Weekly StateVitals Update: Volume 13 (March 31, 2025)
National
HHS pulls back $12 billion in federal funding directed to state and local health departments. The U.S. Department of Health and Human Services (HHS) announced last week that they are pulling back almost $12 billion in federal funding that was originally intended for state health departments for COVID-19 immunization purposes. The funding was appropriated during the public health emergency related to the COVID-19 pandemic and, among other purposes, was meant to address COVID–19 health disparities for high-risk and underserved patients. This resulted in many of the funds to be utilized for vaccination and testing activities. While most of the funds have already been spent, state health departments were leveraging some of the remaining funds for other public health priorities, such as tracking the ongoing measles outbreak in Texas and other states. It remains unclear how HHS intends to recover any outstanding funds given that they were appropriated by Congress but existing balances in some states exceed $100 million.
Arkansas
Governor signs PBM prompt pay bill into law. Little more than a week ago, Governor Sarah Huckabee Sanders (R) signed HB 1620 into law. The bill will require pharmacy benefit managers (PBMs) to reimburse pharmacists for prescription drugs within seven to fourteen days after the receipt of an electronic claim. This required timeline would apply only to clean claims and PBMs would pay penalties of 12 percent per month for late payment of claims. Uniquely, the bill text defines a clean claim as clean only if a PBM receiving the claim has not provided notice to the submitting pharmacist or pharmacy of any deficiency or error within 10 to 15 days of receiving the claim. The measure faced little opposition through the committee hearing process, likely due to other PBM-focused legislation more likely to draw political capital from PBMs during this session.
Colorado
U.S. District Court issues ruling on motion for summary judgment in Amgen case. The U.S. District Court for the District of Colorado issued a ruling dismissing Amgen’s motion for summary judgment against the state of Colorado in their attempt to establish upper payment limits (UPLs) on prescription drug prices. In the dismissal, the district court judge noted that Amgen lacks standing because it is not subject to direct regulation under the law which allows Colorado to set limits for prescription drug prices. Amgen has argued that the Colorado Prescription Drug Affordability Board was unconstitutional because its authority conflicts with federal law and it would regulate commerce outside of state boundaries, among other claims.
Movement on 340B legislation. This past week, the Senate voted to pass SB 25-071 by a 30 to 4 margin. The bill would prohibit drug manufacturers, wholesalers, third-party logistics providers or repackagers from limiting the ability of a pharmacy contracted with a 340B covered entity to acquire a 340B drug. It also prohibits a manufacturers’ ability to require a 340B covered entity or a contracted pharmacy from submitting any health information, claims or utilization data unrelated to claims. Finally, the measure required 340B hospitals to publish their annual total financial benefit from participating in the program and indicate how those savings are utilized.
The Senate also passed by a 20 to 14 margin SB 25-124. Before being passed by the Senate, it was amended to establish transparency requirements on 340B covered entities. Notably, the bill requires nonprofit hospitals that participate in the 340B program to report out how they utilize 340B profits to decrease out-of-pocket expenses for low-income patients. The bill also requires annual reporting by 340B hospitals on their use of 340B program profits, their provision of and spend on charity care, payments to third parties for 340B program-related participation and compliance, and what their use of contract pharmacies is. Both bills have been assigned in the House to the Committee on Health and Human Services.
Governor signs bill into law enhancing coverage and reimbursement for mental health care. Governor Jared Polis (D) signed HB25-1002 into law this past week. The measure provides for standardized utilization review criteria for the treatment of behavioral and mental health disorders that would align with utilization review and determinations made of physical health treatment. Specifically, the bill requires use of criteria and guidelines as published in a most recent version of criteria developed by an unaffiliated nationally recognized non-profit clinical specialty associations of relevant behavioral or mental health disorders. Apart from standardized utilization review criteria, the measure would also codify requirements pertaining to coverage parity of the federal Mental Health Parity and Addiction Equity Act into state law.
