Weekly StateVitals Update: Volume 2 (January 13, 2025)
National
CMS selects states to participate in Transforming Maternal Health Model. The Centers for Medicare & Medicaid Services announced that 15 states were selected to participate in the Transforming Maternal Health (TMaH) Model that launched on January 1, 2025. The states selected include Alabama, Arkansas, California, District of Columbia, Illinois, Kansas, Louisiana, Maine, Minnesota, Mississippi, New Jersey, Oklahoma, South Carolina, West Virginia, and Wisconsin. The TMaH Model will run for 10 years and will support participating state Medicaid agencies in delivering a whole-person approach to pregnancy, childbirth, and postpartum care to improve maternal health in their respective states. Part of the models’ intent is to support states to develop a value-based alternative payment model for maternity care services in Medicaid. Additionally, the model includes expanding access to midwives and doulas to provide non-clinical support and guidance for enrollees. Medicaid health plans, community-based organizations focused on maternal health, and providers will all have an opportunity to work with their respective state Medicaid agencies during the planning phase (first three years of the model).
California
Governor Newsom issues executive order limiting access to ultra-processed foods. On January 3, Gov. Gavin Newsom issued Executive Order N-1-25, which requires the Dept. of Public Health and other state agencies to develop recommendations by April 1, 2025 that would limit the known health harms of ultra-processed food. Among other specific recommendations, the Governor specifically requests consideration of including warning labels for certain ultra-processed foods, further oversight and limiting use of food additives, and requiring or encouraging Medi-Cal managed care plans and hospitals to use community investment dollars and benefit funds to enhance access to fresh and healthy foods. Likely seen as an unwillingness to cede any ground on the issue to the incoming federal administration, there is a high likelihood that some recommendations that emerge as a result of this directive result in either administrative policy or credible legislative proposals.
Connecticut
Office of Health Strategy implements new CON process. Utilizing a new notification process, the Office of Health Strategy (OHS) is initiating a new confidential settlement process to make determinations on certificate of need (CON) applications. Under the new process, when an applicant voluntarily enters confidential settlement negotiations with OHS, both parties agree to suspend prescribed process timelines. If negotiations fail to reach an agreement, OHS will issue a final decision within 60 days of the conclusion of the negotiations. This process does not eliminate the requirement of hearing procedures or opportunity for public comment and testimony. Those elements will be considered during the settlement process. Moving forward, this pathway is entirely optional for applicants. While it’s unlikely that such a model will be emulated by a majority of other states that still use CON processes given concern about impacted stakeholder participation, there is the potential that states looking to reform or reduce the administrative burden of the CON process could examine this model as one solution.
Florida
Grand Jury finds no evidence of criminal activity related to COVID-19 vaccines; issues recommendations. At the request of Gov. Ron DeSantis (R), a statewide grand jury convened to investigate any wrongdoing pertaining to COVID-19 vaccine development, administration or distribution found no evidence of criminal activity. The grand jury issued a report that included policy recommendations, inclusive of increased transparency and reporting pertaining to clinical trials, banning advertisements for pharmaceutical drugs, and enhanced monitoring of wastewater for pathogens of interest. Since this grand jury was originally convened in the midst of the Governor’s run for President in 2022, whether any of the state-level recommendations issued in the report will be taken up is unknown. The Governor’s office had no response nor comment to the report upon its publication.
Illinois
Health Equity Zone grants awarded to two projects. Gov. JB Pritzker (D) and the Dept. of Public Health have awarded two Health Equity Zone (HEZ) grants to reduce health disparities in McDonough and Winnebago counties. In McDonough County, $113,873 was awarded for a HEZ intended to address health outcomes related to obesity, sexually transmitted infections, and mental health. In Winnebago County, $118,000 was awarded to address disparities around mental and behavioral health near the Rockford area. Funded by the General Assembly, the HEZ program was built out from a larger national trend of state investments in historically underserved geographic areas that have severe health disparities compared to the rest of the given state. While the most significant investment in HEZs may be found in Rhode Island and Washington, other states are experimenting with HEZ programs that also offer an opportunity for insurers, Medicaid health plans, and providers to participate in the planning and care delivery of the program.
