Weekly StateVitals Update: Volume 4 (January 27, 2025)
California
Governor declares state of emergency. Following the declaration of a State of Emergency and coinciding Executive Order N-2-25 from Governor Gavin Newsom (D) related to the wildfires in the southern part of the state, administrative simplification and flexibilities were implemented for the Medicaid program. The Department of Health Care Services issued an overview of these flexibilities to eligible Medicaid members in Los Angeles and Ventura counties. Notably, simplification of Medicaid eligibility renewal and enrollment through self-attestation for some requirements, waiver of prescription signature requirements, prioritization of member transfers out of those two counties, and waived prior authorizations and referral requirements for certain services, among other flexibilities. It’s likely that some of these flexibilities will remain in place after the end of the State of Emergency.
Colorado
State to limit authorization for GLP-1 treatment for state employee health plan. After authorizing state employees’ health insurance to cover GLP-1 drugs for obesity in September 2022, Colorado’s Department of Personnel and Administration is now rolling that coverage back. Effective July 1, only individuals with Type 2 diabetes, cardiovascular disease and obstructive sleep apnea will be eligible to have GLP-1s covered. Those who currently have GLP-1s for obesity covered under the health plan will have to pay for the medications out of pocket. The move is expected to save the state $17 million over the next fiscal year. As other states consider whether to mandate coverage of GLP-1s in their Medicaid and state employee health plans as a treatment for obesity, they are likely to more readily scrutinize the fiscal impact, as seen in Colorado, in a year where most states are already grappling with increased revenue pressures.
Connecticut
Governor Lamont leads effort to enhance oversight of healthcare transactions. Last week, Governor Ned Lamont (D) joined lawmakers for a roll out of a legislative proposal to enhance oversight of healthcare transactions and the financial stability of hospitals and medical practices in the state. The exact legislative language has yet to be filed but the Governor iterated that it will incorporate the following elements:
Enhance the notice of material change process by authorizing the Attorney General and Office of Health Strategy to be able to review healthcare transactions that may negatively impact the healthcare system’s ability to drive quality services, access to services and affordability.
Establishes a review process to be used by the Attorney General and Office of Health Strategy to identify red flags in healthcare transactions.
Authorize the Attorney General to impose conditions on transactions to prevent harm to the healthcare system.
Governor Lamont is delivering his annual budget address to the General Assembly on February 5. It’s expected these legislative proposals will be filed then. Connecticut already has seven bills introduced to further regulate and enhance oversight on the corporate practice of medicine and the role of real estate investment trusts and private equity in healthcare. It is likely the Governor’s proposals will be met by a receptive General Assembly.
Georgia
State to seek five-year extension of Pathways to Coverage 1115 Demonstration. The Department of Community Health announced this past week its intent to file an amendment that would extend their 1115 Demonstration, Pathways to Coverage, for up to five years. Notably, the state wants to scale back its reporting requirements for qualifying work hours and activities from monthly to annually to reduce churn. It would also add additional qualifying activities to meet the required hours to retain eligibility, inclusive of compliance with SNAP requirements, Adults Without Dependents Program, or if the enrollee is caregiving for a child under six years of age. Further, the amendment would propose to remove premiums as an element of the Pathways program. This announcement follows Governor Brian Kemp’s (R) announcement last week that the state will seek through 1115 authority to expand Medicaid to parents and guardians without requiring they comply with work requirements if their child is up to the age of 6 and the household income is at or below 100 percent of the federal poverty level. The state public comment period is open through February 20, 2025.
Indiana
Governor Mike Braun issues five executive orders impacting healthcare. This past week, Governor Mike Braun (R) issued six executive orders impacting healthcare access, affordability and transparency:
Improving Price Transparency (Executive Order 25-21): Requires state agencies to assess and evaluate options to improve health price transparency. Based on those findings, recommendations will be made to ensure providers and insurance companies comply with price transparency requirements.
Hospital Charity Care (Executive Order 25-22): Requires the Secretary of Health and Human Services to investigate and analyze the amount of charity care provided by nonprofit hospitals. Requires the Secretary to issue administrative rules, if authorized to, following that investigation that requires each nonprofit hospital to verify their charity care in a given year is in excess of the tax exemption value they receive and failure to do so results in a loss of state tax exemptions.
Healthcare Affordability Measures (Executive Order 25-23): Requires the Department of Insurance to identify protections against surprise medical bills, conduct a review of PBMs and charging of retroactive fees and anticompetitive steering practices, and assess strategies to lower drug prices.
Assessing Fraud, Waste and Abuse (Executive Order 25-24): Requires the state to conduct an audit of Medicaid managed care entities, identify and implement cost-efficient PBM services for the Medicaid program, and other activities related to healthcare coverage expenditures.
340B Program (Executive Order 25-27): Requires the state to investigate and determine rulemaking authority to ensure 340B hospitals meet 340B program eligibility requirements, prohibit duplicate discounts, and ensure adherence to Medicaid Exclusion File and Cost Report. The report will also examine how off-site, outpatient facilities are utilized as part of the program.
