last year and found HB 68 (2024) to be unconstitutional. The 2024 law passed by the Legislature bans counseling, gender-affirming surgery and hormone therapy for minors with a limited exception for those already receiving such therapies when the ban was enacted if the physician deemed it too unsafe to stop. Notably, the court found that the law is discriminatory in nature as the 2024 law does not outlaw identical prescription drugs if used for other reasons beyond gender affirming care. The ruling also found that a ban on prescription drugs for specific purposes is an unreasonable exercise of the state’s police and oversight power when weighed with the rights of parents to care for their children. The state Attorney General has already iterated an intent to appeal the decision in the coming days.
Governor DeWine details new dental pilot program. Ohio Governor Mike DeWine laid out plans this past week for a Children’s Dental Services Pilot Program that was a focus of his State of the State address a few weeks ago. The pilot program will serve children in nine counties (Clinton, Crawford, Gallia, Highland, Hocking, Monroe, Noble, Paulding, and Washington) that are designated as dental health professional shortage areas. Through the pilot program, the state will utilize requested funding from the Governor’s executive budget proposal to coordinate providers, schools districts and other stakeholders that would enable deployment of dental services in school-based settings. It’s estimated that the program will serve 12,000 Ohio children in the nine counties. The program is under consideration by the Legislature for inclusion into the state’s biennial budget being put together this year for FYs 2026 and 2027.
Pennsylvania
House committee passes out legislation to codify ACA protections. The House Insurance Committee voted four bills favorably out of committee for consideration by the full House this past week that will codify in state law existing federal Affordable Care Act (ACA) requirements. The bills include:
HB 404: Providing authorization for children to remain on their parents’ health insurance until the age of 26.
HB 618: Prohibiting insurers from either denying or excluding coverage of an enrollee strictly due to preexisting conditions.
HB 535: Prohibiting insurers from establishing annual or lifetime limits on dollars spent on essential health care, inclusive of emergency care, maternity and newborn care, and mental health services.
HB 755: Require that insured enrollees would be able to access preventative healthcare without being required to pay an expensive co-pay, co-insurance or deductible.
The measures will now go before the full House for consideration. It’s unknown how the Republican-controlled Senate will respond to the proposals should they reach their chamber. If anything is to pass, it would likely be a scaled back iteration of what was passed out of the House committee this week.
Washington
Bill establishing restitution requirements from insurers moves forward. Having already passed the Senate, SB 5331 received a hearing in the House Committee on Consumer Protection and Business this past week. The measure would grant the Insurance Commissioner the authority to require a company or individual violating insurance laws to pay restitution to victims of those violations. Notably, the measure would allow for restitution payments in the amount of demonstrated economic damages due to another person. It also includes a requirement that restitution is to be paid with 8% simple interest from the date the obligation arose. In testifying before the House Committee this week, Insurance Commissioner Patty Kuderer (D) highlighted that restitution may be allowed in the following circumstances:
When an insurance company uses rates that have not been approved by the Insurance Commissioner.
If an unauthorized user defrauds policyholders.
If an insurance agent collects premiums but doesn’t forward that money to the insurance company.
The measure is likely to be voted out of committee and sent to the full House for consideration.
