The NACHC state policy team is launching a new monthly blog series where we will highlight health centers’ monthly state legislative wins.
Every year, states make hard decisions around budget allocations, but given evolving challenges over the years, 2025 posed unique challenges due to COVID-era funding drying up along with the uncertainty in Congress over looming reductions in federal healthcare spending. This blog will highlight three states that showed a commitment for new and continued financial investments into the Community Health Center (CHC) system. These state investments reflect the value that CHCs provide within their state’s overall health care safety net system. The PCAs and health center champions deserve a round of applause for their sustained engagement and advocacy that resulted in these state investments.
Connecticut: State budget invests in Community Health Centers
On June 30, Connecticut Governor Ned Lamont signed into law the state’s two-year budget. Included in the final bill were a mix of reauthorized and new financial investments for CHCs. Foremost, the Community Health Center Association of Connecticut (CHC/ACT) engaged in continued negotiations with the state and ultimately ended up establishing a requirement where health centers have the ability to have their existing Medicaid reimbursement rates evaluated, also known as rebasing, and will occur under an Alternative Payment Method (APM) to be phased in over three years.
“This was a true negotiation,” Deb Polun, chief strategy officer at CHC/ACT, said. “It’s about getting health centers to a place where they’re more financially sustainable and able to serve all people. And having Medicaid rates go up will benefit all health center patients and really the entire community.”
Overall, the budget allocates state funds of $5 million in FY 26, an additional $7 million in FY 27 ($12 million total in new APM rates), and secures an additional $14.4 million in FY 28 ($26.4 million total). Depending upon the federal match, this could yield $15 million, $36 million, and $80 million in funds for Medicaid rates for health centers.
A 2024 NACHC survey found that most CHC respondents (86%) reported difficulty maintaining competitive salaries for staff as a top workforce recruitment and retention challenge due to financial constraints. Increasing health centers’ Medicaid reimbursement rates will yield more resources to support services provided to patients, which in turn enables CHCs to offer competitive salaries in-line with comparable hospitals and for-profit systems who generally have a larger personnel budget comparatively.
Another ongoing challenge for Connecticut’s CHCs was the process to get their Medicaid Prospective Payment System (PPS) rate increased to match the type, intensity, duration, and amount of services being provided to patients. Through the passage of the state budget, Connecticut established a process called “change in scope” to ensure every CHC can have a fair process to evaluate the services provided to patients and allows them to adjust their reimbursement rate to ensure their funding is adequately reflected.
Minnesota: FQHC Subsidy Grant Program
On June 14, Minnesota Governor Tim Walz signed the state’s two-year budget, which included reinvestments in the state’s FQHC Subsidy Grant Program. The Program was established via legislation in 2007 for the purpose of distributing grants to CHCs and FQHC Look-Alikes operating in Minnesota to “continue, expand, and improve federally qualified health center services to low-income populations”. A state’s healthcare budget has limited funding that is dispersed across the whole healthcare system, which is not guaranteed to go towards CHCs. A dedicated funding stream is extremely beneficial for a CHC, both from an operational and financial planning perspective, as it allows them to be more secure with planning for the future.
When a CHC has a dedicated state grant program, it sets a predictable revenue stream and enables them to more confidently create or expand lines of business to better serve their patient population.
The 2026-2028 biennial budget appropriated for Fiscal Year (FY) 2026 and FY 2027 $1M additional each year, and then $6.25 M every following year, starting in 2028. The anticipated result in base annual subsidy is around $9 million annually. For FY 2026, the legislature also appropriated $24.6M in one-time funding to health centers.
Furthermore, Minnesota also established a pathway for a certified midwife licensure and coverage for traditional healing practices. Creating these new licensure pathways benefits CHCs by addressing workforce shortages by offering new provider employment options. Now that these practitioners are certified by the state, they may be eligible for reimbursement which creates new revenue streams for CHCs allowing them to reinvest into programs and services such as maternal healthcare.
It’s important to note that Minnesota’s Lt. Governor, Peggy Flanagan, is the first Native American woman to be elected as a lieutenant governor in the United States. Adding coverage for traditional healing practices reflects a significant move by the state to recognize the need for care that considers patients’ cultural traditions.
Illinois: Increase in PPS for Community Health Centers
On June 16, Illinois Governor JB Pritzker signed the state’s FY26 budget. The state approved $40 million in General Revenue Funds for a PPS increases. This funding will help shore up CHCs so that they can continue to provide care for individuals who may lose health coverage or face other barriers to access.
Due to ongoing budget constraints and the federal reconciliation package, the FY 2026 budget sunset a program providing healthcare for immigrants which is anticipated to result in half a million residents losing health coverage as a result. CHCs that are reimbursed through a bundled rate system receive a single payment for all combined costs of eligible services and supplies. This requires providers to think more holistically about their approach to delivering care yet may result in lower reimbursement compared to CHCs that use fee-for-service.
Elimination of their healthcare for immigrants’ program is expected to increase the volume of uncompensated care CHCs will provide. Whereas by increasing PPS rates, CHCs in Illinois will be able to mitigate the loss of revenue, in turn, enabling providers to continue to provide services to this population.
In addition to CHC funding, the state took moves to advance policies that support non-clinical factors of health. The budget invested $263.7 million for HOME Illinois, a program that addresses homelessness by recognizing the interconnectedness of health and social well-being. Investing in non-clinical factors of health directly improves health outcomes by addressing the root causes of poor health which results in better adherence and outcomes.
Furthermore, the Illinois Primary Health Care Association (IPHCA) also made significant strides in advancing 340B contract pharmacy protections. The 340B program has been a lifeline for CHCs since the program began. As small community-based organizations, CHCs use the 340B program and 340B savings to provide essential medication and health care to under and uninsured individuals by reinvesting every penny from the program into activities that expand access to patient care. While the bill was not called for a final vote in the House before session adjourned, it remains on the docket and can be called once the legislature reconvenes.
“While we know there is much work left to do, we were pleased to take a moment at the end of this year’s legislative session to acknowledge our members’ hard work, our legislative champions, along with our staff, and all the advocates each Illinois health center mobilized over the course of session,” said Ollie Idowu, president and CEO at IPHCA.
It is essential that state legislatures appropriate dedicated funding for CHCs in their state budgets to ensure that these vital providers can continue delivering accessible, high-quality care to underserved populations. CHCs are often the frontline for primary, preventive, and behavioral health services in communities that face persistent health disparities and provider shortages.
Without stable and adequate funding, CHCs struggle to maintain services, expand their workforce, and invest in long-term improvements that benefit public health. State investment strengthens the health infrastructure by reducing emergency room costs and allowing any individuals to access care regardless of their ability to pay.