Separate Risk Pools (Executive Order 25-28): Directs the Department of Insurance to consider enrollees in health plans offered in the individual market through the Exchange to be members of a separate risk pool compared to enrollees in health plans offered outside of the Exchange.
Some of these efforts were identified by Governor Braun as part of his healthcare agenda coming into office. While some of these efforts are likely to require the Legislature’s active engagement, there are other pieces pertaining to auditing and investigatory powers that the Governor will continue to move forward on over the next year.
Senate Committee advances substantive measures for providers and insurers. This past week, the Senate Health and Provider Services Committee advanced numerous bills that stand to impact healthcare stakeholders. The Committee voted out favorably SB 480, which prohibits insurers from utilizing anything but a person (inclusive of AI) for prior authorization reviews and denials, insurers utilizing step therapy if a prescription drug has an annualized net price of $100 or less, and limits a utilization review entity to imposing prior authorization requirements on less than 1 percent of unique services covered under the health plan overall and 1 percent of participating providers overall in a given calendar year. The Committee also voted out favorably SB 475, which would eliminate any private requirement of a physician and employer entering into a noncompete agreement and prohibiting a referring physician from receiving compensation or an incentive from a health care entity for referrals. Both measures now return to the full Senate for second reading.
Maine
Legislature kicks off hearings on supplemental Medicaid budget. The Legislature’s budget committee met this past week to begin hearings on Governor Janet Mills’ (D) proposed supplemental budget through June 2025. The $94 million supplement budget is a result of unexpected costs for the state’s Medicaid program, which the Legislature had been previously warned would result in payment delays and cuts to providers if no additional funds were appropriated. For any supplemental budget to be enacted, it requires two-thirds support from the Legislature. This requires the Governor to garner some Republican support given the small control Democrats have in both the House and the Senate. It’s unclear how Republicans are receiving the supplemental budget as it stands but Republican leaders have iterated concern for the Governor’s next biennium budget proposal.
The proposed budget for FYs 2026 and 2027 includes increased funding for Medicaid through leveraging new taxes on private ambulance companies and pharmacies. For pharmacies, the proposal would place a new $0.70 tax on prescriptions. For non-municipal ambulance service providers, the new tax would equal 6 percent of their net operating revenue. Apart from the new tax revenue, the budget depends on making a 36 percent reduction in Medicaid payments. Explained in the Governor’s budget overview, due to hospitals expanding or reclassifying their affiliated medical practices, they have been able to pull in reimbursement equivalent to 170 percent of Medicare for Medicaid services. The proposed budget would conduct a phased transition to 109 percent of Medicare rates over a five-year transition period.
Maryland
Bill introduces broad UPL authority for state’s PDAB. Senators Dawn Gile (D-Anne Arundel) and Brian Feldman (D-Montgomery) have introduced legislation (SB 357) that would expand upper payment limit (UPL) setting authority for the state’s Prescription Drug Affordability Board (PDAB). Implementing the PDAB’s UPL Action Plan previously approved by the Legislative Policy Committee this past fall, the PDAB would be authorized to set UPLs for all purchases and payor reimbursements of prescription drug products in the state that the PDAB determines have led or will lead to affordability challenges. Currently, the PDAB only has UPL authority for purchases made for or by state and local governments and Medicaid. As part of the legislation, the PDAB would be required to consider how a UPL may impact 340B covered entities before taking action. It would also limit the use of a UPL for drugs in short supply.
Prior to the PDAB’s UPL Action Plan receiving legislative approval and consequently the introduction of this legislation, the PDAB had selected Biktarvy, Dupixent, Farxiga, Jardiance, Ozempic, Skyrizi, Trulicity, and Vyvanse for cost review. These drugs will be first up for consideration to be subject to any UPL. A hearing is scheduled in the Senate Finance Committee on the bill for February 6. The measure has been cross-filed with HB 424, which has a hearing in the House Health and Government Operations Committee on February 6, too.
Mississippi
House passes bill for Medicaid presumptive eligibility for pregnant women. The Mississippi House passed HB 662, which would authorize qualified providers to make determinations of presumptive eligibility of Medicaid for pregnant individuals. Mississippi enacted similar legislation last year but the Centers for Medicare & Medicaid Services (CMS) opted not to approve the state plan amendment because the authorizing legislation required pregnant individuals to show proof of income to the qualified provider to receive presumptive eligibility. That provision from last year’s bill was removed and it’s expected that if this passes the Senate and is signed into law, CMS would approve this language through a state plan amendment. Used by a majority of states for kids and pregnant individuals, presumptive eligibility is a way to streamline access to Medicaid benefits for vulnerable populations while the state reviews and makes a determination to the eligibility of Medicaid for the individual. It is not uncommon that some states can take up to 45 days to process, review and approve Medicaid eligibility applications. HB 662 is expected to pass the Senate before the session adjourns.
