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Health Policy in Utah: Legislative Priorities and the Path Forward

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With ongoing debates about Medicaid funding, healthcare costs, and the need for mental health integration, state policymakers are looking to shape the health policy landscape that will impact millions of residents. The recent legislative session brought these issues to the forefront, with lawmakers discussing the future of Medicaid expansion, the affordability of prescription drugs, and how to address the state鈥檚 provider shortages.

For healthcare providers, patients, and industry stakeholders, these discussions are more than just policy debates鈥攖hey shape access to care, financial stability, and long-term health outcomes. If Utah wants to maintain its reputation for high-quality, low-cost healthcare, it must navigate these challenges strategically.

Legislative Leaders Take the Stage

At the annual Utah State of Reform Health Policy Conference held in late March, a panel of Utah鈥檚 top healthcare policymakers鈥攎oderated by Francis Gibson, president of the Utah Hospital Association鈥攃ame together for a dynamic discussion on these pressing issues.

Panelists:

  • Sen. J. Stuart Adams: President, Health & Human Services Committee, Utah State Senate
  • Rep. Steve Eliason: Member, Health & Human Services Committee, Utah State House of Representatives
  • Sen. Luz Escamilla: Minority Leader, Health & Human Services Committee, Utah State Senate
  • Sen. Jen Plumb: Minority Assistant Whip, Health & Human Services Committee, Utah State Senate

Major Healthcare Issues Addressed

Medicaid & State Budget Considerations

With federal Medicaid funding facing potential impact, Utah lawmakers discussed strategies to prepare for possible financial shortfalls. While Utah has a year to plan for any changes made to the Federal Medical Assistance Percentage (FMAP) that would trigger updates to Utah鈥檚 Medicaid program (particularly for the expansion population), the impact could be significant, particularly for vulnerable populations. President Adams emphasized that the goal would be to maintain coverage as much as possible, and the state would have time to look at adjustments and consider using state reserves in the short term to mitigate disruptions.

Drug Pricing & the 340B Program

Lawmakers discussed the passage of , which set some parameters for how pharmaceutical manufacturers provide discounts to covered entities through the 340B program. Pharmaceutical manufacturers argue that the 340B program has expanded beyond its original intent, claiming that it allows hospitals and healthcare entities to profit from drug discounts without necessarily passing savings on to patients. They contend that increased transparency and tighter regulations are needed to prevent unintended financial benefits for large health systems while ensuring that the program continues to serve its intended purpose of aiding vulnerable populations.

Lawmakers emphasized that ensuring the savings from 340B pricing actually reach the intended patients and healthcare facilities is crucial. The state must now focus on assessing the impact of the bill, monitoring how savings are allocated, and ensuring that these resources directly benefit underserved communities. The program鈥檚 long-term success will depend on transparent oversight and continued evaluation to confirm that cost reductions lead to improved patient care and access to essential medications.

Protecting Healthcare Providers from Malpractice Burdens

Sen. Adams then talked about House Bill 503, which aimed to attract more healthcare providers to Utah by mitigating excessive malpractice insurance costs. Sen. Plumb鈥攈erself a practicing physician鈥攑osited that mounting malpractice costs discourage independent physicians, which is especially a problem in rural areas. Many small clinics and independent providers struggle to keep up with the rising costs of malpractice insurance, leading to increased financial strain and, in some cases, forcing them out of practice. This, in turn, limits healthcare access, especially in underserved areas where provider shortages are already a pressing issue.

The legislation aimed to ensure that malpractice claims do not impose an undue burden on healthcare providers while still maintaining patient protections. By stabilizing liability costs and creating a more predictable legal environment, these Utah legislators hope to retain and attract medical professionals, ultimately strengthening its healthcare workforce and ensuring broader access to care across the state.

Mental Health & Early Intervention

The legislative panelists were united regarding the urgency of improving mental healthcare, particularly for children. Expanding early intervention programs, integrating mental health screenings in schools, and increasing access to care were all identified as priorities. Utah has seen a growing demand for mental health services, with rising rates of anxiety, depression, and suicide among both youth and adults. However, access to timely and effective treatment remains a challenge, with long wait times and a shortage of mental health professionals exacerbating the crisis.

The discussion underscored that addressing mental health proactively could reduce long-term healthcare costs and improve overall public health outcomes. Legislators highlighted the importance of integrating mental health with primary care, increasing funding for community-based mental health initiatives, and enhancing telehealth services to bridge gaps in access. Additionally, ensuring insurance coverage for mental health services on par with physical health care was recognized as a necessary step to improve treatment equity and effectiveness.

What Wasn鈥檛 Said 

One bill that sparked intense debate but was not discussed by the panel was Utah鈥檚 recent ban on fluoridation in public water systems. The legislation, which earned a visit to Utah from Robert F. Kennedy Jr., has drawn national attention. Supporters of the ban argue that fluoridation poses potential health risks, while major medical organizations maintain that it is a safe and effective way to prevent cavities. Critics of the bill worry that removing fluoride could lead to worse dental health outcomes, particularly for children in low-income communities.听

This decision comes at a time when an estimated 120,000 adult Utahns enrolled in Medicaid will now have access to expanded dental services. These services may include check-ups, X-rays, cleanings, fillings, root canals, extractions, dentures, emergency exams for severe pain, and crowns, according to state health officials. With broader dental coverage now available for low-income residents, the fluoride ban raises questions about how the state plans to balance preventive care with access to treatment. Similar legislation is emerging in other states, signaling a potential nationwide shift in water fluoridation policies. 

What This Means for Utah鈥檚 Healthcare Future

These legislative discussions make it clear that healthcare in Utah is at a pivotal moment. Healthcare stakeholders must stay engaged, advocating for policies that support sustainable, high-quality care. Utah has long been a leader in healthcare innovation鈥攏ow is the time to reinforce that leadership by making smart, forward-thinking policy decisions.

Now more than ever, healthcare providers, policymakers, and industry leaders must collaborate to ensure a stable and effective healthcare system in Utah. For organizations looking to navigate these evolving policies, engage with legislators, or explore strategic solutions, the Utah HMA office鈥攊ncluding consultants from the local Leavitt Partners team鈥攊s here to help. Let鈥檚 work together to create a healthcare system that serves all Utahns鈥攂oth now and in the future.

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HHS Begins Reorganization: Actions Focus on Efficiency, Establishment of Administration for a Healthy America

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On March 27, 2025, the US Department of Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr.  significant changes in the department with respect to staffing and organizational restructuring. This reorganization is consistent with President Trump鈥檚 February 11, 2025, Executive Order (EO) 14210, 鈥�.鈥�

HHS is moving rapidly to implement its plans. On April 1, 2025, HHS initiated actions to reduce the federal workforce across the agencies and remake the department. In addition, the Senate is expected to vote on a budget resolution this week, which could have significant impacts on federal healthcare spending, including for the Medicaid and Medicare programs.