Florida
Senate committee advances measure limiting role of AI in insurance claim denials. The Senate Committee on Banking and Insurance unanimously voted to approve SB 794 this past week. The measure, as amended, would require a qualified human professional to determine whether to deny a claim or any portion of a claim. The intent of the bill is to prohibit any artificial intelligence (AI) system from making those determinations. The measure also establishes a procedure for how professionals are required to review a claim if they are going to offer a denial or deny part of the claim, inclusive requiring an analysis of the claims and the terms of the insurance policy entirely independent of any AI system or algorithm. After passing its subject matter committee, the bill is now headed to the Senate Appropriations Committee on Agriculture, Environment and General Government. The amended version accommodates for some technical amendments sought by insurers and providers have iterated their support for the bill as amended.
Florida House passes medical malpractice reform bill. Only a week after HB 6017 and SB 734 both received committee hearings in their respective chambers, the House chamber voted to approve HB 6017. Similar to SB 734, 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 House vote happened on the same day that the Senate Rules Committee approved SB 734 to go before the full chamber for a vote.
Iowa
Senate passes Medicaid work requirements bill. The Senate passed SF 615 this past week by a vote of 33 to 15. The measure was a successor to SF 599, which was amended by the Senate Appropriations Committee before heading to the floor. The amended measure would require the state to implement work requirements for the state’s Medicaid expansion 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. Enrollees would be required to work at least 80 hours each month as a condition of continuing their coverage. As part of the measure, it would require elimination of the Medicaid expansion program if work requirements are not a condition of eligibility. The Iowa Legislative Services Agency estimates that there are 181,000 individually currently enrolled in the expansion program, with approximately 142,000 enrollees who would be subject to the work requirements. Implementation of work requirements is expected to save the state approximately $3.1 million in FY26 and $17.5 million FY27. The measure will now be considered by the House.
Kentucky
Legislature overrides Governor’s vetoes related to healthcare. As lawmakers came back to the Capitol for a two-day veto session, they opted to override most of Governor Andy Beshear’s (D) vetos from the regular session. Related to healthcare, here’s what the Legislature overrode to enact into law:
HB 90: The underlying measure provided for licensure and an exemption of certificate of need requirements for freestanding birth centers. Added to the measure was an amendment that authorizes physicians exercising reasonable judgment relative to abortion care in cases of lifesaving miscarriage management, emergency intervention for sepsis and hemorrhaging, procedures necessary to prevent the death or substantial risk of death of the pregnant woman, removal of an ectopic pregnancy, and treatment of a molar pregnancy.
HB 495: This measure cancels Governor Beshear’s executive order that established restrictions on the use of conversion therapy in the state. The bill also prohibits Medicaid from providing coverage for any gender-affirming medical care.
HB 695: A Medicaid reform measure with the intent to provide the legislature with more robust oversight of the state’s Medicaid program, provisions of the bill include:
Requires the Medicaid agency to seek approval from the General Assembly prior to making any change in eligibility or coverage or benefits. 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 or work requirement 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.
Maine
DHHS submits 1115 five-year waiver renewal. The Department of Health and Human Services (DHHS) has published for a state public comment period a five-year 1115 waiver renewal request that they intend to submit to Centers for Medicare & Medicaid Services (CMS). While the waiver retains key aspects enabling the state to receive federal financial participation (FFP) for services provided to members in Institutions for Mental Diseases (IMDs) for short-term stays, the renewal request includes a proposal to implement an updated program design that cross the entirety of the behavioral health continuum of care, enhances funding for transitions of care services, and seeks authority to make health-related social needs (HRSN) interventions. Of note, the waiver is specifically proposing to:
Establish a transition of care incentive payment pilot program.
Extend Medicaid coverage for targeted Medicaid services up to 90 days pre-release for individuals transitioning from jails, prisons, and the youth correctional facility.
Related to HRSNs, provide targeted services, including food pharmacy/fruit and vegetable prescriptions, nutrition counseling/education, case management for nutrition benefits, and medically tailored meals.
Support the non-federal share of funding for pre-release services for justice-involved individuals and related capacity building, and for HRSN services and related capacity building for the next demonstration period using Designated State Health Program expenditures.