House passes bill to increase transparency on PBMs. The House of Representatives passed over to the Senate HB 1123, which would establish limitations on what pharmacy benefits managers (PBMs) charge for prescription drugs and enhanced reporting requirements on PBMs, manufacturers and insurers. Specifically, the measure would prohibit PBMs from charging an insurer more for a drug than what pharmacists are paid. Additionally, PBMs would be required to submit reports to the state Board of Pharmacy detailing rebates received from manufacturers and any affiliate pharmacies that they may have a financial interest in. For manufacturers and insurers, the bill requires manufacturers and insurers to submit reports to the Board of Pharmacy detailing wholesale drug costs and spending. During a hearing in the House State Affairs Committee, the Board of Pharmacy and the Mississippi Independent Pharmacy Association indicated their concerns that the bill didn’t have enough reach to spur meaningful change for pharmacists, largely due to not incentivizing increased reimbursement rates.
New York
Legislature passes health privacy measure. Following passage by the Assembly, the Senate this past week passed SB 929. The key aspect of the measure is that it would make it illegal to sell an individual’s regulated health information without their explicit consent. The bill would authorize the processing of health data only in cases where it is necessary for rendering or maintaining a service or product, conducting internal business operations, or preventing fraud or illegal activity. The measure came together quickly after fears grew that the new Administration in Washington, D.C. may be lenient on states or other actors utilizing digital footprints to prosecute individuals seeking abortions. Other states, including Washington, have similar laws already enacted. However, in many cases, such laws may allow for the use of regulated health information for cases of public data or research. NY SB 929 contains no such allowances. The measure now heads to the Governor’s desk.
Governor proposes cost market impact review for material transactions in healthcare. As part of the Governor’s proposed executive budget submitted to the Legislature, a provision is included that would subject some healthcare transactions to increased regulatory review. The legislation would extend the pre-closing notice timeline to 60 days and authorize the Dept. of Health to conduct a preliminary review of the transaction. If a cost market impact review were necessitated based on that preliminary review, the closing may be delayed up to 180 days and then after closing the transacting parties would be subject to annual reporting requirements on how the transaction has impacted cost, quality, access health equity and competition.
While the proposal does not provide authority for the state to disprove or approve proposed material transactions, the procedural elements involved pertaining to document and information disclosure and reporting requirements would require additional time and resource investments to ensure adequate compliance. It also remains unclear as to whether existing material transaction review authority and definition terms would be cross-applied (e.g., whether material transactions must exceed a de minimis threshold, who qualifies as an eligible healthcare entity subject to the provisions of this act, and other definitional questions).
South Carolina
Governor seeks expedited approval on Medicaid work requirements. Governor Henry McMaster (R) has sent a letter requesting expedited review and approval for the state’s 1115 demonstration implementing work requirements for Medicaid enrollees. The submitted application would expand Medicaid eligibility up to 100 percent of the federal poverty level (FPL) for parents who either meet work requirements or other qualifying activities, such as schooling. Work requirements would be required for eligibility for parents who make between 67 and 100 percent of the FPL. As of this reporting, it does not appear the state has yet to file for public comment the proposed waiver application.
South Dakota
Resolution to implement Medicaid expansion poison pill clears House. Passed out of the House by a 69 to 7 margin, HJR 5001 now goes to the Senate for consideration. The measure would propose a constitutional amendment sent to the voters to vote on at the next general election to include a poison pill for Medicaid Expansion. Used similarly by other states, the measure would require South Dakota to discontinue providing Medicaid coverage to the expansion population if federal funding were ever reduced below 90 percent. A list of those submitting notice or testifying as a proponent or opponent on the measure can be found here. If eventually approved by voters, South Dakota would join nine other states (Arkansas, Arizona, Illinois, Indiana, Montana, New Hampshire, North Carolina, Utah and Virginia) that have an explicit poison pill in statute. These provisions have received renewed attention of late as Republicans in Congress consider reducing the Federal Medical Assistance Percentage for the expansion population from 90 percent to whatever FMAP the state is currently receiving for their traditional Medicaid population (approximately 60.3 percent on average).
Texas
Lt. Governor extends support to revise abortion law. Recognizing the potential confusion the state’s statutory language on a near-total abortion prohibition may cause providers, Lt. Governor Dan Patrick (R) became the first state-wide official to call for clarification of the language. Physicians in the state claim the current law creates uncertainty as to when a patient meets a given threshold for qualifying for an abortion. Physicians face penalties of up to life in prison and a fine of at least $100,000 if they provide an abortion outside of the qualifying circumstances as authorized in the law. It’s unknown whether the Texas Legislature will ultimately include any tweaks to the law as part of its agenda, however the Lt. Governor in Texas is the Senate President and wields influence in the Chamber.
Wisconsin
Speaker Vos casts doubt on Medicaid postpartum expansion. House Speaker Robin Vos (R- Racine) has iterated that his Chamber is unlikely to consider legislation that would expand Medicaid coverage for postpartum individuals to 12 months. Uniquely, Wisconsin currently has a pending waiver to extend postpartum coverage on Medicaid through 90 days instead of the 60 required under federal law. However, the Centers for Medicare & Medicaid Services (CMS) under the Biden Administration iterated its desire not to approve anything that provided coverage shorter than one year. It’s possible new CMS leadership under the Trump Administration may opt to reconsider that position. Wisconsin and Arkansas are the two remaining states that have yet to extend postpartum coverage for 12 months.