In the coming weeks and months, HHS intends to make additional announcements about how the department will be restructured. It will be critical that healthcare organizations and stakeholders track these developments closely. Organizations seeking to participate in the development of new federal policies and initiatives must know which offices within HHS will maintain authority over key policy areas. Further, to adapt to changes in funding and policies, it is vital that healthcare leaders remain informed.

Because many changes have already begun, the remainder of this article explains what is known to date about the HHS restructuring and other developments and actions relevant to providers, life sciences firms, insurers, safety net clinics, state and local agencies, and other interested stakeholders. This information can help stakeholders consider how best to proceed.

The Reorganization Plan

EO 14210 required agencies to develop reorganization plans and submit them to the Director of the Office of Management and Budget within 30 days and to 鈥減romptly undertake preparations to initiate large-scale reductions in force.鈥� The broader HHS reorganization plan seeks to implement a new departmental focus on 鈥渆nding America鈥檚 epidemic of chronic illness by focusing on safe, wholesome food, clean water, and the elimination of environmental toxins.鈥�

The reorganization calls for the following:

  • Consolidating the 28 HHS divisions into 15
  • Reducing the HHS regional offices from 10 to five
  • Centralizing the human resources, information technology, procurement, external affairs, and policy functions of the department
  • Reducing the full-time staff at HHS by 10,000

When combined with other efforts, including early retirement and pre-reduction in force (RIF), HHS鈥檚 staffing levels of 82,000 full-time will be reduced to 62,000. The announcement listed specific workforce reduction plans for the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), the National Institutes of Health, and the Centers for Medicare & Medicaid Services (CMS).

Following the March 27 announcement, additional details regarding the restructuring have continued to emerge, including:

  • The Biomedical Advanced Research and Development Authority (BARDA) reportedly will be combined with Advanced Research Projects Agency for Health (ARPA-H) under a new Office of Healthy Futures.
  • The Administration for Strategic Preparedness and Response (ASPR) will be reorganized as a part of CDC.
  • Programs currently under the Administration for Community Living (ACL) are slated to be reassigned to other agencies; for example, programs that support older adults and people with disabilities will move to the Administration for Children and Families (ACF), Assistant Secretary for Planning and Evaluation (ASPE), and CMS.

HHS Plans for New Agencies that Mirror Policy Priorities

The reorganization includes the establishment of a new Administration for a Healthy America (AHA), which will combine the following offices and agencies:

  • Office of the Assistant Secretary for Health, which includes the Office of the Surgeon General, the Office of Women鈥檚 Health, and several programs focused on health promotion, chronic disease prevention, and vaccines
  • Health Resources and Services Administration (HRSA)
  • Substance Abuse and Mental Health Services Administration (SAMHSA)
  • Agency for Toxic Substances and Disease Registry (ATSDR)
  • National Institute for Occupational Safety and Health (NIOSH)

According to HHS, the changes are intended to 鈥渋mprove coordination of health resources for low-income Americans and will focus on areas including, Primary Care, Maternal and Child Health, Mental Health, Environmental Health, HIV/AIDS, and Workforce development.鈥� The department also noted that transfer of SAMHSA to the new AHA will 鈥渂reak down artificial divisions between similar programs鈥� and improve operational efficiency.

HHS also intends to establish a new Assistant Secretary for Enforcement position, which will be responsible for leading efforts to address waste, fraud, and abuse at the Departmental Appeals Board, Office of Medicare Hearings and Appeal, and the Office for Civil Rights.

HHS will merge the ASPE and Agency for Healthcare Research and Quality (AHRQ) to establish a new Office of Strategy. The new office will support research 鈥渢hat informs the Secretary鈥檚 policies and evaluates the effectiveness of federal health programs.鈥� This office will also include some of the 鈥渃ritical programs that support older adults and people with disabilities鈥� that are currently within the Administration for Community Living.

Developments on Workforce Reduction Plans

On April 1, 2025, HHS began issuing formal termination notices to a significant number of federal employees across several agencies, including the FDA, SAMHSA, and CDC. The workforce actions reportedly include a full dissolution of some offices, for example, SAMHSA鈥檚 Office of the Director for Centers for Mental Health Services, Office of Behavioral Health Equity, The Policy Lab, among others, and CMS鈥檚 Medicare Medicaid Coordination Office.

What鈥檚 Next

In the coming weeks HHS will put in place a structure for the new AHA and other planned new entities. Many questions remain about the impact on specific agencies and authorities as well as reassignment of responsibilities for programs and functions that were carried about by affected federal employees and offices.

Congressional committees are seeking additional information about the HHS restructuring. The US Senate Committee on Health, Education, Labor, and Pensions (HELP)  that Secretary Kennedy testify at a hearing on April 10, 2025, to discuss the proposed reorganization plan. Providers, health centers, life sciences firms, insurers, health systems, state and local agencies and other healthcare stakeholders and partners should take steps to work through challenges and avail themselves of opportunities to strengthen healthcare systems and improve health. Examples include:

  • Identify the HHS agencies and offices that are now responsible for policies and procedures that impact your business.
  • Establish a plan for tracking developments鈥攊ncluding litigation鈥攁nd processes to brief key organizational leaders and act on information, when needed. Healthcare providers, insurers, community groups, and state and local governments will benefit from information as it becomes available regarding changes to agencies and their portfolios and decision makers for policies governing Medicare, Medicaid, child-specific programs, aging and disability programs, mental health and substance use programs, among many others.
  • Immediately assess current federal discretionary funding and reimbursement policies that may be at risk for your organization, your key partners, and collaborators. Consider potential impact of the policy changes that Congress is separately negotiating, which would significantly affect Medicare and Medicaid. Identify changes that may minimize risk for your organization and position it to engage in new initiatives.
  • Familiarize your organization with federal oversight and enforcement priorities and incorporate flexibility into compliance plans. Identify opportunities to mitigate vulnerabilities going forward.
  • Engage now鈥攚ith your community, your peers, and other experts鈥攖o identify opportunities for improvement and plan to build out the strategy, infrastructure and funding to support this work. Think creatively, act decisively.

Connect with Us

明升88, Inc., experts know the federal landscape and have an intimate knowledge of the dynamics in states and communities. Our policy team is working with clients to help them understand what is happening within HHS and Congress that is ushering in significant policy and funding changes. Our teams are advising stakeholders on the implications for Medicare, Medicaid, and other public programs; strategies to advance their objectives in this new environment; and working with healthcare organizations and state and local government to understand immediate impacts on local financing.