Iowa
CMS approves Iowa’s request to extend Medicaid postpartum coverage to 12 months. Gov. Kim Reynolds (R) announced that the Centers for Medicare & Medicaid Services (CMS) has approved Iowa’s Medicaid State Plan Amendment (SPA) to extend Medicaid postpartum coverage from 60 days to 12 months for women with income at or below 215 percent of the federal poverty level. The SPA came as a result of SF 2251, which passed during the 2024 legislative session. Iowa intends this coverage to reduce the risk of pregnancy-related deaths and complications for the mother while providing ongoing care in the postpartum periods, inclusive of treatment for substance abuse and depression. Iowa follows the lead of 46 other states that have previously taken similar action, of which Wisconsin still has a pending waiver before CMS to extend postpartum coverage from 60 to 90 days, Idaho is in the process of determining how to comply with recent state law necessitating extension to 12 months, and Arkansas has iterated no initial desire to extend coverage beyond 60 days.
Indiana
Proposed bill would repeal Certificate of Public Advantage process. Following a failed hospital merger between two rival health systems in Indiana, Sen. Ed Charbonneau (R-Valparaiso) has introduced legislation that would repeal the Certificate of Public Advantage (COPA) law that was the statutory basis for the merger to potentially happen. Uniquely, it was also a law that Sen. Charbonneau sponsored. COPA laws allow intrastate hospital mergers that might otherwise come in conflict with Federal Trade Commission (FTC) guardrails as a result of decreased competition. In this case, as a result of public pressure and the FTC recommending the state block the merger, the two hospital systems withdrew their application. Now, SB 119 was introduced to prohibit such a scenario from happening in the future. While some providers argue that COPA enables unique circumstances where pooled resources can improve the health of a geographic area’s residents, the FTC remains adamant with the 19 other states that currently have COPA laws that such pathways are anti-competitive and likely hurt consumers over the long-term. In recent years, Maine, Minnesota, Montana, North Carolina and North Dakota have all repealed their respective COPA laws.
Lawmakers cite Medicaid as a major concern heading into 2025. Speaking at the Dentons Legislative Conference, Rep. Robin Shackleford (D-Indianapolis), Rep. Brad Barrett (R-Richmond), Sen. Ed Charbonneau (R-Valparaiso) and Sen. Shelli Yoder (D-Bloomington) highlighted Medicaid costs as increasing focus of the Legislature in 2025. Following a $1 billion forecasting error in 2023 and a litany of cost containment measures that closed the gap to a limited extent, Rep. Barrett views the next year as an opportunity with the new federal Administration to limit spending to the program. More cautiously, Sen. Charbonneau was adamant that investment in the program prevents illness which saves the state in the long-run. Similar to other states, Indiana is facing decreased revenues and higher acuity with its Medicaid population now than in the previous year that is likely to increase costs on a per member per month basis.
Maine
Governor Mills to introduce supplemental budget. Following a letter sent to the Legislature’s Appropriations and Financial Services Committee by Kirsten Figueroa, Commissioner of the Dept. of Administrative and Financial Services, Gov. Janet Mills is planning to introduce a supplemental budget to bridge the state’s Medicaid gap for the remainder of the 2024-2025 budget and add to the Medicaid budget for the 2026 and 2027 budget. In the letter, Commissioner Figueroa highlighted that if the estimated $118 million gap in FY2026 was not addressed by the Legislature, the Department was likely to limit Medicaid payments to providers beginning this Spring. The letter cited the increasing cost of health care services, workforce challenges, and an increase in utilization following declines during the pandemic. This comes on the heels of other states expressing similar concerns of their own Medicaid budget gaps, and concern about the rising cost of Medicaid expenditures in the coming year.
Massachusetts
Governor signs sweeping healthcare reform bills into law. Following a rush at the end of the year to enroll S. 3012 and H. 5159, Gov. Maura Healey (D) signed both into law this week. S. 3012 provides enhanced oversight and limitations on the drug supply stakeholder chain, inclusive of pharmacy benefits manager (PBM) licensure, establishment of an office to examine pharmaceutical spend data (inclusive of rebates), and establishes uniform reporting requirements from PBMs to the state’s Health Policy Commission. Among other elements, reporting requirements include wholesale acquisition cost and changes to any discounts and rebates. The bill also requires insurers to remove cost-sharing requirements for one generic drug and cap co-payments on one brand-name drug at $25 for 30-day supplies for diabetes, asthma, and certain heart conditions.
