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Medicaid Managed Care Enrollment Declines in Q1 2026: 黑料不打烊 Analysis of State Trends and Market Share

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黑料不打烊 (黑料不打烊) analyzed monthly Medicaid managed care enrollment data from 34 states to assess enrollment trends as of March 2026. The findings show that Medicaid managed care enrollment continued to decline as states navigate new eligibility policies and preparations for new Medicaid community engagement requirements under the 2025 budget reconciliation act, P.L. 119-21, now known as the Working Families Tax Cut (WFTC) Act. These trends serve as an early indicator of how policy and programmatic changes may affect Medicaid enrollment levels in the years ahead.

Drawing on monthly enrollment data from the 34 states, 黑料不打烊 found that Medicaid managed care enrollment fell to 60.4 million members in March 2026鈥攁 decline of 3.1 million members from March 2025, or 4.8 percent year over year. As states prepare to address this issue, this enrollment snapshot provides important insights into how administrative and policy changes may shape Medicaid participation in the years ahead.

Medicaid Managed Care Enrollment Trends in Q1 2026

黑料不打烊 Information Services (黑料不打烊IS) maintains a database of monthly Medicaid enrollment from all 50 states and Puerto Rico. The most recent 黑料不打烊 analysis showed that enrollment declines were widespread across the 34 states studied (Figure 1). Key findings include:

  • Enrollment changes varied considerably across states, reflecting a combination of state-specific demographic, administrative, operational, and policy factors.
  • Of the 34 states,聽only four鈥擟olorado, Mississippi, Nevada, and South Carolina鈥攕howed modest gains in Medicaid managed care enrollment from March 2025.
  • Several states experienced particularly significant declines. Arizona, Indiana, Kansas, and Louisiana聽each reported data reflecting , ranging from
  • Among the聽expansion states in the analysis,聽enrollment聽declined聽by聽2.5聽million (5 percent) to聽48.4聽million.聽The聽eight non-expansion states聽included in this analysis experienced聽a聽decline of 547,000 (4.4 percent),聽bringing聽enrollment to聽12聽million enrollees.

Figure 1. 黑料不打烊 Analysis of Medicaid Managed Care Enrollment in 34 States, March 2026

Note: States colored as blue shown on the map above are included in the 黑料不打烊 Enrollment Analysis.

National Medicaid Managed Care Market Share

黑料不打烊IS鈥檚 resource contains information on approximately 300 Medicaid managed care plans across 41 states and tracks corporate ownership, program participation, and tax status among participating plans.

As of March 2026, Centene held the largest share of the national Medicaid managed care market at 17.9 percent. Elevance followed with 10.6 percent, while United and Molina accounted for 8.4 percent and 6.0 percent, respectively (see Figure 2). These four organizations represented 42.9 percent of enrollment among the plans analyzed, underscoring continued concentration among large, national Medicaid managed care organizations, even as overall enrollment declines.

Figure 2. National Medicaid Managed Care Enrollment Share by Parent Organization, March 2026

How Medicaid Work Requirements and Eligibility Policies Could Affect Enrollment in 2027

The enrollment trends observed at the end of the first quarter (Q1) of 2026 come on the cusp of significant policy change. On June 1, 2026, the Centers for Medicare & Medicaid Services (CMS) released an interim final rule establishing a national framework for implementing Medicaid community engagement requirements under P.L. 119-21. The rule outlines federal parameters for eligibility exemptions and state implementation responsibilities.

States must now translate these federal requirements into operational eligibility policies, technology systems, administrative procedures, and beneficiary communications. As implementation moves forward, enrollment trends will provide important insights into how policy changes and state implementation affect enrollment levels and continuity of coverage across Medicaid programs.

Several states are advancing implementation of the new eligibility policies. Nebraska launched Medicaid work/community engagement requirements on May 1, 2026. Montana plans to begin implementation on July 1, 2026, while Arkansas intends to begin a soft launch of the new requirements in July 2026 before enforcement begins in January 2027.

Declines in enrollment are often an early indicator of broader impacts across the healthcare system, including uncompensated care levels, shifts in payer mix, and increased financial pressure on safety鈥憂et systems. For managed care organizations, even modest enrollment changes can mask shifts in risk profiles, geographic concentration, or service needs.

Data Considerations.The data in this analysis have some important limitations. States report enrollment figures at different points throughout the month, with some data reflecting beginning of the month totals and others capturing end of month enrollment. In addition, some state datasets encompass all Medicaid programs offering managed care plans, whereas others reflect only a subset of the managed Medicaid population. As a result, the findings should be viewed as indicative of broader trends rather than a comprehensive state-by-state comparison.

The 黑料不打烊IS enrollment reports and analyses, available through subscription, use data from nearly 300 health plans in 41 states.鈥疶he report provides by-plan enrollment plus corporate ownership, program inclusion, and for-profit versus not-for-profit status, with breakout tabs for publicly traded plans. 黑料不打烊IS鈥檚 Medicaid enrollment data, financials, procurement tracking, and a robust library of public documents鈥痚quips stakeholders with timely, actionable intelligence. Subscribe here.

Connect with Us鈥�

黑料不打烊 knows the Medicaid managed care landscape and how it is evolving. Medicaid changes under the WFTCA are affecting eligibility, financing, waivers, managed care oversight, provider reimbursement, and program integrity. 黑料不打烊 helps organizations assess impact, plan next steps, and move from policy analysis to implementation with confidence. Contact us to prepare your organization.

黑料不打烊 Weekly Roundup

June 24, 2026

Medicaid Managed Care Enrollment Declines in Q1 2026: 黑料不打烊 Analysis of State Trends and Market Share

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Clover Health Star Ratings Decision Signals Need for MA Plans to Engage in Scenario Planning

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On May 27, 2026, a federal court ruled that the Centers for Medicare & Medicaid Services (CMS) unlawfully included certain quality measures in Clover Health鈥檚 2026 Medicare Advantage (MA) Star Ratings, raising important questions for MA issuers.