For details about these federal level developments contact one of our featured federal policy experts listed below.

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What to Watch: Medicare Payment Rules

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Medicare stakeholders are awaiting the imminent release of the Centers for Medicare & Medicaid Services (CMS) final Medicare Advantage and Part D rate notice and technical updates, as well as a final policy rule that establishes a significantly new direction for Medicare Advantage (MA) stakeholders. These final rules typically are released in April of each year.

In addition, the agency kicks off the annual cycle of payment rules for traditional fee-for-service Medicare, including the first wave of proposed rules that typically are released in April for the forthcoming payment year. These proposed rules for 2026 pertain to the following: Hospital Inpatient Prospective Payment System for Acute Care Hospitals, the Inpatient Rehabilitation Facility Payment System, the Home Health Payment System, and the Inpatient Psychiatric Facility Payment System. A second wave of 2026 proposed rules are typically released in July, including the Medicare Physician Fee Schedule and the Hospital Outpatient Prospective Payment System.

The MA rules and the first wave of Medicare Part A and Part B rules are highly anticipated regulations and now under review at the Office of Management and Budget. These rules are expected to be released in the coming days and weeks.

Why These Rules Matter

The rules set the rates for MA and reimbursement for a significant number of healthcare providers and facilities that serve Medicare beneficiaries. The rules also contain important information about CMS鈥檚 quality reporting programs and bonus payments and other changes required for Medicare stakeholders to ensure compliance.

What鈥檚 Different 明升88 2025 Proposals

In the first year of a new presidential administration, CMS leaders have a limited window to include their policy priorities in the MA and Part D Final Rate Notice. CMS may, however, decline to finalize some or all of the prior administration鈥檚 proposals. Key issues that 明升88 (HMA), experts are watching for in the final rules include:

  • Whether CMS chooses to delay or not finalize significant policy changes proposed by the Biden Administration, including new requirements and guardrails around the use of prior authorization
  • Potential finalization of improvements to the Medicare plan finder
  • Direction on oversight of MA plan marketing activities
  • CMS decision and response to the proposal to expand coverage of anti-obesity medications under Medicare Part D and Medicaid

Stakeholders can access HMA鈥檚 review of the contract year (CY) 2026 MA and Part D proposed rule and key considerations here and our review of the 2026 Advance Notice for the Medicare Advantage and Medicare Part D programs here.

Similarly, in the first year of a presidential transition, CMS has a narrower opportunity to shape Medicare鈥檚 first set of proposed payment and policy rules. The agency may, however, begin to signal important policy direction on a global level and technical issues that can have an impact on Medicare stakeholders. HMA experts are watching in particular for requests for information and other signals of CMS鈥檚 Medicare priorities, including reforms in quality reporting, value-based contracting, pricing and contract transparency, among others.

Connect with Us

HMA鈥檚 expert consultants provide the advanced policy, tailored analysis, and operational skills you need to navigate today鈥檚 rapidly evolving regulatory landscape and to support implementation of final policies. Don鈥檛 let the uncertainty of future policies derail your strategic plans or burden your teams.

For details about the forthcoming Medicare Advantage and traditional Medicare regulations, contact one of our featured experts below.

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Navigating Uncertainty in Medicare and other Federal Health Programs

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As we approach Medicare鈥檚 60th Anniversary this July, the program again finds itself at a critical crossroads, facing demands听for higher quality care, expanded access to transformative treatments, and streamlined patient access to their medical information. 听Decision makers also must integrate digital tools into clinical models, address mounting scrutiny of costs, and ensure accountability for outcomes influenced by social determinants of health.

This period of transition at the Federal level is bringing new scrutiny and pressure for efficiency. With nearly half of whom are enrolled in Medicare Advantage, the Medicare program is continually evolving to respond to shifting policies and priorities. Organizations that stay ahead of policy changes will be best positioned for success and drive meaningful improvements for Medicare beneficiaries.

When you work with , you get access to former CMS officials and plan executives, payment system and coding experts, and policy analysts to support your efforts. HMA鈥檚 Medicare team includes experts specializing in , dual eligibles, Medicare stars, value-based care, rural health, PACE, actuarial support, and data and quality. We draw on the resources of experts from our HMA companies to provide comprehensive and end-to-end solutions. Read some of our insights in the links below.

Here鈥檚 how HMA is helping clients navigate this dynamic landscape:

  • Our policy team is working with clients to understand what is happening right now in Congress and in the US Department of Health and Human Services that will usher in significant policy and funding changes. Our teams are advising stakeholders on the short- and long-term implications, strategies to advance their objectives in this new environment, and working with states to understand immediate impacts on local financing.
  • Our clinicians are working closely with insurers, providers, and health systems to strengthen models of care that address complex conditions, behavioral health issues, long-term services and supports and unique needs of special Medicare populations.
  • Our actuaries are conducting financial modeling and analysis to forecast costs, revenues, and potential outcomes to help navigate financial uncertainties in Medicare Advantage bids, Medicare payment models, and emerging environmental and regulatory issues, including digital quality measure collection, increased focused on dual integration, supplemental benefits, and drug price negotiations.
  • Our digital quality experts are working with healthcare organizations to prepare for rapid changes that digital health quality measurement will bring to reimbursement models. Our teams are advising on the influx of newly accessible clinical data to ensure it is properly validated and interpreted and working with insurers and providers to develop strategies allowing them to be more agile in contract negotiations.

To talk to an expert to help support and improve your Medicare programs, contact Greg Gierer with the HMA DC office ([email protected]) or Josh Trent with the Leavitt Partners DC office ([email protected]).

For more cutting-edge information check out some of our recent insights:

Policy & Regulatory Strategies: Legislative, regulatory, reimbursement, and budget analysis from experienced former staffers from CMS and various legislative committees. The HMA policy team includes past HHS officials like Amy Bassano and Monica Johnson, as well as the team at .

Actuarial & Financial Analytics: Leading actuaries with deep MA experience and robust tools to support innovative benefit and pricing strategies. Encounter data audits to improve risk scores. The HMA Actuarial team includes   and .

Communications & Engagement: Creative campaigns to inform, persuade, and engage providers and payers. The HMA team includes and .

Strategy & Transformation: Strategy & analytic fundamentals informed by variety of experts in Medicare, health insurance, care delivery for older and vulnerable populations, and value-based payment and delivery innovations.

Operations & Implementation: Clinical and administrative operations building care models, implementing value-based payment incentives, technology, and compliance. The HMA Managed Care team is led by Holly Michaels Fisher.

Quality Outcomes & Research: Integrated approach to STARS ratings, building digital quality management tools and strategies for compliance and accreditation. The HMA team includes Caprice Knapp and .

