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黑料不打烊 Insights鈥攊ncluding briefs, webinars, and our podcast鈥攇ives you easy access to 黑料不打烊鈥檚 deep expertise, helping you stay current on the latest healthcare trends and topics. Search for a topic of interest or browse the latest insights below.

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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.听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.

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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

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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.听
  • 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.听
  • 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.听
  • 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.听

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.听
  • 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.听
  • 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.听

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.听
  • 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.听
  • 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.听
  • 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.听

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.

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

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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Medicaid State Directed Payments: CMS Proposes Major Changes to Financing and Oversight

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The Centers for Medicare & Medicaid Services (CMS) proposed changes to state directed payments mark a significant inflection point for Medicaid financing. For states, plans, and providers, the coming months will be critical in understanding the rule鈥檚 final shape鈥攁nd how they can position themselves for a more constrained and standardized payment environment.

Federal Medicaid policy is entering a period of rapid change. Policymakers are advancing a series of interconnected proposals鈥攊ncluding Medicaid community engagement (work) requirements, program integrity initiatives, and new scrutiny of financing mechanisms that shape how dollars flow through the program. 

Among the most significant developments: the CMS鈥檚 proposed changes to Medicaid state directed payments (SDPs). As outlined in 黑料不打烊鈥檚 recent Issue Brief, the proposal signals a meaningful shift in how federal policymakers approach provider reimbursement, managed care financing, and oversight of supplemental payment arrangements. 

黑料不打烊 (黑料不打烊) will further examine these developments in future articles, briefs, and its Medicaid summer webinar series, which will focus on SDPs, work requirements, and program integrity鈥攖hree policy areas now moving in parallel and reshaping the Medicaid landscape. This article provides an executive overview of the SDP rule. 

What are Medicaid State Directed Payments? 

State directed payments (SDPs) are a key Medicaid financing tool that allows states to direct how managed care organizations reimburse providers. 

States use SDPs to: 

  • Increase provider payment levels聽
  • Target specific provider types or services聽
  • Support delivery system reforms聽

Over time, SDPs have become a central component of Medicaid managed care financing. As the 黑料不打烊 issue brief emphasizes, their growing scale and complexity have drawn increased federal scrutiny. 

What Does CMS Propose to Change? 

The CMS proposed rule implements the statutory changes approved in the 2025 budget reconciliation act (P.L. 119-21, which CMS refers to as the Working Families Tax Cut Act, or WFTCA). The rule introduces a new framework for how SDPs are structured, regulated, and reviewed. Based on 黑料不打烊鈥檚 analysis, the proposal advances several core policy shifts: 

  1. Expanded聽Federal Limits on Payment Levels.听CMS proposes new constraints on how much states can direct plans to pay providers, extending payment limits across a broader range of services and delivery systems. Specifically, CMS proposes to lower the payment ceiling for all SDPs to either 100 percent of Medicare for states administering Affordable Care Act (ACA) expansion programs or 110 percent of Medicare for states without an ACA expansion program. CMS plans to grandfather certain SDPs at levels above Medicare and provide a transition period with an annual 10 percent reduction until the payments are reduced to Medicare levels. In addition, this rule proposes聽limiting SDPs to the total published Medicare payment rate at the service level鈥攁 departure even from Medicaid fee-for-service (FFS) upper payment limits, which are limited to a reasonable estimate of what Medicare would pay but are calculated at the aggregate level by ownership class.听
  2. Extends Limits聽Across Programs聽and Delivery Systems.听The proposal聽seeks聽to align聽the limitations on practitioner payments under聽fee-for-service聽with the new limitations on SDPs. If a state makes payments to a subset of targeted practitioners, the new proposed limit would be actual Medicare payment rates applicable to the practitioner or provider for the same聽time period聽as the Medicaid state plan rate year.听The crosswalk of Medicaid payment rates to Medicare will聽likely be聽administratively burdensome鈥攅specially for states that set Medicaid rates using an entirely different聽methodology聽than Medicare鈥檚. Applying the Medicare payment limit at the service level will limit states鈥� ability to incentivize certain service types that may need enhanced reimbursement amounts to preserve access to care (e.g., primary care, neonatal, etc.).听
  3. Broader Applicability Across Providers.听The changes extend beyond a narrow set of provider types, affecting a wider range of stakeholders聽participating聽in Medicaid financing and delivery.听For example, the WFTCA聽called for the reduced payment ceiling to be applied to the specified four classes of providers. This rule proposes that all providers be limited to the same ceiling and that the revised limits also apply to US territories.听

Why Is CMS Focusing on State Directed Payments Now? 