In an exclusive webinar for clients, Wakely, an 黑料不打烊 Company, addressed the , its implications, and the resulting policy and financial issues, some of which remain unanswered.

Clover Decision Requires Careful Interpretation

The US District Court for the Southern District of Georgia ruled that CMS acted unlawfully when it incorporated certain quality measures into Clover鈥檚 Star Ratings. According to the decision, CMS relied on data sources beyond those permitted and did not follow required procedural steps, including notice and comment rulemaking. As a result of the decision, CMS was required to recalculate Clover鈥檚 2026 Star Ratings, removing the disputed measures from the rating process.

Although the judgment applies specifically to Clover, the underlying legal reasoning raises broader questions that could affect how the Star Ratings program is administered for MA plans going forward.

Clover Decision Raises Strategy Questions for Other Plans

Wakely Consulting modeled the revenue impact of the 20 Stars measures specific to the Clover case as well as three scenarios based on the court鈥檚 ruling:

Key takeaways for MA plans include:

  1. The Clover decision creates a meaningful degree of uncertainty for the Star Ratings program and its future design. Carriers need to have nimble approaches and resources that respond to the evolving legal and policy landscape.
  2. The ruling is limited to the 20 measures Clover disputed in its lawsuit; however, the legal reasoning in the case and the US District Court ruling could apply to other measurements.
  3. Although the judgment only directly affects Clover, other MA plans have already cited the decision in separate, ongoing litigation, which increases the possibility that similar arguments could be applied more broadly. Organizations participating in the MA market should closely monitor these developments.
  4. CMS鈥檚 near-term steps will be critical for the market and current strategy. It is still unknown whether CMS will appeal the decision. MA organizations should be watching for further legal filings as well as additional guidance from the agency. Potential future guidance could address whether rebids will be permitted and, if so, the scope and timing of that process.
  5. MA organizations also need to keep an eye on the federal policies that will inform future federal policy decisions related to the design and implementation of the Star Ratings program. The Clover decision and related litigation may determine policy proposals advanced by Congress, CMS, or both.

Decision Creates Urgency for Modeling and Scenario Planning

The range of possible outcomes requires carriers to undertake robust scenario planning to ensure they are prepared to act on the options available to them and the multiple pathways that are likely to emerge.

Wakely鈥檚 actuarial and policy team will continue to monitor guidance from CMS as well as the ongoing legal process. To discuss specific scenarios and implications for your organization specifically and the market generally, contact our actuarial team.

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Outlook 2026: New Guidance Raises the Bar for Medicaid 1115 Demonstration

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As part of its ongoing effort to reshape Medicaid policy and oversight, the Centers for Medicare & Medicaid Services (CMS) over the past few months has released a series of guidance documents in 2026 that collectively signal a more structured, fiscally rigorous approach to federal Medicaid funding. These changes will have a considerable impact on state innovation within the program.

In the most recent of these consequential directives, CMS outlines its plan to implement updated budget neutrality requirements for Medicaid Section 1115 demonstrations beginning in 2027.

To understand what this guidance means for states, health plans, and providers, 黑料不打烊 (黑料不打烊) senior principal Andrea Maresca caught up with Sara Singleton, Principal at Leavitt Partners, an 黑料不打烊 Company, and Rob Buchanan, Senior Principal at 黑料不打烊. Of particular interest was the need for significantly more robust modeling and financing strategies to provide the new prospective actuarial analyses required for approval.

A Shift in Federal Policy Direction

Q: CMS has issued several guidance documents this year, but why and how does the one on Section 1115 budget neutrality stand out?

Sara Singleton: This guidance reflects a broader shift toward increased federal oversight and a more standardized interpretation of budget neutrality. While Section 1115 demonstrations have always been required to be budget neutral in concept, CMS and states have historically relied on methodologies that allowed for flexibility and, in some cases, greater federal spending over time.

What鈥檚 different now is that Congress recently added a requirement that the CMS Chief Actuary certify that demonstrations will not increase federal expenditures relative to what Medicaid would otherwise spend. That requirement, combined with CMS鈥檚 implementing guidance, is driving a more prospective, and in theory, data-driven approach to evaluating demonstrations.

Q: How is the change from reviewing retrospective to prospective spending expected to affect Medicaid programs?

Sara Singleton: Historically, CMS often reviewed budget neutrality retrospectively against what鈥檚 called 鈥渨ithout waiver鈥� spending limits, which means the agency reviewed what spending would have been in the absence of the waiver program. Going forward, CMS is emphasizing prospective certification and signals an expectation that states will provide more rigorous actuarial analysis and activity-level financial modeling.

The implication is that states will need to demonstrate upfront and in much greater detail how each component of their demonstrations affect federal spending. This is a substantive change in expectations for documentation, analytics, and accountability.

Implications for Innovation, Including HRSN Initiatives

Q: Sara, you鈥檝e written previously about the opportunities to address health-related social needs (HRSN) through Medicaid. How does this new guidance intersect with those efforts?

Sara Singleton: The timing is important. Over the past several years, the number of states utilizing 1115 waivers to address HRSNs, such as housing instability, nutrition, and transportation, has significantly increased. Many of these waivers and additional research have proven what we have long known to be true鈥攖hat addressing HRSNs has a clear impact on health outcomes and costs.

The new budget neutrality framework raises the bar for states to demonstrate that new innovations in an 1115 waiver will reduce costs before the waiver can be approved. States will need to show not just that these services are beneficial, but that they also are financially sustainable within the federal budget neutrality test. That鈥檚 a higher evidentiary standard, particularly for newer or more complex interventions.

Q: Does that mean HRSN initiatives are at risk?

Sara Singleton: Not necessarily; however, it does mean states may need to rethink how they structure and justify them.