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CMS Shakes Up the Innovation Center Model Landscape: What Comes Next?

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This week, our In Focus section focuses on a March 12, 2025,  from the Centers for Medicare & Medicaid Services (CMS) regarding CMS Innovation Center programs under the new Administration. After reviewing the Innovation Center鈥檚 model portfolio, CMS has elected to discontinue four models ahead of their original end dates:  (TCOC),  (PCF),  (ETC), and  (MCP). The agency also intends to downsize the Integrated Care for Kids Model (InCK) and forgo the launch of two drug pricing initiatives. According to the announcement, CMS appears to be moving forward with other Innovation Center models, but signaled upcoming modifications to models to align with Administration priorities as well as new model announcements.

The following is a discussion of CMS鈥檚 announcement and what it may signal about the agency鈥檚 commitment to value-based care, key takeaways regarding the four terminated models, and how stakeholders should be preparing to engage with the Innovation Center on current or future models while we await additional details.

颁惭厂鈥檚&苍产蝉辫;Strategic Decision

As part of CMS鈥檚 recent announcement about the model terminations, the agency reaffirmed its support for testing models that reduce program spending while maintaining or improving quality of care. Furthermore, the Innovation Center 鈥減lans to announce a new strategy based on guiding principles to make Americans healthier by preventing disease through evidence-based practices, empowering people with information to make better decisions, and driving choice and competition.鈥� These statements should be seen as a commitment to using the Innovation Center to test new approaches to delivering care but with an expectation that the models will need to demonstrate significant cost and quality improvements as outlined in its statutory authority. According to CMS, the cancellation of these models is projected to save an estimated $750 million.

Because CMS said it may modify additional models in the future, it is reasonable to expect those changes will focus on achieving a higher level of savings or to see savings earlier in the demonstration, as well as aligning model design with the priorities of this Administration. The potential modifications could have an impact on the number of model participants, length of model testing, and financial arrangements, especially with regard to risk and quality improvement approaches.

Models Ending

CMS Innovation Center models are time-limited pilots meant to help the agency test which types of interventions lead to cost savings and improved quality and, if successful, can be scaled on a nationwide basis. These models are evaluated regularly, and CMS has the authority to modify or terminate models if they fall short of the statutory criteria.

The four models the agency plans to terminate are ending for various reasons (e.g., underwhelming performance, forthcoming replacement by successor model, etc.) and, as stated above, the decision should not be seen as a retreat from value-based care, but rather as a signal regarding Administration priorities for Innovation Center models. For example, despite terminating PCF and MCP prior to their original end dates, CMS reaffirmed its support for primary care as a 鈥渇oundational component of the Center鈥檚 strategy鈥� and that future primary care payment reforms will focus on approaches that produce savings. CMS also noted that ending these models early offers an opportunity to move beneficiaries into more permanent programs, such as the 鈥擟MS鈥� flagship accountable care initiative鈥攅ven going so far as to direct readers to the MSSP鈥檚 calendar year 2026 .

CMS plans to advise current model participants of other options for advanced primary care payment before the models conclude by December 31, 2025. Table 1 presents information on the models scheduled for early termination.

Table 1: Models Ending by December 31, 2025

In addition, the agency is considering options to reduce the size of the  model and will no longer pursue the  and Accelerating Clinical Evidence models. The latter two initiatives were included in a Biden Executive Order on drug pricing and were not implemented. Notably, CMS did not end another drug pricing Innovation Center model, ) Model.

Innovation Center鈥檚 New Strategic Plan

CMS also announced that it will soon release its new vision for the Innovation Center, based on principles designed to improve Americans鈥� health through evidence-based practices, empower individuals with decision-making information, and drive competition.

This vision will set the direction for future value-based care initiatives and reflect the leadership changes within CMS, including the anticipated confirmation of Mehmet Oz, MD, as CMS Administrator and the appointment of , as the new Director of the Innovation Center. Mr. Sutton鈥檚 experience with value-based care鈥攅specially during his time as an advisor to then Department of Health and Services Secretary Alex Azar under the first Trump Administration and his subsequent private sector leadership of value-based companies鈥攑ositions him to play a key role in shaping CMS鈥檚 future efforts.

Stakeholder Considerations

Stakeholders have several critical operational decisions and strategic considerations to address, including:

  • Transition Support. Participants in the models scheduled to end must assess their options for sustaining certain components of the payment models without Innovation Center support. This effort will require strategic, operational, and financial analyses to make informed decisions.
  • Evaluation of Other Programs. While the Innovation Center has signaled its intentions of announcing new models, participants should not wait to evaluate options. The Administration plans to prioritize permanent payment programs and will continue to support the MSSP as CMS鈥檚 permanent model for accountable care organizations (ACOs). Stakeholders interested in participating in the MSSP in 2026 must act quickly to assess their organizational readiness, conduct financial modeling of their potential benchmark and performance, evaluate potential partners, and prepare for the application process. Both existing and new ACOs should be exploring their strategies and infrastructures to optimize performance.
  • Adapting to Changes in Existing Models.听While CMS discontinued select models, it is likely the agency will make additional changes to the Center鈥檚 continuing models. These revisions likely will reflect President Trump鈥檚 executive actions and policy priorities. With the increased focus on cost savings, CMS may choose to spend fewer resources on model implementation, including participant support and model engagement.
  • Policy and Market Intelligence.听Monitoring the dynamic federal policy landscape and seeking strategic advisory support can help stakeholders navigate and inform potential future federal and state alternative payment model opportunities. Stakeholders should expect that existing and potential new models may have stricter requirements and higher expectations for financial risk. Providers, states, insurers, and other interested stakeholders should monitor public and private sector developments to understand the landscape and evolving opportunities.

Connect with Us

明升88, Inc. (HMA), is home to alternative payment model experts that can assist stakeholders in responding to changes in Innovation Center models and the agency鈥檚 approaches and to help prepare for participation in future model opportunities. Additionally, HMA produces a weekly briefing focused on public and private sector VBP-related news. To learn more about how HMA can support your organization鈥檚 federal engagement and innovation strategy, contact听our experts below.

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Navigating CMS鈥檚 2025 Marketplace Rule: What It Means for ACA Marketplaces, Insurers, and Consumers

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This week, our In Focus section also reviews the , released by the Centers for Medicare & Medicaid Services (CMS) on March 10, 2025. The proposed rule calls for enhancing program integrity protections in the Affordable Care Act (ACA) marketplaces through targeted changes to eligibility and enrollment policies and procedures.

