2026 Kentucky Legislative Session Recap
Kentucky lawmakers concluded the 2026 regular session on April 15, meeting the constitutional deadline for a budget-year session. Healthcare discussions centered on the final budget, Medicaid policy, gubernatorial vetoes, and legislative overrides. Few health bills were enacted, amended, or left unresolved before adjournment.
We are providing this end of session recap to keep you informed on key legislative developments that may affect care and access in the communities we serve.
Budget
The budget was the central vehicle for Kentucky’s major healthcare policy decisions during the 2026 session. Through HB 500, lawmakers established Kentucky’s Medicaid funding and operating framework for the next two fiscal years. The bill became law after Governor Andy Beshear issued line-item vetoes and the General Assembly overrode those vetoes in part. The final budget funds Medicaid services, managed care payments, waiver services, provider payments, and health-related agency work over the next two fiscal years.
For Medicaid services, the final budget appropriates approximately $23.97 billion in FY 2026-27 and $23.85 billion in FY 2027-28, drawing from General, Restricted, and Federal Funds. It also requires the Cabinet for Health and Family Services to make 12 monthly payments to Medicaid managed care organizations each fiscal year and prohibits the Cabinet from deferring payments into a later fiscal year.
The Medicaid funding level drew scrutiny because it was below the agency request for continuation of Medicaid benefits. The budget appropriates $691 million less in General Fund dollars than the agency request for Medicaid benefits over the biennium and transfers $290 million from the Kentucky Insurance Regulatory Trust Fund for a potential Medicaid appropriation in the 2027 Regular Session.
HB 2 builds on the budget framework by making significant Medicaid policy changes. It requires work requirement notices to begin by September 1, implementation to begin January 1, 2027, and certain cost-sharing changes to take effect October 1, 2028. HB 2 also includes more frequent eligibility redeterminations, managed care contracting provisions, dental coverage modifications, nonemergency medical transportation provisions, and development of a public Medicaid transparency dashboard.
Medicaid State-Directed Payment Program
HB 689 directs the Department for Medicaid Services to seek federal approval for a Medicaid state-directed payment program for physician and nonphysician professional services provided to Medicaid beneficiaries by qualifying hospitals, affiliated physician groups, physicians, and other employed or contracted professionals. The measure was signed by Governor Beshear on April 13.
Prior Authorization
HB 176 establishes a prior authorization exemption program for certain providers and creates annual prior authorization reporting requirements for the Department of Insurance and the Department for Medicaid Services. The Medicaid reporting requirement will take effect January 1, 2027, while the exemption program and related insurance provision generally apply to contracts issued, renewed, or amended on or after January 1, 2028. The bill was signed into law on April 13.
Physician Licensure
SB 137 creates a provisional licensure pathway for eligible physicians who have an employment offer from a qualifying healthcare sponsor located in a federally designated medically underserved area. Applicants must meet specified licensure requirements, have good standing or authorization to practice medicine in their licensing country within the last five years, complete residency or substantially similar postgraduate medical training, and have practiced as a physician for at least five years. The provisional license converts to a regular Kentucky medical license after three years with the employing sponsor. The bill was signed by the governor on April 10.
Health Data Utility Study
HB 676 was narrowed from a proposal to create a statewide health data utility into a study of policy options and strategies for developing one. Legislative Research Commission staff must study policy options and implementation strategies and submit a written report to lawmakers by December 1. The bill became law without the Governor’s signature on April 14, meaning the Governor allowed it to take effect without signing or vetoing it.
With the 2026 session concluded, Kentucky’s healthcare priorities now shift to implementation, including Medicaid funding and policy changes, federal review of the state-directed payment program, and next steps following the health data utility study.
Statewide News
Kentucky Lantern: KY hospitals: Letters from Trump admin over pricing transparency were over technical issues
Kentucky Lantern: Democratic state lawmaker prepares data center regulation bill for next year
WLWT: Kentucky Gov. Beshear freezes state’s gas tax, activates price gouging laws
Kentucky Today: Beshear launches limited Pre-K for All pilot program by executive action, prompting GOP criticism