One key element in the guidance is the distinction between services that are already Medicaid-authorizable and those that are unique to Section 1115 demonstrations. CMS is signaling a preference for using existing authorities where possible. CMS鈥檚 preference and negotiations with states could lead states to shift some HRSN activities into managed care programs, including using in lieu of services, or state plan options.

For services that remain in 1115 demonstrations, the burden will be on states to build a more robust financial and policy case. That expectation could shape which interventions move forward.

Q: Rob, what are you hearing from states as they process this guidance?

Rob Buchanan: States recognize that Section 1115 demonstrations are critical tools鈥攖hey allow flexibility to test new delivery models and address complex population needs. In fact, every state has an 1115 demonstration, each with tailored initiatives that span coverage, benefits and services, workforce investments, and other programs. The pathway to approval and iteration of these programs is becoming more complex.

From a planning perspective, states will need to rethink how they approach the entire life cycle of a demonstration鈥攆rom concept development to modeling, implementation, and evaluation.

Q: Where are the biggest pressure points?

Rob Buchanan: 黑料不打烊 consultants have identified three key areas.

First is analytics and actuarial capacity. The guidance calls for more rigorous financial projections and certification prior to approval, which means states need stronger data infrastructure and modeling capabilities earlier in the process.

Second is program design and prioritization. Because demonstrations that increase federal spending will not be approved, states may need to narrow their focus, phase in initiatives, or identify offsetting savings within the demonstration.

Third is timing and alignment. CMS has indicated it will begin applying this framework in 2027, even as rulemaking continues. States with renewals or amendments coming up in that window will need to move quickly to align with the new expectations.

Q: How should states begin adapting their strategies?

Rob Buchanan: We鈥檙e advising states to start with a few practical steps.

One is to reassess their current demonstration portfolios. Which components are most essential? Which are most likely to meet the new budget neutrality standard? That prioritization will be critical.

Another is to integrate policy, finance, and operations early. Under this framework, you can鈥檛 develop policy concepts in isolation. You need to understand the financial implications from the outset.

Finally, states should think about implementation pathways. For example, if certain services can be authorized through managed care or state plan options, that may provide more flexibility than relying solely on Section 1115 authority.

Q: Does this change how states should think about partnerships?

Rob Buchanan: Yes, the level of coordination required across Medicaid agencies, actuaries, managed care plans, providers, and community organizations is increasing.

States will need strong partnerships to both design workable demonstrations and execute them effectively. That includes building connections with community-based organizations, particularly for initiatives that address HRSNs, where implementation relies heavily on local networks.

Q: As we look toward 2027 implementation, what should states and other Medicaid-focused organizations be focused on now?

Rob Buchanan: The most important thing is to recognize that this is not a distant policy change. It鈥檚 an immediate planning issue and states should already be assessing how the new framework applies to their program.

Compliance with this guidance requires state Medicaid programs to have detailed data  鈥� specifically actuarial analyses that have a clear methodology and assumptions and documentation demonstrating the federal fiscal impact of each demonstration component. States must provide sufficient information for CMS鈥檚 Chief Actuary to evaluate and certify budget neutrality. Plans and providers should also be engaged because these changes will influence program design, reimbursement approaches, and operational expectations.

Sara Singleton: At a broader level, stakeholders should expect additional guidance from CMS. This is one piece of a larger policy agenda, and CMS plans to provide additional clarification through the federal rulemaking process as well as technical assistance to states.

黑料不打烊, including 黑料不打烊 companies Wakely and Leavitt Partners,聽is actively helping states, health plans, providers, and other stakeholders assess the implications of CMS’s proposed budget neutrality framework and prepare for upcoming section 1115 renewals and amendments, as well as other changes due to recent guidance on community engagement requirements, state directed payments, and program integrity. 黑料不打烊 can support strategic assessments, renewal planning, demonstration redesign, financial modeling, actuarial coordination, federal negotiations, and implementation planning. Connect with 黑料不打烊 to learn how we can support your organization in navigating the next phase of Medicaid Section 1115 demonstration and policy.

You can find more insights on the impact of federal Medicaid policy changes in, CMS Proposes New Budget Neutrality Framework for Medicaid Section 1115 Demonstrations and register for the next edition of 黑料不打烊鈥檚 Summer Webinar Series: Understanding Work and Community Engagement Requirements and New Section 1115 Guidance

Blog

CMS聽Proposes New Budget Neutrality Framework for Medicaid Section 1115 Demonstrations聽

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New guidance outlines how CMS intends to implement Chief Actuary certification and a fundamentally different approach to budget neutrality beginning January 1, 2027.

[黑料不打烊鈥檚 analysis on this and related Medicaid changes is ongoing; this blog reflects an initial understanding of the 6/11 SMDL; additional analysis is forthcoming.]

On June 11, 2026, the Centers for Medicare & Medicaid Services (CMS) released State Medicaid Director Letter (SMDL) #26-003, which provides long-anticipated guidance on how the agency intends to implement new statutory budget neutrality requirements for Medicaid section 1115 demonstrations beginning January 1, 2027.

The SMDL provides guidance on CMS’s implementation of provisions enacted in Public Law 119-21 (the One Big Beautiful Bill Act, or OBBBA), which CMS now refers to as the Working Families Tax Cut (WFTC) Act. The law requires the CMS Chief Actuary to certify that Medicaid section 1115 demonstrations will not increase federal Medicaid expenditures before CMS may approve new demonstrations, amendments, or renewals.

While the SMDL includes discussion of CMS’s preference that states rely on Medicaid state plan and other Title XIX authorities when available, the guidance primarily focuses on implementing the new budget neutrality requirements under section 1115(g).

The result is a proposed framework that could fundamentally change how states design, finance, evaluate, and renew section 1115 demonstrations.

