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--- version:Acts Chapter 159
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-CHAPTER 159
-Legislative Research Commission PDF Version
-
-1
-CHAPTER 159
-( SB 173 )
-AN ACT relating to legislative oversight of the Medicaid state plan and declaring an emergency.
-Be it enacted by the General Assembly of the Commonwealth of Kentucky:
-SECTION 1.   A NEW SECTION OF KRS CHAPTER 205 IS CREATED TO READ AS FOLLOWS:
-(1) As used in this section:
-(a) "CMS" means the federal Centers for Medicare and Medicaid Services;
-(b) "Department" means the Department for Medicaid Services;
-(c) "KCHIP state plan" means the federally approved, legally binding contract between the
-Commonwealth and CMS that outlines how the Commonweal th administers the Kentucky Children's
-Health Insurance Program, commonly known as KCHIP;
-(d) "Medicaid state plan" means the federally approved, legally binding contract between the
-Commonwealth and CMS that outlines how the Commonwealth administers the s tate's medical
-assistance program, commonly known as Medicaid; and
-(e) "SPA" means a Medicaid state plan or KCHIP state plan amendment or a request for a state plan
-amendment that has been submitted to CMS.
-(2) (a) The Commonwealth's Medicaid state plan an d KCHIP state plan shall be subject to an annual
-legislative review in accordance with this section.
-(b) The department shall, by July 1 of each year, submit to the Legislative Research Commission, for
-referral to the Interim Joint Committee on Health Serv ices and the Medicaid Oversight and Advisory
-Board established in KRS 7A.273:
-1. A copy of the current Medicaid state plan;
-2.  A copy of the current KCHIP state plan; and
-3. A copy and summary of each Medicaid and KCHIP SPA that has been:
-a. Approved by CMS;
-b. Denied or rejected by CMS; and
-c. Submitted to, but not yet approved or denied by, CMS;
-since July 1 of the preceding calendar year.
-(c) The Medicaid Oversight and Advisory Board shall, by August 31 of each year, on a date determined
-by the co-chairs, review the Medicaid state plan, KCHIP state plan, and all Medicaid and KCHIP
-SPAs submitted in accordance with paragraph (b) of this subsection, at which time representatives
-from the department shall appear before, provide testimony to, and ans wer questions from the board
-concerning the Medicaid state plan, the KCHIP state plan, and all Medicaid and KCHIP SPAs
-submitted in accordance with paragraph (b) of this subsection.
-(d) The Interim Joint Committee on Health Services shall, by October 31 of  each year, on a date
-determined by the co-chairs, review the Medicaid state plan, KCHIP state plan, and all Medicaid and
-KCHIP SPAs submitted in accordance with paragraph (b) of this subsection, at which time
-representatives from the department shall appe ar before, provide testimony to, and answer questions
-from the committee concerning the Medicaid state plan, KCHIP state plan, all Medicaid and KCHIP
-SPAs submitted in accordance with paragraph (b) of this subsection, and the department's response
-to any r ecommendations made by the Medicaid Oversight and Advisory Board in accordance with
-subsection (4) of this section.
-(3) When submitting a copy and summary of a SPA to the Legislative Research Commission in accordance
-with subsection (2)(b) of this section, the department shall include:
-(a) A copy of all materials submitted to CMS related to the SPA;
-ACTS OF THE GENERAL ASSEMBLY 2
-(b) A summary of the change or changes sought by the SPA;
-(c) A summary of how the SPA will improve the administration of the Medicaid or KCHIP program,
-access to services, or the overall health of the Medicaid or KCHIP population;
-(d) An explanation of the necessity of the SPA;
-(e) A determination of whether or not the SPA was subject to the authorization requirements established
-in KRS 205.5372 and an explanation of that determination; and
-(f) An analysis of the anticipated fiscal and budgetary impacts of the SPA which shall include an
-analysis of costs over a one (1), two (2), and five (5) year timeframe.
-(4) Following a review conducted pursuant to subsection (2)(c) of this section, the Medicaid Oversight and
-Advisory Board may, by a vote of a majority of the voting members appointed to the board under KRS
-7A.276, make recommendations for changes to a state plan or SPA. If the board elects to make
-recommendations for changes to a state plan or SPA, the board shall submit those recommendations in
-writing to the Governor, the secretary of the cabinet, and the commissioner of the department within thirty
-(30) calendar days from the date on which the review was conducted.