Cover traditional healing therapies received through Indian Health Services or Tribal Organizations.
Request to utilize $15 million for capacity building funds, intending to help operationalize the implementation of this waiver.
DHHS is accepting public comments at the state level through April 22, 2025. Soon after, they are expected to submit to CMS for public comment.
Mississippi
Legislature sends CON reform bill to the Governor. Following concurrence by the House of Representatives, HB 569 was sent to the Governor’s desk for his signature. The amended bill that was subject of scrutiny throughout the legislative session will establish a nuanced approach to certificate of need (CON) reform. The enrolled measure includes a provision raising the threshold for a medical facility needing to file a CON application when purchasing medical equipment from $1.5 million to $3 million. The bill would also increase the amount that healthcare stakeholders would need to seek a CON application for in building a new clinical building, from $5 million to $10 million and non-clinical building, from $10 million to $20 million. Finally, among other provisions, the bill would have the Department of Health conduct a study on CON laws pertaining to small hospitals and their dialysis units, geriatric psychiatric units, and acute adult psychiatric units. It’s expected that the Governor will sign the bill into law.
New York
Department of Health issues new guidance on healthcare transaction law. Two years after Governor Kathy Hochul (D) signed the state budget for fiscal year 2023 and 2024 into law, the Department of Health has released clarifying guidance on key provisions of that budget that govern healthcare transactions. In the previous two-year budget bill, a provision was included that required a 30-day pre-closing notice of material transactions that meet a given revenue threshold. That notice would then be posted to the website of the Attorney General with a summary of the proposed transaction and an invitation for public comment. In the most guidance from this past week, the Dept. of Health published it as a FAQ. The FAQs provide clarity with regard to the types of healthcare entities require to file notice, how to determine the de minimis revenue exception from the required notice, and what types of material transactions are subject to notice.
Among other clarifying remarks, the guidance iterates that dental practices, clinical laboratories, pharmacies, wholesale pharmacies, independent practice associations, and accountable care organizations are all considered “health care entities” and subject to pre-closing notice requirements. Relative to what qualifies as an acquisition subject to notice requirements, the guidance clarifies that it includes when an entity contracts for services provided through a management or administrative services agreement but the requirement does not apply to any material transaction subject to the state’s certificate of need requirements.
North Dakota
Senate passes 340B bill. This past week, the Senate passed by a 41 to 4 margin HB 1473, which would establish penalties on pharmaceutical manufacturers who deny, restrict, prohibit or interfere with a contract pharmacy’s ability to acquire drugs on behalf of a 340B covered entity. The bill also prohibits manufacturers from requiring a covered entity or a contract pharmacy from submitting any claims, encounter or utilization data as a condition of acquiring a drug. Finally, the measure will prohibit a manufacturer from making the drug available in the form of a rebate. The measure had previously passed the House earlier in the session and is expected to be agreed to and sent to the Governor’s desk. Notably, despite opposition from the myriad of manufacturers and other aligned interests, the bill was never amended.
Pennsylvania
House passes bills to codify ACA protections. The House of Representatives voted to pass four bills favorably out of the Chamber and over to the Senate 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.
While the bills received some bipartisan support in the House, it’s unlikely that these measures will receive a warm welcome in the Senate given the current federal Administration’s previous claims to repeal the ACA. However, that said, Senate leadership has not indicated whether they will take the bills up for consideration.
Oklahoma
House passes measure with intent to reduce insulin costs. The House of Representatives passed HB 1380 this past week by a 77 to 13 margin, which intends to lower insulin costs in the state. The measure would establish the Insulin Access and Affordability Program under the Department of Health and provide the Department with the authority to enter into agreements with non-profit pharmaceutical companies to support the production and distribution of insulin. The intent would be to establish a stable and affordable supply of insulin specific for Oklahoma residents. Part of the performance objectives outlined in the bill would require an end result of having availability of fast-acting biosimilar insulin at prices not to exceed $30 per vial and $55 per pack of file prefilled insulin pens. The bill now heads to the Senate for consideration.
