(1) The Department of Health and Human Services shall use the Medicaid Access and Quality Fund for the following purposes:

(a) Beginning January 1, 2026, forty million dollars annually shall be used to obtain federal financial participation for the purpose of enhancing rates paid to nonhospital providers of physical health services, as published in the medicaid practitioner fee schedule. This funding shall not be used to replace or offset existing state funds paid to providers for providing services under the medical assistance program. In calculating a rate enhancement under this subdivision, the department shall work with a statewide association exempt from taxation under section 501(c)(6) of the Internal Revenue Code of 1986 that primarily represents health care providers in multiple specialties who are licensed to practice medicine and surgery under the Uniform Credentialing Act. It is the intent of the Legislature that a rate enhancement provided by this subdivision should aim to improve access to care through increasing rates across a broad range of physical health services provided by nonhospital providers, with an emphasis on evaluation and management services, labor and delivery services, and rural services;

(b) Beginning no later than January 1, 2027, five million dollars annually shall be used to obtain federal financial participation to pay a monthly per-member fee of not less than seventy-five dollars to qualified primary care providers who meet criteria established by the Department of Health and Human Services to serve as a primary care medical home for target populations; and

(c) Any remaining funds shall be transferred to the medical assistance program and the Children's Health Insurance Program.

(2) Use of the funds described in this section is subject to all required federal approvals including any approvals necessary for use of such funds to obtain federal financial participation.