This proposed rule aligns with the overarching policy priorities President Trump has identified, including reducing federal costs and reforming policies related to immigrants. It also takes aim at fraud, waste, and abuse practices in the ACA Marketplaces, which is the cornerstone from which the US Department of Health and Human Services explains and justifies its proposed initiatives.

Notably, the proposed changes will occur alongside other potential federal policy revisions, including the December 31, 2025, expiration of the ACA enhanced subsides for consumers, which led to historically high coverage levels鈥� as of January 2025. The combined changes will have a varied but significant effect on all state health insurance markets, creating a need for scenario planning and preparation to start immediately.

CMS is providing the public 30 days to submit comments on the proposed rule. An overview of the proposed changes and key considerations follow.

Rule Components

Enrollment Timeline: CMS proposes shortening the open enrollment period for all individual market coverage, including for state-based marketplaces (SBMs), which traditionally have had flexibility to set later enrollment deadlines. If finalized, open enrollment will begin November 1 and end December 15, a month earlier than the current deadline of the following January 15.

Income Verification: The rule would require marketplaces to bolster their income verification processes to protect against manipulation of the authorization and calculation of advance premium tax credit (APTC) values. CMS policymakers believe these changes will be useful in addressing broker and consumer fraud and abuse of the APTC eligibility process. Proposed income verification changes include requirements that people provide the documentation of their income if they meet the following criteria:

  • The income on their application is between 100 percent and 400 percent of the federal poverty level (FPL), but the income returned from external data sources show they make less than 100 percent of the FPL
  • No tax data are available from external data sources to confirm the applicant鈥檚 self-attested income

Applicants who do not verify their income will have it adjusted to align with the income returned from external data sources, and their APTC eligibility will be updated accordingly. In some cases, such as when no returned income data are available, these individuals will become ineligible for the APTC.

CMS also plans to reinstate a 2015 policy that requires marketplaces to designate applicants or enrollees as ineligible for APTCs if they fail to file and reconcile their APTC on their federal income taxes. This requirement is known as the failure to file and reconcile (FTR). The Biden Administration changed the FTR requirements to find enrollees ineligible for APTCs if they fail to file and reconcile for two consecutive tax years.

Lastly, CMS proposes eliminating the additional 60 days consumers are granted to resolve income inconsistencies. Today, most marketplace consumers have up to 150 days to resolve income inconsistences. This proposal would return to the 90-day verification period that was in place prior to the Biden Administration.

CMS also requests input on alternative redetermination and re-enrollment policies for fully subsidized consumers, including whether $5 is the appropriate premium amount or should be higher or if fully subsidized consumers should be required to actively confirm their eligibility and reenroll every year.

Another proposal would remove the ability for marketplaces to automatically reenroll Bronze members who are eligible for a cost-sharing reduction (CSR) in a Silver plan if the Silver plan has the same provider network, is in the same product, and has a lower or equivalent net premium as the consumer鈥檚 Bronze plan.

Special Enrollment Period Changes: CMS is proposing multiple changes to special enrollment periods (SEPs), including the removal of monthly SEPs for individuals with household incomes that are projected to be at or below 150 percent of the FPL and a requirement that marketplaces verify eligibility for at least 75 percent of new enrollments during SEPs. CMS also proposes adopting a pre-enrollment income verification model for SEPs.

  • Bar Deferred Action for Childhood Arrivals (DACA) recipients from QHPs in the Marketplace and basic health programs, making them ineligible for APTCs and CSRs and returning to pre-Biden era DACA eligibility rules
  • Remove gender-affirming care as an essential health benefit
  • Allow insurers to require payment of past due premiums before effectuating new coverage, if state law permits
  • Increase cost sharing/lower premiums by increasing the maximum out-of-pocket limit and widening de minimis ranges

Implications

CMS is reverting to several policies that were put in place during President Trump鈥檚 first term, increasing the likelihood that CMS will finalize many of the changes as proposed or with minimal modification.

Insurers, SBMs, insurance departments and other stakeholders should engage in the federal policymaking process and begin planning immediately for the financial and operational changes that will be required to comply, as several of the requirements will take effect as soon as the rule is finalized. Stakeholders will also want to consider the direct impact on consumers.

明升88 (HMA) Marketplace experts identified the six key considerations for stakeholders:

  • Market share and risk.听The proposed changes are projected to decrease Marketplace enrollment and听Insurers and states need to plan for shifts in their market and consider approaches to manage these changes.
  • Administrative operations.听A shorter enrollment period and additional eligibility and enrollment requirements may increase administrative actions for enrollees, insurers, and marketplaces. Examples include:
    • Marketplaces will need to make system and operational changes to comply with the new income verification, SEP, and open enrollment period requirements.
    • Departments of Insurance may need to adjust their rate and form filing instructions and timelines to give insurers the clarity and time they need to comply with new requirements.
  • Consumer education.听Insurers and marketplaces will need to consider the effectiveness of their marketing and outreach and education strategies, given the shorter open enrollment period.
  • Interactions with the expiration of the enhanced subsidies in 2026.听The Congressional Budget Office听听that the uninsured population will increase by 2.2 million in 2026 and up to 3.8 million by 2028 if the enhanced ACA subsidies expire. While it is too early to project or measure the impact of this proposed rule and the expiring subsidies, together they undoubtedly will have direct impacts on eligibility, enrollment levels, market dynamics including pricing and risk mix, and the overall stability of the Marketplaces in the long term. Congress may also take action on other policies related to Marketplace stability for which stakeholders should prepare.
  • State-level mitigation. States interested in mitigating the impacts of this proposed rule, as well as the expiring subsidies, will need to consider legislation to address the resulting affordability gaps and coverage losses. For example, states may look to state-funded subsidy wraps or reinsurance programs to minimize the net premium rate increases that most Marketplace plan members will experience when the enhanced subsidies expire in 2026.
  • Federal engagement. CMS is providing the public 30 days to comment on the proposed rule. This provides stakeholders the opportunity to voice their positions on the impact of this and future Marketplace policies. Comments on the proposed rule may also be shared with congressional policymakers and staff to help shape future legislative proposals.

HMA experts have considerable experience working with marketplaces, Departments of Insurance, insurers, and federal policymakers with jurisdiction over the Marketplace. They work with these entities to inform, analyze, and influence federal policies and conduct impact analyses on pricing, enrollment, administration, and operations. HMA also provides strategic and project management support for the implementation of finalized policies.

To learn more about how the proposed rule and the scheduled sunsetting of enhanced subsidies may affect your organization contact HMA Marketplace experts听below.