As highlighted in the 黑料不打烊 Issue Brief, federal policymakers are increasingly focused on the growth and complexity of SDPs as well as the role of SDPs in broader Medicaid financing strategies. In addition, CMS policy officials are prioritizing program integrity and fraud, waste, and abuse and have couched the current SDP policies as inefficient use of taxpayer dollars. 

These priorities align with a broader shift toward tighter federal oversight of Medicaid funding mechanisms. 

What Are the Implications for States, Plans, and Providers? 

The proposed changes have wide-ranging implications across the Medicaid ecosystem. 

States: SDPs have been a flexible tool for shaping payment policy and directing resources. New federal parameters may limit that flexibility and require states to reassess existing financing strategies. 

Health Plans: Plans may face a more standardized and regulated environment for implementing SDP arrangements, with less variation driven by state policy choices. 

Providers: Many providers rely on SDPs to supplement base Medicaid payment rates. Changes to these payments could affect reimbursement levels and financial stability, particularly for organizations serving large Medicaid populations. 

As the 黑料不打烊 brief underscores, the impact will vary significantly by state, depending on how SDPs are currently structured. 

How This Fits into Broader Medicaid Policy Changes 

CMS is advancing a broader recalibration of how SDPs fit within Medicaid policy. However, the SDP proposal is also part of a larger set of federal Medicaid policy developments, including: 

  • Medicaid community engagement (work) requirements聽and other changes to eligibility and redetermination rules聽included in聽a June 1, 2026,聽interim final rule聽
  • Program integrity and oversight initiatives聽
  • Changes to financing structures and supplemental payments聽

Taken together, these policies signal a transition toward greater federal standardization and increased oversight of funding flows. 

What Should Stakeholders Watch Next? 

CMS鈥檚 proposed changes to Medicaid state directed payments mark a turning point in Medicaid financing policy. 

Stakeholders should expect continued movement toward greater oversight, tighter payment parameters, and increased consistency across the program. They should begin planning now for a more constrained and standardized payment environment. Key questions center on: 

  • How CMS will implement and phase in payment limits across states聽
  • The extent to which existing arrangements will be grandfathered聽in聽or phased down聽
  • How states respond in redesigning Medicaid payment strategies聽

The proposed SDP rule is open for public comment through July 21, 2026, with final policy decisions expected following federal review. As pending issues are resolved, stakeholders across the Medicaid landscape will need to reassess financial models, policy approaches, and operational strategies. 

Stakeholders should begin evaluating potential impacts now, as the policy direction is clear, even if final details are still evolving. 

Staying Ahead of Medicaid Financing Changes 

Given the pace and breadth of these developments, staying informed is critical. 黑料不打烊鈥檚 upcoming Medicaid summer webinar series will provide timely analysis of the SDP proposal alongside related policy changes, including community engagement and work requirements and program integrity initiatives. These sessions are designed to help states, plans, and providers understand policy changes and prepare for operational and financial implications, identify compliance gaps, and address sustainability issues. Register for one or multiple webinars here.  

To understand how these Medicaid policy changes affect your organization, contact one of 黑料不打烊鈥檚 Medicaid experts. 

Webinar

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

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As federal regulators introduce new Medicaid program integrity expectations to reshape the landscape, states, providers, and insurers across the country are facing intense pressure to adapt to changing eligibility and enrollment rules and financing policies while sustaining access to services and improving outcomes.

This webinar series will deliver timely analysis and actionable insights on the evolving policy and operational environment affecting Medicaid funding, enrollment, and access to services. Each session will feature up-to-the-moment information and perspectives from our subject matter experts, with content tailored to reflect the latest federal guidance, waiver activity, litigation, state implementation decisions, and market developments.

Webinar

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

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This webinar was held on June 10, 2026.

As CMS advances a proposed rule that would significantly reshape Medicaid State Directed Payments (SDPs), states, health plans, hospitals, and other providers face growing uncertainty around Medicaid financing, reimbursement, and access to care.

In this webinar, 黑料不打烊 experts examine the proposed SDP changes, including new Medicare-based payment limits, phase-down requirements for existing programs, and restrictions on supplemental payment structures. The discussion explores the potential financial, operational, and policy implications for Medicaid stakeholders and highlights key considerations for planning, advocacy, and implementation.