Key Takeaway #1: Budget Neutrality framework is changing to become more accurate, detailed, and subject to enhanced review.

For decades, Medicaid Demonstrations under Section 1115 required budget neutrality calculations that relied on comparisons of projected with and without waiver expenditure. Retrospective assessments against established 鈥渨ithout waiver鈥� budget neutrality limits then occurred.

CMS now proposes a different model that includes enhancements to how the budget neutrality calculations are developed and reviewed. This will include an actuarial certification requirement that shows how the budget neutrality meets actuarially sound principles.

Beginning with applications, renewals, or amendments submitted after January 1, 2027, the following must occur:

  • CMS鈥� Chief Actuary must certify that there will be no increase in federal expenditures compared to the expenditures projected in the absence of the Demonstration.
  • A rigorous actuarial analysis of the projected financial impacts of individual demonstration activities must be performed. The budget neutrality analysis is certified by CMS鈥� Chief Actuary prior to Demonstration approval. This is a change from the historical 鈥渨ithout waiver鈥� expenditure cap calculation.
  • With the review above, there is now no expenditure limit or budget neutrality cap. Instead, the budget neutrality is not approved if there is a projected increase in Federal Medicaid expenditures. (Note, approval of historical Demonstration applications and budget neutrality required a projection of reduced overall expenditures.)
  • Monitoring budget neutrality in the Demonstration time period will utilize new special terms and conditions (STCs). There will be corrective actions implemented if expenditure substantially deviates from the State projections. Historically, quarterly and annual reporting was required, and States were subject to return to CMS any excess federal funds. The new guidance appears similar in that ongoing monitor will occur and action will be needed to the extent expenditures are not at or below projections.

For states to be compliant with this guidance, detailed actuarial analyses, methodology, assumptions, data, and documentation demonstrating the federal fiscal impact of each demonstration component will be necessary. States must provide sufficient information for CMS鈥檚 Chief Actuary to evaluate and certify budget neutrality, including the populations affected, covered services, payment methodologies, payment rates, administrative costs, and estimated federal expenditures associated with demonstration authorities.

Key Takeaway #2: Beginning January 1, 2027, certain benefits and services may be treated differently under Medicaid section 1115 demonstrations.

A central feature of the new framework is CMS’s proposed classification of demonstration activities into two categories.

The first category is Medicaid Authorizable Populations and Services (MAPS). These are populations and services that could otherwise be covered through the Medicaid state plan or another Title XIX authority. For budget neutrality purposes, CMS proposes treating MAPS expenditures as having a zero net financial impact because they represent expenditures that could have occurred absent the demonstration. This is similar to how current hypothetical expenditures are treated.

The second category consists of section 1115-only activities; that is, activities that could not otherwise be authorized through existing Medicaid authorities. These activities would become the primary focus of budget neutrality review.

States would be required to identify, measure, and document both the costs and savings associated with each section 1115-only activity, including administrative costs. CMS would then evaluate the aggregate financial impact of those activities when determining whether a demonstration qualifies for certification.

Key Takeaway #3: Medicaid 1115 demonstration savings will become more difficult to accumulate and carry forward.

CMS also proposes significant changes to the treatment of demonstration savings.

Historically, states have been able to accumulate budget neutrality savings and, under certain circumstances, carry those savings into future renewal periods. Many demonstrations have relied on these accumulated savings to support cost-not-otherwise-matchable expenditures and other demonstration initiatives.

Under the new approach, savings generally would be limited to those generated during the current demonstration period and could only be applied to the next immediate renewal period. CMS also proposes limiting rollover calculations to the most recent five years of demonstration experience and eliminating the longstanding ability to carry forward legacy savings across multiple renewal cycles.

CMS would provide a transition period for the first renewal after January 1, 2027, allowing states to use savings calculated under the current methodology. Over time, however, the proposed framework is expected to reduce the amount of demonstration savings available to states.

For states that have historically relied on demonstration savings as a key financing mechanism, these changes could require significant strategic and financial planning.

Key Takeaway #4: States and Medicaid-focused organizations should begin to identify alternative approaches, authorities, and partnerships to continue to advance the goals of certain 1115 demonstration initiatives.

One of the more closely watched aspects of the guidance involves CMS’s discussion of the relationship between section 1115 authority and other Medicaid authorities.

The final guidance stops short of directing states to systematically move authorities out of section 1115 demonstrations. Instead, CMS encourages states to reduce reliance on section 1115 authority when alternative Medicaid authorities are available, noting that doing so would strengthen oversight while reserving section 1115 authority for innovation and demonstration purposes. The agency specifically references Medicaid state plan authorities and other Title XIX authorities as potential alternatives where appropriate.

At the same time, CMS recognizes that, in certain circumstances, states may require concurrent section 1115 authority layered over other Medicaid authorities to achieve program goals and has indicated that it will provide technical assistance in those situations.

The interaction between this policy and the new MAPS framework may be particularly important. CMS provides examples showing that many authorities currently treated as hypothetical expenditures鈥攊ncluding certain home- and community-based services (HCBS), managed care-related authorities, and other services that could be authorized elsewhere under Medicaid鈥攚ould now be treated as MAPS activities for budget neutrality purposes.

For states, the immediate significance may be less about whether authorities remain within a section 1115 demonstration and more about how those authorities are treated under the new budget neutrality framework. As states assess the implications of the guidance, they may want to consider how various authorities are structured across section 1115 demonstrations, state plan authorities, and other Title XIX pathways. CMS’s discussion suggests that these decisions may increasingly be informed by both programmatic objectives and budget neutrality considerations.

Key Takeaway #5: States and Medicaid organizations can begin scenario planning and assessments now and monitor additional guidance and clarifications critical to operational issues.