-(5) (a) As part of a review conducted under subsection (2)(d) of this section of the Medicaid state plan,
-KCHIP state plan, and all Medicaid and KCHIP SPAs submitted in accordance with subsection
-(2)(b) of this section, the Interim Joint Committee o n Health Services may, by a vote of a majority of
-the members appointed to the committee, find a state plan to be, in part or in whole, deficient because
-it:
-1. Appears to be in conflict with an existing state statute governing the Medicaid or KCHIP
-program, including but not limited to the requirements imposed under KRS 205.525;
-2. Appears to be in conflict with federal law governing the Medicaid or CHIP program;
-3. Appears to exceed the cabinet's or department's statutory authority, including but not limi ted
-to restrictions imposed under KRS 205.5372;
-4. Appears to impose an unreasonable burden on state government, Medicaid -participating
-providers, or Medicaid beneficiaries;
-5. Was submitted for review in a manner that does not fully comply with subsection  (3) of this
-section;
-6. Fails to fully incorporate recommendations made by the Medicaid Oversight and Advisory
-Board under subsection (4) of this section; or
-7. Appears to be deficient in any other manner, except that the committee shall not find a state
-plan to be deficient on the basis of a SPA that was:
-a. Denied or rejected by CMS; or
-b. Submitted to, but not yet approved or denied by, CMS.
-(b) Notwithstanding paragraph (a)7. of this subsection, the Interim Joint Committee on Health Services
-may make r ecommendations to the Governor, secretary of the cabinet, commissioner of the
-department, or the General Assembly related to a SPA that was denied or rejected by CMS or that has
-been submitted to, but not yet approved by, CMS.
-(c) If the Interim Joint Committee on Health Services finds the Medicaid state plan to be, in part or in
-whole, deficient, the committee shall transmit to the Governor, the secretary of the cabinet, and the
-commissioner of the department:
-1. A copy of the finding of deficiency and  other relevant findings, recommendations, or
-comments; and
-2. A request that the Governor determine whether the Medicaid or KCHIP state plan shall:
-a. Be amended to resolve concerns identified by the committee that lead to its finding of
-deficiency; or
-b. Remain in effect notwithstanding the finding of deficiency.
-CHAPTER 159
-Legislative Research Commission PDF Version
-
-3
-(6) The Governor shall transmit his or her determination on any request made under subsection (5)(c)2. of this
-section to the Legislative Research Commission for referral to the Interim Joint Committee on Health
-Services and the Medicaid Oversight and Advisory Board within thirty (30) calendar days of the date on
-which the Interim Joint Committee on Health Services found the Medicaid or KCHIP state plan, in part or
-in whole, to be deficient.
-(7) The department shall, within thirty (30) days after the effective date of this Act, publish to its website, in an
-easily accessible manner:
-(a) A copy of the current, in effect Medicaid and KCHIP state plans, including a clear notation of the
-date of the most recent approved SPA to each plan; and
-(b) A copy of each Medicaid and KCHIP SPA that has been submitted to CMS and the Legislative
-Research Commission, as required under KRS 205.525, including a copy of the summary and
-statement of benefits as required under KRS 205.525.
-(8) Notwithstanding provisions of this section to the contrary:
-(a) When conducting the initial legislative review of the Medicaid and KCHIP state plans in 2026, the
-Medicaid Oversight and Advisory Board and the Interim Joint Co mmittee on Health Services shall
-review the Medicaid state plan and the KCHIP state plan in their entirety and may, by June 1, 2026,
-request a summary, to be prepared in accordance with subsection (3) of this section, for any part of
-the Medicaid state plan; and
-(b) The department shall, within five (5) calendar days after the effective date of this Act, provide the
-Legislative Research Commission with a copy of the current, in effect Medicaid and KCHIP state
-plans for referral to the Interim Joint Committe e on Health Services and the Medicaid Oversight and
-Advisory Board.
-Section 2.   Whereas recently enacted federal changes to the Medicaid program and significant increases in
-the Commonwealth's Medicaid budget over the last decade create an urgent need to  bolster legislative oversight of
-the Medicaid program, take immediate steps to comply with new federal requirements, and ensure that Medicaid
-expenditures support the healthcare needs of only those individuals the program is intended to serve, an emergenc y is
-declared to exist, and this Act takes effect upon its passage and approval by the Governor or upon its otherwise
-becoming a law.
-Veto Overridden April 14, 2026.