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New Insights on Medicaid Spending: HMA Analysis of Disaggregated Medicaid Managed Care Spending

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This week, our In Focus section highlights insights from a new 明升88 (HMA), issue brief, 鈥�New Insights on Medicaid Spending: An Analysis of Disaggregated Managed Care Spending.鈥�&苍产蝉辫;Until now, most Medicaid cost data have focused on enrollees in fee-for-service (FFS) programs. HMA used the Centers for Medicare & Medicaid Services (CMS) Transformed Medicaid Statistical Information System (T-MSIS) database to analyze Medicaid managed care organization (MCO) spending in major categories of healthcare, including inpatient and outpatient hospital care, physician and other professional services, skilled nursing facilities (SNFs) and home and community-based services (HCBS), clinics, pharmaceuticals, and other services. HMA鈥檚 methodology can be applied to all 50 states and allows us to determine prices for these services, which, combined with data on the number of encounters, yields reliable cost figures.

Findings

Medicaid managed care accounted for $420 billion of the total $717 billion in Medicaid spending for federal fiscal year 2021. Professional claims accounted for the largest portion of Medicaid spending, totaling 25.1 percent, followed by SNFs at 19.7 percent, and inpatient claims at 15.4 percent.

Figure 1. T-MSIS Medicaid Spending by Service Category 2021 (MCO Disaggregated plus FFS)

What鈥檚 Next

This analysis can be replicated for subsequent years and will provide important information on Medicaid spending trends. This work also sets the stage for analyses and comparisons of cost categories by variables such as eligibility category (e.g., dual eligibles, children, parents, adults without children, the Medicaid expansion population, and designated as aged/frail/disabled); race and ethnicity; frequent users of hospital services; and people with multiple chronic illnesses. This type of analysis allows us to answer fundamental questions about the Medicaid program and can pinpoint areas of high need within the Medicaid population, such as:

  • How much do we spend on services for people with diabetes?
  • How much do we spend during childbirth/first year of life and in the last year of life?
  • How much do we spend for Medicare-Medicaid dual eligibles?

Data-informed discussions on these and other topics can help identify opportunities for efficiencies and timely care management to slow the growth in total healthcare spending. This information will provide important context for the policy debate, offering a full view of the relative magnitude of the major categories of Medicaid spending.

Connect with Us

Medicaid providers, MCOs, states, and policymakers all have an interest in identifying high-cost drivers of Medicaid managed care. The methodology applied in the analysis for the HMA issue brief can be applied and adapted for future analysis.

For details about this analysis, its implications for state and local policies, and additional research using T-MSIS, contact听our experts below.

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Join the Call to Action to Address the Behavioral Health Workforce Crisis

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The behavioral health workforce crisis, a long-standing issue worsened by the COVID-19 pandemic, threatens the ability of provider organizations to meet growing demands for behavioral health treatment services. Despite decades of efforts, challenges such as inadequate compensation, workforce shortages, lack of diversity, and high burnout persist. In fact, a 2023 survey of state Medicaid officials on behavioral health revealed that nearly every state was engaged in at least one strategy to address the workforce shortage.[1]

Since 2021, The Workforce Solutions Partnership, a collaboration of , , and 明升88 has worked to create both short and long-term solutions. Efforts have included:

The next step for the Workforce Solutions Partnership is to expand engagement with partners to address the workforce shortage. The Partnership believes that using the framework, will provide the structure to build a national strategy and cross-sector approach to shared implementation of workforce initiatives, resulting in effective and scalable solutions. We understand there are countless workforce initiatives underway across the country, many of which are demonstrating progress and innovations that can be scaled. Rather than duplicate or distract from existing efforts, the Partnership will build connections between these efforts, elevate their impact and empower emerging innovative ideas.

Initial areas of focus will include:

Community alignment: Enhancing recruitment and retention of a workforce that reflects the communities accessing behavioral health services.

Creation of efficiencies: Building a new operational and administrative model that improves access.

Technology integration: Exploring tech-enabled supports to enhance skill development and service delivery.

Career pathways and compensation: Improving access to career opportunities and using evolving payment models to increase salaries for behavioral health professionals.

The Call to Action outlines the Partnership common agenda, levers of change, and the process for developing a national platform for change. It outlines how partners can engage and is the launch of what we hope will be national action to build a sustainable workforce.

[1] Saunders, H., Guth, M., & Eckart, G. (2023). A look at strategies to address behavioral health workforce shortages: Findings from a survey of state Medicaid programs. Kaiser Family Foundation.

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The Medicaid Pivot: New Developments in Section 1115 Demonstration Policy

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This week, our In Focus section examines new federal policy developments affecting Medicaid Section 1115 demonstrations. The Centers for Medicare & Medicaid Services (CMS), on March 4, 2025,  two guidance letters issued by the prior Presidential Administration that defined and provided the framework for state Medicaid programs to cover health-related social needs (HRSNs) using Section 1115 authority.

Though specific Medicaid priorities under the Trump Administration are nascent, 明升88鈥� federal and state experts are monitoring these developments. This article describes the withdrawn policy, known implications for states with approved and pending proposals, and the imperative to plan for a variety of scenarios and future opportunities.

Background on HRSN Initiative in Section 1115 Demonstrations

CMS-approved Section 1115 demonstrations allow states to pilot alternative methods to improve the accessibility, coverage, financing, and delivery of healthcare services under joint federal-state funded programs, specifically Medicaid and the Children鈥檚 Health Insurance Program (CHIP).

Addressing health disparities and promoting integrated care in Medicaid became a key focus of the Biden Administration. In November 2023, CMS introduced a , giving state Medicaid agencies the opportunity to address the broader social determinants of health (SDOH) that affect their enrollees, leading to better health outcomes. The agency published an  to the guidance in December 2024. The new initiatives were not intended to replace other federal, state, and local social service programs, but rather to coordinate with those efforts.

Key Takeaways for States

The following critical components of the March 2025 announcement and the present policy landscape should inform state Medicaid agency and stakeholder response and future planning work.

First, this guidance does not affect states with a current, active Section 1115 demonstration, state plan, or 1915 waiver programs that include HRSN. States with HRSN demonstrations will maintain their approved programs; however, states and their partners should prepare for shifts in federal reporting, oversight, and evaluation expectations. Separately, states may wish to re-evaluate their resource allocation and consider adjustments that may be needed to better align with a new federal policy environment.

States seeking any amendment or extension of their demonstration program鈥攅ven if unrelated to HRSN鈥攕hould expect this activity to trigger a CMS review of the HRSN component of the 1115. States will need to consider the strategic advantages and necessity of such requests relative to the implications to their HRSN initiative. They also should consider planning for nonrenewal of their HRSN programs in advance of the demonstration鈥檚 current expiration date.

Pending state HRSN Section 1115 demonstration proposals are not expected to be approved. The Section 1115 option for federal matching funds to provide up to six months of housing supports, nutrition supports, and associated infrastructure capacity funding no longer aligns with the Trump Administration鈥檚 objectives for Medicaid and CHIP. Stakeholders interested in these concepts should consider alternative strategies and investment options.