Although CMS provides substantial detail regarding its intended direction, several important implementation questions remain unanswered. Among the issues states are likely to focus on over the coming months:

  • How will CMS apply the new requirements to renewals that are already under review鈥攐r that are submitted before January 1, 2027鈥攂ut remain pending after that date?
  • How long will CMS鈥檚 Chief Actuary review take, and how should states adjust renewal and amendment timelines to account for the new certification process?
  • How aggressively will CMS apply its stated preference for using state plan and other Title XIX authorities when alternative pathways exist?
  • What level of documentation, modeling, and actuarial support will CMS ultimately require to support certification?
  • How will CMS define acceptable methodologies and assumptions in the forthcoming rulemaking process?

CMS repeatedly notes that additional technical guidance, technical assistance, and formal rulemaking are forthcoming, suggesting that many operational details remain under development.

Key Takeaway #6: States should build additional time into future section 1115 renewal and amendment planning

Although significant details remain unresolved, the overall direction of federal policy is becoming clearer.

States with upcoming section 1115 renewals, amendments, or major demonstration redesign efforts should begin assessing which components of their demonstrations are likely to be classified as MAPS activities versus section 1115-only activities. They should also evaluate the extent to which future financing strategies depend on rollover savings or other elements of the current framework that may no longer be available after January 1, 2027.

In addition, states may want to assess whether certain demonstration authorities could be more appropriately administered through state plan, managed care, HCBS, or other Medicaid authorities, particularly given CMS’s stated preference for relying on alternative Title XIX pathways when available.

Most importantly, states should prepare for a future in which section 1115 approval decisions are increasingly driven by prospective actuarial analyses of the financial impact of individual demonstration activities that include detailed supporting documentation for CMS鈥檚 Chief Actuary to utilize for approval.

The forthcoming proposed rule will provide critical details; however, this guidance makes clear that CMS intends to reshape how section 1115 demonstrations are financed, evaluated, and renewed in the years ahead.

How 黑料不打烊 Can Help

黑料不打烊 is actively helping states, health plans, providers, and other stakeholders assess the implications of CMS’s proposed budget neutrality framework and prepare for upcoming section 1115 renewals and amendments, as well as other changes due to recent guidance on community engagement requirements, state directed payments, and program integrity. Our experts bring deep experience in section 1115 demonstrations, Medicaid financing, budget neutrality modeling, actuarial analysis, managed care authorities, HCBS programs, waiver strategy, and federal negotiations.

As states evaluate the operational, financial, and policy implications of the new requirements, 黑料不打烊 can support strategic assessments, renewal planning, demonstration redesign, financial modeling, actuarial coordination, federal negotiations, and implementation planning. We are also tracking forthcoming rulemaking and additional CMS guidance that will further shape how section 1115(g) is implemented.

Be sure to register for our upcoming webinar, Understanding Work and Community Engagement Requirements and New Section 1115 Guidance, on July 15.

CMS Proposes New Budget Neutrality Framework infographic
Blog

Act Now to Implement Community Engagement Requirements

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On June 2, 2026, the Centers for Medicare & Medicaid Services (CMS) issued the highly anticipated Interim Final Rule (IFR) on implementing the Medicaid work and community engagement requirements set forth in the 2025 budget reconciliation act, P.L. 119-21. States are expected to implement the requirements by January 1, 2027, leaving Medicaid authorities, health plans, providers, and community-based partners with a compressed timeline to design, test, and deploy new workflows that will fundamentally change how eligibility and compliance are administered.

This article builds on 黑料不打烊 (黑料不打烊) colleagues鈥� ongoing analysis of federal Medicaid policy changes stemming from the Working Families Tax Cut Act and evolving federal priorities (see Connecting the Dots here and here) and explores the implications for enrollees, state agencies, health plans, and providers. 

Community engagement requirements create risk and exposure for all of these interest-holders, opening them to the possibility of increased enrollment churn, particularly during the early stages of implementation as enrollees and administrators adapt to new processes. Even Medicaid enrollees who meet compliance requirements or qualify for exemptions could experience temporary coverage losses or disruptions because of delays in documentation, notice response, or case processing.

Plans and providers, meanwhile, may encounter downstream effects on capitation rate adequacy, financial and membership forecasting, risk adjustment, care management continuity, quality performance, and network stability.

From Policy to Practice: A Systemwide Operational Shift 

Many elements of the IFR align with statutory provisions; however, it introduces new operational expectations that will reshape eligibility processes, including: 

  • Structured verification and documentation requirements聽
  • Expanded exemption frameworks tied to functional ability to work聽
  • New reporting and oversight obligations聽
  • Increased reliance on enrollee notifications and engagement聽

Collectively, these changes introduce a new layer of administrative expectations that extend beyond traditional eligibility and enrollment functions and require coordination across state and local agencies, health plans and providers, and community partners. 

Notably, CMS has provided targeted flexibilities鈥攑articularly through income-based compliance pathways鈥攚hich will allow states to leverage existing data sources and potentially reduce administrative burden, if implemented effectively. 

States Need to Build an Operational Foundation 

For state Medicaid agencies, the immediate priority is translating federal requirements into scalable, consistent processes. 