+UNOFFICIAL COPY  26 RS SB 173/SCS 1
+Page 1 of 6
+SB017340.100 - 1935 - XXXX   3/3/2026 2:33 PM  Senate Committee Substitute
+AN ACT relating to legislative oversight of the Medicaid state plan and declaring 1
+an emergency. 2
+Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
+SECTION 1.   A NEW SECTION OF KRS CHAPTER 205 IS CREATED TO 4
+READ AS FOLLOWS: 5
+(1) As used in this section: 6
+(a) "CMS" means the federal Centers for Medicare and Medicaid Services; 7
+(b) "Department" means the Department for Medicaid Services; 8
+(c) "KCHIP state plan" means the federally approved, legally binding contract 9
+between the Commonwealth and CMS that outlines how the Commonwealth 10
+administers the Kentucky Children's Health Insurance Program, commonly 11
+known as KCHIP; 12
+(d) "Medicaid state plan" m eans the federally approved, legally binding 13
+contract between the Commonwealth and CMS that outlines how the 14
+Commonwealth administers the state's medical assistance program, 15
+commonly known as Medicaid; and 16
+(e) "SPA" means a Medicaid state plan or KCHIP sta te plan amendment or a 17
+request for a state plan amendment that has been submitted to CMS. 18
+(2) (a) The Commonwealth's Medicaid state plan and KCHIP state plan shall be 19
+subject to an annual legislative review in accordance with this section. 20
+(b) The departme nt shall, by July 1 of each year, submit to the Legislative 21
+Research Commission, for referral to the Interim Joint Committee on 22
+Health Services and the Medicaid Oversight and Advisory Board established 23
+in KRS 7A.273: 24
+1. A copy of the current Medicaid state plan; 25
+2.  A copy of the current KCHIP state plan; and 26
+3. A copy and summary of each Medicaid and KCHIP SPA that has 27
+UNOFFICIAL COPY  26 RS SB 173/SCS 1
+Page 2 of 6
+SB017340.100 - 1935 - XXXX   3/3/2026 2:33 PM  Senate Committee Substitute
+been: 1
+a. Approved by CMS; 2
+b. Denied or rejected by CMS; and 3
+c. Submitted to, but not yet approved or denied by, CMS; 4
+since July 1 of the preceding calendar year. 5
+(c) The Medicaid Oversight and Advisory Board shall, by August 31 of each 6
+year, on a date determined by the co -chairs, review the Medicaid state plan, 7
+KCHIP state plan, and all Medicaid and KCHIP SPAs submitted in 8
+accordance with par agraph (b) of this subsection, at which time 9
+representatives from the department shall appear before, provide testimony 10
+to, and answer questions from the board concerning the Medicaid state 11
+plan, the KCHIP state plan, and all Medicaid and KCHIP SPAs submit ted 12
+in accordance with paragraph (b) of this subsection. 13
+(d) The Interim Joint Committee on Health Services shall, by October 31 of 14
+each year, on a date determined by the co -chairs, review the Medicaid state 15
+plan, KCHIP state plan, and all Medicaid and KCH IP SPAs submitted in 16
+accordance with paragraph (b) of this subsection, at which time 17
+representatives from the department shall appear before, provide testimony 18
+to, and answer questions from the committee concerning the Medicaid state 19
+plan, KCHIP state plan , all Medicaid and KCHIP SPAs submitted in 20
+accordance with paragraph (b) of this subsection, and the department's 21
+response to any recommendations made by the Medicaid Oversight and 22
+Advisory Board in accordance with subsection (4) of this section. 23
+(3) When submitting a copy and summary of a SPA to the Legislative Research 24
+Commission in accordance with subsection (2)(b) of this section, the department 25
+shall include: 26
+(a) A copy of all materials submitted to CMS related to the SPA; 27
+UNOFFICIAL COPY  26 RS SB 173/SCS 1
+Page 3 of 6
+SB017340.100 - 1935 - XXXX   3/3/2026 2:33 PM  Senate Committee Substitute
+(b) A summary of the change or changes sought by the SPA; 1
+(c) A summary of how the SPA will improve the administration of the Medicaid 2
+or KCHIP program, access to services, or the overall health of the Medicaid 3
+or KCHIP population; 4
+(d) An explanation of the necessity of the SPA; 5
+(e) A determination of whether or not the SPA was subject to the authorization 6
+requirements established in KRS 205.5372 and an explanation of that 7
+determination; and 8
+(f) An analysis of the anticipated fiscal and budgetary impacts of the SPA 9
+which shall include an analysis of costs over a one (1), two (2), and five (5) 10
+year timeframe. 11
+(4) Following a review conducted pursuant to subsection (2)(c) of this section, the 12
+Medicaid Oversight and Advisory Board may, by a vote of a majority of the voting 13
+members appointed to the board under KRS 7A.276, make recommendations for 14
+changes to a state plan or SPA. If the board elects to make recommendations for 15
+changes to a state plan or SPA, the board shall submit those recommendations in 16
+writing to the Governor, the secretary of the cabinet, and the commissioner of the 17
+department within thirty (30) calendar days from the date on which the review 18
+was conducted. 19
+(5) (a) As part of a review conducted under subsection (2)(d) of this section of the 20
+Medicaid state plan, KCHIP state plan, and all Medicaid and KCHIP SPAs 21