What to Watch

Notably, CMS did not rescind the 2021 State Health Official Letter RE:  (SDOH) (SHO# 21-001) published during the first Trump Administration. States and their partners should monitor CMS鈥檚 actions and signals for the agency鈥檚 posture toward SDOH proposals.

A new group of states proposing alternative and revised demonstration concepts and innovations is likely to emerge. These states may provide early signals of the nature and breadth of the Section 1115 demonstrations CMS is willing to consider. With regard to SDOH, states and their partners should consider aligning proposals with the approaches outlined in the 2021 guidance for regular federal program authorities (e.g., 1915(i) state plan options, 1915(c) waiver options) as well as certain managed care authorities.

In addition, states and Medicaid stakeholders should watch for other Medicaid and CHIP policy priorities advanced through demonstration and other authorities, including efforts to address substance use disorders (SUD) and reentry initiatives that focus on supporting individuals who are transitioning from incarceration back into society. SUD and reentry initiatives can intersect with Section 1115 demonstrations and other authorities, such as managed care, in a variety of ways. The intersection of these issues can provide another area of common ground and opportunity to continue work on state reentry initiatives, though likely with new and modified federal parameters.

Connect With Us

HMA is monitoring other developments in Congress and from the White House and agencies affecting federal Medicaid and CHIP policy changes. The complexity and nuances associated with potential future statutory and regulatory changes necessitate thoughtful and immediate impact analysis, scenario planning, and preparations that will allow organizations to pivot if and when policy changes occur. HMA colleagues have expertise in all of the components critical to staying informed, engaged, and prepared for changes to Section 1115 programs鈥攆rom the policy knowledge to actuarial/budgeting talent, to communications and project management skills, as well as the necessary IT infrastructure.

For questions about these developments and your organization鈥檚 plan to adapt to new federal Medicaid policy priorities, contact our featured experts below.听

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HMA partners with Healthcare Association of New York State (HANYS) on webinar series to help organizations with Survey Readiness

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In today鈥檚 complex healthcare environment, navigating the scrutiny of regulatory and accreditation bodies like The Centers for Medicare & Medicaid Services (CMS), Department of Health (DOH), The Joint Commission, and Det Norske Veritas (DNV) Healthcare is critical for the success of every hospital and health system. Unexpected surveys, triggered by recertification, validations or even complaints, can occur at any time.

HMA has partnered with the Healthcare Association of New York State (HANYS) to develop the content for Survey Readiness: Prepare, Respond, Succeed, a 5-part virtual series on Wednesdays in April from 1- 2:30pm ET.  HMA鈥檚 expert faculty will also co-teach the sessions. Attendees will dive deep into organizational strategies and tactics to prepare, manage and respond to surveyors effectively 鈥� and get the essential skills to excel in survey readiness.

While some examples in the program will address issues from the New York state perspective, attendees from organizations nationwide should attend. Hospital and long-term care executive team and leaders in quality and compliance, survey coordinators, and risk management will benefit from attending.

Survey Readiness: Prepare, Respond, Succeed

Virtual Series | April 2 鈥� 30

  • April 2:听 Survey readiness 101: Overview and getting started
  • April 9:听 Preparation: How to mitigate risk and prepare for upcoming surveys
  • April 16: They鈥檙e here: Establishing a survey response and management protocol
  • April 23: Responding to survey findings: How to develop a strong correction plan and knowing your options
  • April 30: What鈥檚 next: Leveraging survey findings and strengthening organizational quality and compliance

The cost to attend this series is $475.

State hospital associations and their members can enjoy $50 off when using this code when registering: SHADISCOUNT25

To learn more and to register, visit .

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PACE Plans and The Changing Risk Environment

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Programs for All-Inclusive Care for the Elderly (PACE) plans are programs aimed at keeping low-income older adults living in the community and out of nursing homes, providing home care, prescriptions, meals, and transportation to participants. The Centers for Medicare & Medicaid Services (CMS) recently proposed changes to the risk score model used for PACE (which determines the calculation for how many Medicare dollars PACE gets) that will create funding vulnerabilities in the Medicare rate. If approved, this would likely mean PACE programs get significantly lower funding amounts from Medicare than under the current model. The final notice is expected to be released in April 2025. If approved, this change would be fully phased in by 2029.

PACE enrollees, as compared to enrollees in Medicare Advantage plans, disproportionally have conditions that will no longer be risk-adjustable, such as depression, leading to an across-the-board drop in risk scores. Along with the reduced funding for PACE programs, this risk model change will create data submission issues for PACE organizations and their vendors. When health plans, who are much more risk-score focused in general than PACE plans, underwent this same change, risk scores dropped by between 5%-20%. If PACE programs don鈥檛 fix their data submissions in 2025, they鈥檒l lose money in 2026 and beyond.

To sustain and grow, PACE leaders must understand and plan for the change to v28 risk scores. HMA鈥檚 team of consultants and our actuaries from Wakely, an HMA Company, have put together an analysis to help PACE plans understand and prepare for the transition:

  • HMA will create reports showing the current (v22) risk score, the proposed (v28) risk score, and the impact by diagnosis category to help with potential recapture efforts.
  • Identify data submission problems and suggest strategies for fixing them.
  • Outline potential financial and operational adjustments uncovered during the analysis.

HMA has found that this the change in the process of diagnosis submission is a blind spot for many PACE plans and may be more critical to mitigate than the impacts from the risk adjustment model change.  

HMA & Wakely will be hosting a booth at the National PACE Association Spring Policy Forum in Washington, DC on March 17 and 18. If you are attending, we hope you will visit us there. If you would like help understanding the potential impact to your PACE organization, contact us about developing an analysis to help you respond to these changes.

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2025 State of the State Addresses, Part 2: Evolving Healthcare Priorities Across the Nation

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This week, our In Focus section reviews priorities outlined in recent State of the State addresses, building on an earlier article:  We examine specific proposals from the governors of Illinois, Indiana, New Mexico, and South Carolina, as detailed in the 明升88 Information Services (HMAIS) report, 2025 State of the States Overview. These states offer examples of the trending policy changes and investments governors intend to make, providing valuable insights into the evolving healthcare landscape.

Key Trends in Governors鈥� Budgets

State of the State addresses provide insights into governors鈥� priorities, reflecting state budgets, multiyear initiatives, and changes in federal policies and funding. These priorities signal strategic shifts healthcare stakeholders must navigate to remain aligned with the evolving state and federal policy landscapes. Common themes that 明升88 (HMA) is tracking this year include healthcare affordability, Medicaid work requirements, workforce shortages, and enhanced oversight of healthcare entities.