Key actions include: 

  • Redesign eligibility and聽compliance聽workflows.聽States will need to聽identify聽affected populations, track compliance,聽adjudicate聽exemptions and hardships, and manage appeals鈥攁ll within tight implementation timelines.聽
  • Invest in verification infrastructure.聽Although automation opportunities exist,聽particularly using income and existing eligibility data,聽many determinations (e.g., medical frailty, caregiving, hardship) will require individualized review and new documentation standards.聽
  • Strengthen cross-agency coordination and data integration.聽Effective implementation will depend on integrating data from workforce, social services, and other programs to support compliance and reduce manual processes.聽
  • Develop robust communication strategies. Experience from prior Medicaid initiatives demonstrates that coverage loss often results from administrative barriers, not ineligibility, making clear, proactive communication essential. 
  • Balance automation and administrative complexity.聽States that effectively聽leverage聽automation and streamline enrollee-facing processes will be better positioned to聽maintain聽coverage continuity while meeting federal requirements.聽

Implications for Health Plans: Expanding the Role of Member Engagement 

Health plans will play a pivotal role in implementation, although they cannot determine enrollee compliance with the new requirements. States rely on plans to identify members who may be subject to community engagement requirements, to assist with member communications, and to connect members with resources that support compliance or exemption eligibility. Even though these activities occur outside the traditional managed care financing framework, plans may be called upon to accomplish the following: 

  • Enhance outreach and education capabilities.聽Plans are often the primary point of contact for members and will need to support awareness, compliance, and navigation of new requirements.聽
  • Identify and support at-risk populations. Plans can help flag members likely to qualify for exemptions and assist with documentation and care coordination to reduce inappropriate disenrollment.
  • Prepare for enrollment volatility.聽Increased churn聽driven by documentation delays and administrative barriers聽may affect financial performance,聽care聽continuity, and quality outcomes.聽
  • Align with state expectations and funding constraints.聽Because these activities fall outside traditional聽Medicaid聽benefits, states and plans must carefully define roles, accountability, and funding mechanisms.聽

Implications for Providers: A New Interface with Eligibility Systems 

Providers, particularly safety net organizations, will be directly affected by new documentation and enrollee support responsibilities and should be prepared to address the following: 

  • Expand administrative and clinical workflows.聽Providers will increasingly be asked to support medical frailty determinations, document functional limitations, and provide verification related to exemptions.聽
  • Prepare for increased administrative burden.聽New documentation requirements and coordination with plans and states will聽require聽operational adjustments, particularly for organizations serving large Medicaid populations.聽
  • Mitigate impacts of coverage disruption.聽Gaps in coverage鈥攐ften tied to procedural barriers鈥攎ay disrupt care continuity, particularly for high聽need populations, and increase uncompensated care.聽
  • Serve as a critical partner in engagement efforts.聽Providers are uniquely positioned to聽identify聽at-risk individuals, educate patients, and support compliance,聽making them essential to implementation success.聽

Many of the most complex determinations鈥攕uch as medical frailty and caregiving鈥攃annot be fully automated, requiring nuanced policy design and consistent operational execution. As a result, successful implementation will depend on the following: 

  • Standardized documentation and review processes聽
  • Integrated data systems and verification pathways聽
  • Clear division of responsibilities聽across聽interest-holders聽
  • Coordination across policy, operations, and frontline personnel聽

Act Now to Influence Community Engagement Rollout 

States and stakeholders face dual, immediate priorities鈥攑reparing for implementation and engaging in the federal rulemaking process. CMS is accepting comments on the IFR through July 31, 2026, creating a critical opportunity to shape final policy while building operational readiness. At the same time, the compressed timeline to 2027 for implementation underscores the need for rapid decision-making on policy design, systems investments, and partner engagement. 

The Medicaid community engagement requirements represent one of the most significant operational transformations in the program鈥檚 60-year history. To succeed, organizations should act early, coordinate with interest-holders, and design implementation strategies that balance compliance, administrative efficiency, and coverage continuity. 

Now is the time to: 

  • Establish cross-functional governance and implementation plans聽
  • Evaluate verification strategies and data integration opportunities聽
  • Define roles and expectations across plans, providers, and partners聽
  • Develop targeted communication and engagement strategies聽
  • Conduct readiness assessments and system testing聽

黑料不打烊 can actively support state policymakers, health plans, and providers as they in navigate these challenges. For details, access the full 黑料不打烊 Issue Brief and explore the Community Engagement State Support Hub.

Blog

New Funding Approaches Prompt Maryland Healthcare Leaders to Reassess Strategies for Affordable Coverage

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Strategies to improve healthcare delivery, sustain coverage, and manage growing cost pressures resulting from federal policy changes and state budget dynamics were key topics of discussion at this year鈥檚 , May 21, 2026, in Baltimore, MD. Hosted by (SOR), an 黑料不打烊 Company, the program convened state policymakers and leaders of health plans, provider groups, and community-based organizations to examine the most pressing healthcare issues in Maryland.

Across sessions, participants explored key policy priorities, including Maryland鈥檚 implementation of the Rural Health Transformation Program (RHTP), efforts to stabilize and expand health insurance coverage, and early lessons from implementing the AHEAD (Achieving Healthcare Efficiency through Accountable Design) total cost of care (TCOC) model. 

Sustaining Medicaid and Marketplace Accessibility Amid Federal Policy Changes 

Throughout the conference speakers and attendees engaged on myriad issues and concerns resulting from the 2025 budget reconciliation act, now referred to as the Working Families Tax Cuts (WFTC) Act, and its potential impact on state Medicaid programs and coverage stability. Maryland Deputy Secretary for Healthcare Financing and Medicaid Director Perrie Briskin joined Johanna Fabian-Marks, Deputy Executive Director of the Maryland Health Benefit Exchange (MHBE), and Melissa Horn, Director of State Legislative Affairs at the Arthritis Foundation, to examine strategies for mitigating coverage loss and maintaining affordability. 

Speakers emphasized the need for improved coordination between Medicaid and the MHBE, including clear and consistent consumer communications and targeted outreach in counties most affected by federal policy changes. 

For example, Maryland leaders described several innovative approaches the MHBE is using to help people in the state maintain Marketplace coverage, including state-funded subsidies to offset the expiration of enhanced premium tax credits, streamlined auto-renewals, and simplified enrollment pathways for individuals identified as uninsured based on their tax and employment records. The state reported an 8 percent decline in enrollment in April 2026, noting that without these mitigation strategies, enrollment could have dropped by as much as one-third. 

The MHBE is using artificial intelligence (AI) to support document verification and is deploying a chatbot to help consumers navigate common questions. 