H. 5159 was enacted with the intent to limit the growing influence of private equity in healthcare. The measure enhances the scope of data that may be considered from pharmaceutical manufacturers, PBMs, equity investors, real estate investment trusts (REITs) and management service organizations as part of the state’s administrative cost trends hearings. It notably also increased the Health Policy Commission’s scope of what constitutes a “material change” that would necessitate a state review prior to the expansion of a provider, inclusive of transactions involving an equity investor, a real estate lease-back arrangement, or conversion of an organization from non-profit to for-profit. For existing health systems, it requires that hospitals file audited financial statements of out-of-state operations of a hospital’s parent organization, any significant equity investors, healthcare REITs, and management services organizations. Massachusetts joins California, Indiana, Minnesota, New Mexico and Oregon as having state review programs that in some way regulate healthcare private equity. Given the complexity and multitude of elements involved in this law, StateVitals will be publishing a deep dive analysis of the law, inclusive of how it compares to other state market review laws and its potential implications for stakeholders before the end of January.
Texas
Legislature to consider increased resources for 988 hotline. Following reports of a $7 million funding deficit, Sen. Jose Menendez (D-San Antonio) has filed SB 188 to build a state trust fund for sustainable and appropriate funding of the 988 hotline. While the Texas Health and Human Services Commission has recommended additional resources for the state’s call centers in the past, the Legislature had previously authorized $14 million in funding despite a request for $21 million to fulfill the needs across the state’s five call centers. Mental health advocates are tying the strapped resources from the call centers to an increase in emergency department utilization for individuals who otherwise may have used the 988 hotline. While being carried by Sen. Menendez, behavioral health funding is a priority for some Republican leaders and this is viewed as a bipartisan issue that theLegislature will give serious consideration to. Such enhanced funding may reduce utilization of resources either provided by providers or managed care organizations currently filling any possible gap in services.
Virginia
Save Local Pharmacies Act to be introduced by a bipartisan group of lawmakers. Intending to drive immediate consensus around a unified approach to enhanced oversight and limitations on pharmacy benefit managers, a bipartisan group of lawmakers introduced SB 875 last week. The bill would require the Dept. of Medical Assistance Services to select and contract with a single third-party administrator to serve as the PBM for all pharmacy benefits to Medicaid recipients. The bill would require a PBM to have a fiduciary duty to the state, require the use of pass-through pricing,and require transparency in drug costs and rebates, among other elements. The intent of the bill is to organically increase reimbursement rates for local pharmacies that currently are argued to be too low to cover a pharmacy’s expenses. In introducing the legislation, sponsors highlighted similar legislation that was passed in Kentucky in 2021 (savings of $56.6 million to the state) and West Virginia in 2017 (savings of $54.4 million).
PDAB bill expected to be re-introduced. With bipartisan support, Del. Karrie Delaney (D-Fairfax) is planning to re-introduce legislation that would establish a Prescription Drug Affordability Board (PDAB). Announced during a virtual news press conference, the same bill as passed by the General Assembly and ultimately vetoed by Gov. Youngkin (R) last year will be introduced again with Del. Ellen Campbell (R-Rockbridge). The legislation from the previous year included upper payment limits and was vetoed by Gov. Youngkin with the message that while it was well intended, he had concerns that it limited access to treatment and would mitigate advancement of innovation. It remains unclear whether the General Assembly will take it back up given the likely veto waiting from the Governor.
Washington
CMS approves 1115 demonstration amendment. The Centers for Medicare & Medicaid Services approved Washington’s amendment to their Medicaid Transformation Project 2.0 1115 Demonstration this last week. The amendment expands Medicaid coverage for former foster care youth under the age of 26 who reside in Washington but were enrolled in Medicaid in a different state when they aged out of the foster care system prior to December 31, 2022. Additionally, the amendment will provide continuous eligibility for CHIP recipients up to the age of six, includes eligible individuals in tribal jails under the state’s initial reentry demonstration initiative already approved, and authorizing the state to receive federal reimbursement for designated state health plans. As part of this rollout, the state also announced their intent to implement medical respite care for Medicaid recipients as part of the approved health-related social needs benefit package authorized under the existing demonstration. The demonstration currently runs through June 30, 2028.