Highlights by State

Illinois Gov. J.B. Pritzker  a 2025 State of the State Address on February 19, 2025, during which he presented his executive  for fiscal year (FY) 2026 and discussed strengthening oversight of healthcare entities like pharmacy benefit managers (PBMs) and health insurers. Governor Pritzker introduced the Prescription Drug Affordability Act, which seeks to further regulate PBMs, reduce drug costs, and protect independent pharmacists. More specifically, it would give the state Department of Insurance full statutory authority to examine PBM records and require these organizations to comply with annual auditing and reporting requirements. The governor also called for a ban on prior authorization for behavioral healthcare and proposed requiring insurance companies to reimburse patients for reasonable travel costs for medical appointments when the distance they must travel exceeds network adequacy requirements.

Pritzker鈥檚 budget allocations include:

  • $191.8 million to support the Certified Community Behavioral Health Clinic (CCBHC) Medicaid Demonstration Program
  • $27.9 million to maintain the state鈥檚 maternal and child home health programs
  • $27.7 million to support nonhospital facilities that provide psychiatric care to people younger than 21 years old
  • $132 million for Medicaid-like coverage for undocumented adults ages 65 and older
  • A shift in funding from the state鈥檚 Exchange to a State-Based Marketplace, which would end use of the federal platform

In addition, the budget plan eliminates funding for Medicaid-like coverage for undocumented adults ages 42鈭�64, which cost approximately $420 million in one year.

Indiana Gov. Mike Braun  his address on January 29, 2025, during which he discussed his support for state legislation that would address healthcare costs. Governor Braun urged the legislature to pass multiple bills, including:

  • House Bill (HB) 1003: Specifies that the state鈥檚 Medicaid Fraud Control Unit (MCFU) may investigate provider fraud, insurer fraud, and duplicate billing and would require more healthcare price transparency, stop anticompetitive practices that drive up prices, and put an end to surprise billing
  • Senate Bill (SB) 3: Would mandate that third party administrators, PBMs, employee benefit consultants, and insurance providers acting on behalf of plan sponsors have a fiduciary duty to the plan sponsors
  • HB 1004: Would bolster oversight of nonprofit hospital financials

The governor also encouraged the legislature to support efforts focused on PBM reforms.

Governor Braun鈥檚 proposed  for the 2025鈭�27 biennium recommends a general fund appropriation of more than $5 billion in FY 2025鈭�26 and $5.3 billion in FY 2026鈭�27 for the state Office of Medicaid Policy and Planning. Moreover, the state is still managing the effects of a nearly $1 billion shortfall it identified in the Medicaid budget in FY 2024. The Indiana Family and Social Services Administration predicts total Medicaid expenditures will reach nearly $21 billion in FY 2025, up 6.4 percent from $19 billion in 2024 and will likely increase by at least another $1 billion in both 2026 and 2027.

New Mexico Gov. Michelle Lujan Grisham  her 2025 State of the State Address on January 21, 2025, wherein she discussed the new state Health Care Authority (HCA), which launched in July 2024. According to Governor Grisham, the HCA has helped the state to increase Medicaid provider rates, create a Health Care Affordability Fund, and expand the Health Care Professional Loan Repayment Program. To continue with HCA鈥檚 work, the governor announced that in March 2025, the state will be sending more than $1 billion to New Mexico hospitals through the Medicaid provider tax. She also recommended that the state legislature approve $50 million in additional funding for the Rural Health Care Delivery Fund, which supports getting new and expanded primary, behavioral, maternal and child, and specialty healthcare services into rural areas.

In her proposed FY 2026 , the governor recommends:

  • $13 million in recurring funds to increase reimbursement rates up to 150 percent of Medicare rates
  • $5.3 million for the Program of All-Inclusive Care for the Elderly (PACE)
  • $2.5 million for increased assisted living facility rates
  • $2.9 million to increase behavioral health rates for non-Medicare equivalents
  • $30 million annually over three years to expand Medicaid services, including medical respite for people who are homeless, food support for certain individuals who pregnant, infrastructure to provide medical services to people who are justice-involved, and infrastructure to provide housing and food supports.

In addition, the budget recommends a $100 million special appropriation to address behavioral health needs, which will fund the 988 program, an investment to secure a federal match for the CCBHC Initiative, more drug and alcohol treatment services at the New Mexico Behavioral Health Institute, and medical and behavioral health providers at the Corrections Department.

South Carolina Gov. Henry McMaster  his 2025 State of the State Address on January 29, 2025, in which he discussed the state鈥檚 siloed health and human services delivery system, which he said creates a difficult landscape to navigate for people with physical disabilities, special needs, and mental health issues. Governor McMaster said the state must make immediate changes to the Department of Mental Health and Department of Disabilities and Special Needs and proposed making the boards of commissioners that run the departments directly accountable to the governor.

The governor鈥檚 proposed FY 2025鈭�26  highlighted his priority of reimplementing Medicaid work requirements through a Section 1115 demonstration waiver, which the state previously had in place during President Donald Trump鈥檚 first administration. Governor McMaster has already requested an expedited approval of the demonstration, which would expand Medicaid eligibility to 100 percent of the federal poverty level (FPL) for parents who are working or going to school. Under South Carolina鈥檚 existing eligibility rules, parents no longer qualify for Medicaid if they earn more than 67 percent of the FPL. The work and school requirements would only apply to parents with incomes of between 67 percent and 100 percent of the FPL.

The budget also recommends approximately $79 million in recurring funds to support the state鈥檚 Medicaid program. Those funds would be allocated as follows:

  • $5.7 million toward increasing behavioral health provider payment rates
  • $5.4 million toward increasing opioid use disorder provider reimbursement rates
  • $10 million toward reducing waiting lists for home and community-based services
  • $2.4 million toward intensive partial hospitalization and outpatient behavioral health programs

In addition, the budget recommends funding for the Department of Public Health and $1.6 million in nonrecurring funds and $625,000 in recurring funds for the Healthy Moms, Healthy Babies program and its mobile maternity care vehicle.

Connect With Us

 has prepared a comprehensive report summarizing each State of the State address and governors鈥� proposed budgets, which is available to HMAIS subscribers. It also comprises a section highlighting trends in the issues covered in each speech, including maternal health, substance use disorder, Medicaid work requirements, prescription drug prices, and provider rates.

HMA supports healthcare stakeholders in responding to these developments, offering strategic guidance and expertise to help navigate the evolving policy landscape and align with the shifting priorities outlined in these addresses. Contact听one of our experts below for more information about the report or to connect with one of HMA鈥檚 state policy and market experts.

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