On the Medicaid side, the state is consulting multiple data sources鈥攊ncluding CRISP (Chesapeake Regional Information System for our Patients), labor, and education data鈥攖o verify eligibility and, compliance with community engagement requirements to reduce administrative burdens.

Rural Health Transformation Program Implementation and Early Priorities 

Maryland鈥檚 RHTP, supported by nearly $168.2 million in first-year funding from the Centers for Medicare & Medicaid Services (CMS), was a hot topic at the conference. State leaders and implementation partners emphasized the program鈥檚 role in addressing rural health disparities, strengthening care delivery infrastructure, and improving chronic disease outcomes.

Elizabeth Kromm, PhD, Assistant Secretary, Maryland Department of Health, outlined the three pillars of the state鈥檚 RHTP plan: 

  • Expand the rural healthcare workforce聽
  • Increase access to integrated primary, specialty, and behavioral health services聽
  • Address the underlying drivers of chronic disease through nutrition and food system interventions聽

Together, these initiatives highlight Maryland鈥檚 focus on both clinical care delivery and broader population health strategies. 

State officials also discussed the funding opportunities  in April 2026, one of which seeks to support care delivery innovation, improve chronic condition management, and advance value-based care models. Speakers emphasized that connection is central to the program鈥檚 success鈥攂oth the strength of community relationships, the connections enabled through technology, and the integration of clinical and nonclinical services. 

AHEAD Model: Advancing Total Cost of Care and Population Health 

Maryland鈥檚 participation in CMS鈥檚 AHEAD Model represents a significant shift toward healthcare cost containment and system transformation. As one of the first states to implement the framework, Maryland is testing a statewide approach to managing TCOC while improving quality and population health outcomes. 

A panel discussion including leaders from the MedChi, Johns Hopkins, CareFirst Blue Shield, and Kaiser Permanente, addressed implementation considerations, open policy implications, and how providers and payers were approaching these changes in payment for healthcare services. Reimbursement strategies for primary care services were still uncertain and may differ significantly from those used under the Maryland TCOC model. Panelists also discussed what this model means in the broader healthcare environment of reductions in Medicaid payments resulting from the reconciliation legislation and additional funding coming from the Rural Health Transformation Fund. They also described how Maryland could serve as an example for other states working to implement AHEAD in the coming years. 

Speakers noted that successful implementation will require strong coordination among providers, payers, and state agencies, and more details are necessary to fulfill the requirements. The model鈥檚 10-year timeline positions Maryland as a leading test case for future federal and state efforts to scale TCOC approaches. 

AI in Healthcare: From Innovation to Real-World Impact 

AI鈥檚 role in healthcare delivery and policy continues to evolve, with growing attention on its practical applications and regulatory implications. A session led by 黑料不打烊 (黑料不打烊) Principal Brandon Greife, JD, and speakers from Microsoft AI, the Pair Team, the Center for Virtual Care, and b.well Connected Health explored how healthcare organizations conceptualize AI use cases to deploy solutions that demonstrate measurable impact. 

AI holds promise for improving care delivery, but realizing that potential requires navigating ethical, regulatory, and operational challenges. Mr. Greife led a panel discussion on how the healthcare industry is transitioning from abstract use cases for AI toward evaluating the real-world impact of deployed solutions. 

Session speakers also explored how healthcare is advancing from AI tools that support clinicians and payers to patient-facing AI that supports care navigation, chronic disease management, and community outreach. They rounded out the session with a focus on fundamentals of healthcare鈥攃oncepts like data quality, clinical trust, patient safety, and demonstrated value at the point of care. 

Looking Ahead 

If you are looking for strategies and solutions to address urgent healthcare policy and operational challenges, 黑料不打烊 experts are available to help you navigate these complex changes and identify practical paths forward. 

Through the ,  partnership events, and other 黑料不打烊 convenings across the country, we connect state leaders, providers, health plans, and community stakeholders to share insights, elevate lessons, and advance solutions. Join us at an upcoming event鈥攊ncluding our next 黑料不打烊 National Conference in New Orleans, LA on October 5-7, 2026鈥攐r explore additional opportunities to engage with 黑料不打烊 and access the full schedule of conferences and resources. 

State of Reform develops its conference agendas through collaboration with 黑料不打烊 subject matter experts/market leads and stakeholders across the public and private sectors, including state officials, community-based organizations, providers, payers, and more. 

Solutions

What Medicaid Policy Changes Should Healthcare Leaders Be Paying聽Attention to聽Right Now?聽

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黑料不打烊 Solutions

What Medicaid Policy Changes Should Healthcare Leaders Be Paying聽Attention to聽Right Now?聽

Medicaid policy is undergoing a massive regulatory shift driven by the One Big Beautiful Bill Act (OBBBA) legislation. 

To maintain financial stability, compliance, and continuity of care during these Medicaid policy changes, healthcare leaders must focus their attention on four highly critical, interconnected policy domains. 

Changes to Section 1115 Demonstration Waivers

The federal approach to approving, extending, and evaluating Section 1115 waivers is experiencing a significant pivot, holding space for true innovation and pilots.

Shifting Federal Alignments: CMS is reshaping the criteria for waiver flexibilities. For instance, recent guidance has rolled back certain previous pathways used to cover health-related social needs (HRSNs) under Section 1115 authority. CMS issued a to State Medicaid Directors explaining its planned revisions to the program.

Strategic Scenario Planning:聽As outlined in 黑料不打烊’s analysis on聽CMS聽Proposes New Budget Neutrality Framework for Medicaid Section 1115 Demonstrations, state changes or extensions will trigger comprehensive CMS reviews. Leaders must transition toward alternative authorities (such as 1915(c) or managed care options) while聽monitoring聽emerging federal priorities around substance use disorders (SUD) and carceral reentry initiatives

Updated Eligibility & Community Engagement/Work Requirements

The eligibility path for Medicaid enrollees is tightening dramatically, introducing significant risks of coverage disruption that will create coverage churn in state insurance markets. 