+submitted in accordance with subsection (2)(b) of this section, the Interim 22
+Joint Committee on Health Services may, by a vote of a majority of the 23
+members appointed to the committee, find a state plan to be, in part or  in 24
+whole, deficient because it: 25
+1. Appears to be in conflict with an existing state statute governing the 26
+Medicaid or KCHIP program, including but not limited to the 27
+UNOFFICIAL COPY  26 RS SB 173/SCS 1
+Page 4 of 6
+SB017340.100 - 1935 - XXXX   3/3/2026 2:33 PM  Senate Committee Substitute
+requirements imposed under KRS 205.525; 1
+2. Appears to be in conflict with federal law gov erning the Medicaid or 2
+CHIP program; 3
+3. Appears to e xceed the cabinet's or department's statutory authority, 4
+including but not limited to restrictions imposed under KRS 205.5372; 5
+4. Appears to impose an unreasonable burden on state government, 6
+Medicaid-participating providers, or Medicaid beneficiaries; 7
+5. Was submitted for review in a manner that does not fully comply with 8
+subsection (3) of this section; 9
+6. Fails to fully incorporate recommendations made by the Medicaid 10
+Oversight and Advisory Board under subsection (4) of this section; or 11
+7. Appears to be deficient in any other manner, except that the committee 12
+shall not find a state plan to be deficient on the basis of a SPA that 13
+was: 14
+a. Denied or rejected by CMS; or 15
+b. Submitted to, but not yet approved or denied by, CMS. 16
+(b) Notwithstanding paragraph (a)7 . of this subsection, the Interim Joint 17
+Committee on Health Services may make recommendations to the 18
+Governor, secretary of the cabinet, commissioner of the department, or the 19
+General Assembly related to a SPA that was denied or rejected by CMS or 20
+that has been submitted to, but not yet approved by, CMS. 21
+(c) If the Interim Joint Committee on Health Services finds the Medicaid state 22
+plan to be, in part or in whole, deficient, the committee shall transmit to the 23
+Governor, the secretary of the cabinet, and the  commissioner of the 24
+department: 25
+1. A copy of the finding of deficiency and other relevant findings, 26
+recommendations, or comments; and 27
+UNOFFICIAL COPY  26 RS SB 173/SCS 1
+Page 5 of 6
+SB017340.100 - 1935 - XXXX   3/3/2026 2:33 PM  Senate Committee Substitute
+2. A request that the Governor determine whether the Medicaid or 1
+KCHIP state plan shall: 2
+a. Be amended to resolve concern s identified by the committee that 3
+lead to its finding of deficiency; or 4
+b. Remain in effect notwithstanding the finding of deficiency. 5
+(6) The Governor shall transmit his or her determination on any request made under 6
+subsection (5)(c)2. of this section t o the Legislative Research Commission for 7
+referral to the Interim Joint Committee on Health Services and the Medicaid 8
+Oversight and Advisory Board within thirty (30) calendar days of the date on 9
+which the Interim Joint Committee on Health Services found th e Medicaid or 10
+KCHIP state plan, in part or in whole, to be deficient. 11
+(7) The department shall, within thirty (30) days after the effective date of this Act, 12
+publish to its website, in an easily accessible manner: 13
+(a) A copy of the current, in effect Medic aid and KCHIP state plans, including 14
+a clear notation of the date of the most recent approved SPA to each plan; 15
+and 16
+(b) A copy of each Medicaid and KCHIP SPA that has been submitted to CMS 17
+and the Legislative Research Commission, as required under KRS 205. 525, 18
+including a copy of the summary and statement of benefits as required 19
+under KRS 205.525. 20
+(8) Notwithstanding provisions of this section to the contrary: 21
+(a) When conducting the initial legislative review of the Medicaid and KCHIP 22
+state plans in 2026, the Medicaid Oversight and Advisory Board and the 23
+Interim Joint Committee on Health Services shall review the Medicaid state 24
+plan and the KCHIP state plan in their entirety and may, by June 1, 2026, 25
+request a summary, to be prepared in accordance with subs ection (3) of this 26
+section, for any part of the Medicaid state plan; and 27
+UNOFFICIAL COPY  26 RS SB 173/SCS 1
+Page 6 of 6
+SB017340.100 - 1935 - XXXX   3/3/2026 2:33 PM  Senate Committee Substitute
+(b) The department shall, within five (5) calendar days after the effective date 1
+of this Act, provide the Legislative Research Commission with a copy of the 2
+current, in effect Medicai d and KCHIP state plans for referral to the 3
+Interim Joint Committee on Health Services and the Medicaid Oversight 4
+and Advisory Board. 5
+Section 2.   Whereas recently enacted federal changes to the Medicaid program 6
+and significant increases in the Commonwealth's Medicaid budget over the last decade 7
+create an urgent need to bolster legislative oversight of the Medicaid program, take 8
+immediate steps to comply with new federal requirements, and ensure that Medicaid 9
+expenditures s upport the healthcare needs of only those individuals the program is 10
+intended to serve, an emergency is declared to exist, and this Act takes effect upon its 11
+passage and approval by the Governor or upon its otherwise becoming a law. 12