Learning Objectives

  • Explain the major provisions of CMS鈥檚 proposed Medicaid State Directed Payment rule.
  • Assess how new Medicare-based payment limits could affect provider reimbursement and Medicaid financing strategies.
  • Identify potential impacts on value-based payment arrangements, provider sustainability, and access to care.
  • Evaluate key considerations for states, health plans, and providers as they prepare for implementation and future policy changes.
Webinar

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

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As states prepare for sweeping changes to the Medicaid program, new federal requirements related to work and community engagement and newly released guidance on Section 1115 demonstrations are creating urgent policy and operational questions. States, providers, health plans, and community organizations must now navigate evolving expectations around financing, program design, eligibility, benefits, and compliance.

Join 黑料不打烊 experts for a timely discussion of the latest federal developments, including implementation considerations for Medicaid work and community engagement requirements, the implications of new Section 1115 demonstration guidance, and what these changes could mean for beneficiaries, state agencies, providers, and health plans. Our experts will provide practical insights on what to watch, how states are responding, and key considerations for planning ahead.

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Special Alert: CMS Proposes Major Medicaid Payment Reform to Cap State-Directed Payments and Align Rates with Medicare

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On May 20, the Centers for Medicare and Medicaid Services (CMS)聽聽a proposed rule aimed at curbing state Medicaid payment practices that federal regulators have driven excessive federal spending without clear improvements in care. The rule, which implements new statutory requirements approved as part of the 2025 budget reconciliation act (P.L. 119-21, OBBBA) proposes to cap certain state-directed and targeted provider payments and is seeking to better align them with Medicare payment levels. These financial arrangements include healthcare related provider taxes and intergovernmental transfers.

If finalized,聽CMS聽projects the聽rule will聽result聽in聽significant聽federal聽savings over time and聽will聽refocus Medicaid funding on patient care, strengthen oversight, and ensure that supplemental payments are tied to measurable improvements in quality, access, and outcomes rather than financing strategies that increase costs without corresponding value.听黑料不打烊聽(黑料不打烊)聽experts are聽continuing to聽review聽the proposed Medicaid payment reform聽and will provide聽additional聽analysis in聽future聽newsletters and communications to聽interest-holders.听聽

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Join us at 黑料不打烊鈥檚 2026 National Conference: Signals, Signs & Flashing Lights

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Registration is now open for the 黑料不打烊 (黑料不打烊) 2026 National Conference, , October 5鈥�7 in New Orleans, LA. 

 is intentionally structured to bring together leaders who are shaping decisions across sectors鈥攖hose setting policy, managing risk, leading clinical operations, and innovating approaches to improve outcomes鈥攖o engage in candid conversations about what is working, what is not, and what is changing in  and adjacent programs. In an environment defined by new challenges and 鈥渇lashing lights,鈥� even the most seasoned healthcare leaders will find value in stepping out of their day鈥憈o鈥慸ay roles to compare strategies, test assumptions, and learn from peers facing similar pressures. 

This year鈥檚 conference is designed to reflect the environment healthcare leaders are navigating today鈥攐ne defined less by policy certainty and more by shifting expectations and competing pressures on cost, access, and performance. Our experts are crafting discussions to address how organizations are approaching policy engagement in this environment, including new strategies for interpreting signals from federal and state policymakers and negotiating policy frameworks that directly shape market dynamics. 

Across plenary sessions, breakout discussions, and 黑料不打烊鈥檚 signature coffee conversations, the conference will focus on how organizations are interpreting these signals and translating them into practical strategies. 

Programming will center on four cross-cutting themes shaping healthcare decision-making: 

  • Managing聽risk and cost amid continued financial pressure. Discussions will examine聽the drivers of聽utilization聽and affordability trends across Medicare, Medicaid, and commercial markets and which聽strategies are聽demonstrating聽measurable impact.听
  • Sustaining access and system stability. The agenda also will focus on how providers, health systems, and state programs are maintaining access amid workforce challenges, coverage transitions, and ongoing financial strain.
  • Turning innovation into impact.听Sessions will explore where artificial intelligence聽(AI)聽and digital health tools are delivering measurable operational or clinical impact聽and聽what it takes to implement them effectively.听
  • Building partnerships聽that last.听Conversation聽will highlight how stakeholders are聽aligning incentives,聽funding,聽and strategy to move from short-term聽responses to long-term, sustainable聽solutions.听

As in prior years, the 黑料不打烊 National Conference is structured to support candid dialogue, actionable takeaways, and meaningful connections. Attendees consistently highlight the opportunity to move beyond high-level trends and engage in practical discussions that inform decision-making in their organizations. 

 is now available for a limited time. The  includes new opportunities for your organization. Additional agenda details, featured speakers, and interactive programming announcements will be released in the coming weeks. 

Ready to talk?