Mandatory Community Engagement: Under federal mandates, able-bodied adults without young children must demonstrate at least 80 hours per month of qualifying activities (employment, education, or community service). 

Accelerated Churn Risks: As evaluated in 黑料不打烊’s report on the Medicaid Community Engagement Interim Final Rule, states are shifting to an accelerated six-month redetermination cycle for expansion populations. Managed care organizations (MCOs) and health systems face immediate operational hurdles to track compliance and prevent massive lapses in continuous enrollment. 

Focus on Managed Care Oversight & Program Integrity to Reduce Fraud, Waste, & Abuse

Federal regulators are pairing stricter oversight with direct financial consequences to reduce administrative inefficiencies and improper payments and crack down on fraud and abuse. 

Error Rate Financial Sanctions: Beginning in FY 2030, states exceeding a 3% eligibility error rate face severe pullbacks in federal funding for files lacking insufficient verification data. 

Aggressive Auditing and MCO Risk: Enhanced program integrity frameworks require monthly network audits to root out terminated providers and quarterly data matching for deceased enrollees. Healthcare leaders must brace for tighter risk adjustments, standardized plan requirements, and intensive fraud, waste, and abuse (FWA) strategies.

Changes to State Directed Payments (SDPs) & Reimbursement 

CMS is fundamentally altering provider reimbursement limits and closing localized financing mechanisms to ensure a more regulated environment. 

Medicare-Linked Caps: Moving away from average commercial rate benchmarks, CMS is establishing rigid ceilings. As captured in 黑料不打烊’s brief on Proposed Changes to Medicaid State Directed Payments, new limits cap SDPs at 100% of Medicare rates for expansion states and 110% of Medicare rates for non-expansion states. 

Choking Provider Tax Revenue: Effective October 2026, states are restricted from implementing new provider taxes beyond July 2025 thresholds. Furthermore, as detailed in 黑料不打烊’s commentary on Medicaid State Directed Payments: CMS Proposes Major Changes to Financing and Oversight, existing provider taxes in expansion states will steadily choke down from 6% to 5.5% in 2028, and ultimately down to 3.5% by 2032, forcing health systems to rapidly recalibrate their financial baselines. 

How 黑料不打烊 Helps Leaders Respond 

黑料不打烊 (黑料不打烊) turns high-stakes statutory mandates into functional, compliant operational strategies. We offer end-to-end strategic guidance, actuarial analytics, and technical assistance:

  • Strategic Planning & Financing Modeling: Developing innovative strategies to model state-directed payment caps, analyze provider tax restrictions, and structure financial baseline adjustments.
  • Operational & Workflow Overhauls: Redesigning eligibility systems to execute 6-month redeterminations and building automated tracking platforms for community engagement. 
  • Program Integrity & Compliance: Aligning FWA shielding strategies and conducting pre-audit assessments to mitigate the risk of eligibility error-rate penalties. 
  • Workforce & Stakeholder Alignment: Delivering targeted training and managing cross-functional change management to ensure seamless communication between state agencies, MCOs, and providers. 

With a deep bench that includes 10 former Medicaid and CHIP directors and active project experience across more than 35 state programs, 黑料不打烊 equips healthcare leaders to navigate this shifting regulatory landscape with absolute confidence. 

Stay Ahead of Medicaid Changes: Register for Webinars & Watch Replays

A Summer Webinar Series: How New Program Integrity Expectations Affect Medicaid Payments

Webinar Replay – Summer Webinar Series: The Future of Medicaid State Directed Payments聽

A Summer Webinar Series: Understanding Work and Community Engagement Requirements and New Section 1115 Guidance

Brief & Report

Final 2027 Notice of Benefit and Payment Parameters Notice: What States and Issuers Need to Know

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What are the changes in the payment notice for 2027? On May 15, 2026, the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) released the final Notice of Benefit and Payment Parameters (NBPP) for 2027, setting key rules for the individual and small group health insurance markets. This report explains the most important 2027 Payment Notice changes for health care payers, issuers, state regulators, and state-based exchanges鈥攊ncluding what CMS finalized, what changed from the proposed rule, what takes effect in 2026, 2027, and 2028, and what the rule signals for future marketplace policy. Topics include ACA marketplace operations, eligibility and enrollment, marketing oversight, plan design flexibility, cost-sharing, Essential Health Benefits, QHP certification, and state authority. According to HHS, the final rule could reduce marketplace enrollment by 1.2 million to 2.0 million people, making it essential for decision makers to understand the operational, financial, and compliance implications now.

Need to understand how the final 2027 NBPP affects your organization? Connect with the report authors to discuss implications for pricing, product strategy, exchange operations, compliance, and state marketplace oversight. Whether you are evaluating operational changes, preparing for upcoming requirements, or assessing market impact, our experts can help you turn the final payment notice into a clear action plan. .

Brief & Report

Medicaid Community Engagement Interim Final Rule:聽Key Implications for States, Payers, and Providers

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黑料不打烊鈥檚 issue brief on the Medicaid Community Engagement Interim Final Rule provides a clear, actionable summary of new Medicaid work requirements and community engagement requirements for states, Medicaid health plans, providers, community-based organizations, and technology vendors. The report explains key policy changes issued by CMS on June 1, 2026, including exemptions such as medical frailty, verification and reporting expectations, enrollee notification requirements, and the state systems changes needed to prepare for the January 1, 2027 implementation deadline. If you are searching for a summary of Medicaid work requirements, a summary of Medicaid community engagement requirements, the medical frailty definition, or guidance on Medicaid work requirements state systems changes, this brief helps translate complex federal regulation into practical next steps to support compliance, reduce coverage loss risk, and inform implementation strategy.

Please fill out this form to receive a copy of the issue brief.

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