Oregon
Committee chair opts against moving forward with UPL setting authority for PDAB. The Chair of the Senate Health Care Committee has indicated her intent not to move forward with plans to introduce legislation that would provide the state’s prescription drug affordability board (PDAB) with authority to establish upper payment limits (UPLs). In her decision, Chair Deb Patterson (D-Salem) relayed that there was a lack of consensus from the state’s PDAB about whether to or how best to approach UPL setting authority. During a December committee hearing on the potential matter, the PDAB’s Board Executive Director, Ralph Magrish, advocated for such authority while the PDAB Chair, Shelley Bailey, was noncommittal. Related to the PDAB’s existing work and authority, the PDAB recently selected a subset of drugs for affordability review during their March meeting.
Utah
Governor allows 340B reform to go into effect without his signature. Utah Governor Spencer Cox (R) faced a midnight deadline on Thursday, March 27 to either veto or sign 87 bills following the adjournment of the legislature. He decided not to sign, or veto, SB 69 which prohibits a pharmaceutical manufacturer from restricting or prohibiting a pharmacy from contracting with a 340B entity. The 340B program, which is a federal program that allows certain health care providers to obtain drugs at deep discounts, is the focus of reform in many states. In his statement to the legislature Governor Cox wrote, “I appreciate the sponsors of this bill for their efforts to make prescription medication more accessible to uninsured and low-income Utahns. I’m also grateful that this bill will be good for Utah hospitals. I have some concerns that the current program does not exactly serve its intended purpose. The bill does not require cost savings to be passed onto patients and is not transparent in how cost savings are used.”
Virginia
Governor vetoes PDAB measure. Despite a second attempt by the General Assembly to pass a bill authorizing the establishment of a Prescription Drug Affordability Board (PDAB), Governor Glenn Youngkin (R) opted to instead veto HB 1724. Having passed the General Assembly at the end of session, the bill would have also created a stakeholder council to assist the PDAB in making decisions relative to drug cost affordability. The bill would have provided an upper payment limit setting authority for the PDAB but limits it to no more than 12 UPL amounts annually. As part of the veto, Gov. Youngkin did not include any message explaining his rationale for the veto.
West Virginia
Governor signs bill banning food dye. Joining only California as the only other state to do so, Governor Patrick Morrisey (R) signed legislation HB 2354 into law this past week which bans certain food dyes in school lunches and for sale within the state. Specifically, the bill will classify Red Dye Numbers. 3 and 40, Yellow Dye Numbers 5 and 6, Blue Dye Numbers 1 and 2, and Green Dye Number 3 as unsafe and will prohibit their use as an ingredient in any meal served in a school nutrition program beginning August 1, 2025. Beginning in 2028, those dyes and preservatives (butylated hydroxyanisole and propylparaben) will be prohibited from being included in food if the food is sold within the state. Critics of the law argue that it would make up to 60 percent of the items currently sold in grocery stores illegal. At least 28 states have introduced legislation this year to do something similar, and this largely arises as a near verbatim proposal from the U.S. Department of Health and Human Services Secretary Robert F. Kennedy, Jr. that he is likely to similarly investigate during his time in office.
House committee hears narrow CON reform bill. Despite opting to vote down a measure earlier this year that would have repealed the state’s Certificate of Need (CON) program in its entirety, the House Health Committee opted to hold a public hearing this past week on HB 3487. The bill would eliminate CON requirements pertaining to the construction or acquisition of either a small format or a micro-hospital provided it is owned by a health system with at least one licensed hospital within the state. Part of the requirement to bypass the CON process for a micro-hospital is that the new facility would have to be located as such so that it increases capacity in the area without simultaneously pulling beds away from any critical access hospitals in the area. Under the bill, a micro-hospital exempt from CON requirements is limited to only 25 in-patient beds and 25 emergency room beds, with a cost not to exceed $100 million. The bill was scheduled for a markup discussion in committee at the end of last week and is waiting for final approval to get to the full House.
