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LB 527

Adopt the Medicaid Access and Quality Act and change provisions relating to taxes on health maintenance organizations, prepaid limited health service organizations, and insurance companies

109th Legislature (2025-2026) Introduced by Machaela Cavanaugh and 1 co-sponsor

Imposes a 6% HMO premium tax to fund the Medicaid Access and Quality Fund, boosting payments to nonhospital providers and adding per-member primary care fees with federal match.

Approved by Governor on April 7, 2025
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WeVote Research Nonpartisan
Bill Summary · LB 527

Summary — LB 527 (Medicaid Access and Quality Act)

Status: Approved by Governor April 7, 2025 (passed Final Reading 47–0–2 with emergency clause)

Main purpose

LB 527 (the Medicaid Access and Quality Act) creates a dedicated revenue stream by imposing a new tax on health maintenance organizations (HMOs) and uses those proceeds, together with federal matching funds where approved, to increase Medicaid payment rates and support primary care access — with emphasis on evaluation & management services, labor and delivery, and rural providers.

Key provisions and changes

  • Creates the Medicaid Access and Quality Fund to receive and hold revenues from the new tax and related investment earnings.
  • Establishes a 6% tax on the gross amount of non‑Medicare direct writing premiums written under an HMO certificate of authority in Nebraska. The Director of Insurance must establish a collection schedule by January 1, 2026. The tax is effective January 1, 2026 and applies to premiums received during the current calendar year and thereafter.
    • Amendment: premiums received in 2025 that are attributable to an individual contract held by an entity that will not offer that contract in 2026 are exempt.
  • Directs the Department of Health and Human Services (DHHS) to amend Nebraska’s Medicaid state plan or file necessary federal documents by August 1, 2025 to obtain federal financial participation.
  • Uses of the Fund (subject to federal approvals):
    • Beginning January 1, 2026 — $40,000,000 annually to obtain federal match to enhance rates paid to nonhospital providers of physical health services (must not replace or offset existing state provider funds). DHHS must work with a statewide 501(c)(6) provider association in developing enhancements.
    • Beginning no later than January 1, 2027 — $5,000,000 annually to obtain federal match to pay a monthly per‑member fee (not less than $75) to qualified primary care providers who serve as primary care medical homes for target populations.
    • Any remaining funds transferred to Medicaid (Medical Assistance Program) and CHIP.
  • Express legislative intent that Medicaid practitioner fee schedule rates and associated General Fund appropriations not be reduced below the levels published as of July 1, 2024.
  • Authorizes DHHS to adopt implementing rules and regulations.
  • Amends statutes governing taxation of HMOs, prepaid limited health service organizations, and insurer premium taxes (see amendments to sections 44‑32,180; 44‑4726; and 77‑908, RRS/RS Neb.).

Who is affected

  • HMOs operating in Nebraska: new 6% tax on non‑Medicare direct writing premiums.
  • Prepaid limited health service organizations and insurers: related tax statute changes and clarifications (capitation payments for Medical Assistance Act excluded from tax computations).
  • Nonhospital providers of physical health services (physicians, clinics, rural providers): targeted for rate enhancements.
  • Primary care providers: potential per‑member fees for qualifying medical home services.
  • Medicaid and CHIP enrollees: intended to improve access and quality of physical health care, obstetric/labor & delivery, and rural care availability.
  • State budget/fiscal managers: administration of the new fund and coordination with federal matching processes.

Implementation and timeline

  • Aug 1, 2025 — DHHS to file Medicaid plan amendments or federal authorizing documents.
  • Jan 1, 2026 — Director of Insurance to establish collection schedule; tax becomes effective for premiums in the applicable calendar year; $40M annual use begins.
  • Jan 1, 2027 (no later than) — $5M annual per‑member fee program begins.
  • Emergency clause included — law effective immediately upon approval; tax collections and program uses subject to the statutory dates and to obtaining federal approvals for Medicaid matching funds.

Fiscal and federal considerations

  • The Fund’s effectiveness at increasing provider payments depends on DHHS obtaining federal financial participation (Medicaid match) for the planned rate enhancements and per‑member payments.
  • The statute prohibits using Fund monies to replace existing state Medicaid provider payments.
  • The 6% HMO premium tax increases insurer tax burden; economic and premium impacts may depend on market responses and regulatory enforcement.

Legislative actions

Introduced January 22, 2025; passed Final Reading April 3, 2025 (47–0–2); approved by Governor April 7, 2025. Primary sponsor: Sen. Mike Jacobson; cosponsor: M. Cavanaugh.

Compiled from official sources — confirm details with the bill’s official record.

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