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Blog

HHS Issues Immediate Policy Shift on Federal Benefit Eligibility Under PRWORA

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On July 10, 2025, the US Department of Health and Human Services (), Department of Labor, Department of Justice, Department of Education, and US Department of Agriculture () issued notices that significantly reinterpret the definition of 鈥渇ederal public benefit鈥� used in Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). These changes are effective immediately upon publication in the Federal Register, though agencies have opened 30-day public comment periods to solicit feedback.

In this article, 量子资源 (HMA) 量子资源s explain two of these notices鈥攖hose from and 鈥攂ased on what we know and outstanding issues that organizations should expect to arise in the coming months.

Programs Affected by HHS鈥檚 Revised Interpretation

The notice changes HHS鈥檚  of PRWORA and will have sweeping implications for service delivery across the country. It does this by reversing the classification of many long-standing programs to be 鈥淔ederal public benefits;鈥� until now, these programs had been specifically excluded from that definition. People with Unsatisfactory Immigration Status are not permitted to access these benefits. People classified as such include those who are undocumented, but also several categories of people lawfully in the United States, such as holders of H1B and J-1 visas, as well as some lawful permanent residents (green card holders 鈥� only for the purposes of eligibility for certain programs).

Programs newly subject to these restrictions include:

  • Head Start
  • Certified Community Behavioral Health Clinics (CCBHCs)
  • Community Mental Health Services Block Grant
  • Community Services Block Grant (CSBG)
  • Health Center Program (Community Health Centers/FQHCs)
  • Health Workforce Programs (including grants, loans, scholarships, and loan repayments)
  • Services administered by the Substance Abuse and Mental Health Services Administration (SAMHSA)
  • Title IV-E programs (Educational and Training Voucher Program, Kinship Guardianship Assistance Program and Prevention Services Program)
  • Title X Family Planning

Organizations that receive federal or pass-through federal funding may now be required to assess immigration status as a condition of service delivery鈥攕omething many have never done before. This shift raises significant operational, ethical, and mission-aligned challenges for hospitals, community health centers, behavioral health providers, and human services organizations. PRWORA does include language exempting 501(c)(3) charitable organizations from being required to verify immigration status, but as the administration notes in its announcement, they are not barred from doing so. This will be an area to watch.

USDA Interpretation

The USDA鈥檚 notice similarly identifies all 16 programs the Food and Nutrition Services (FNS) administers as meeting the definition of 鈥淔ederal public benefit鈥� used in Title IV of PRWORA. These programs include:

  • Supplemental Nutrition Assistance Program (SNAP)
  • Nutrition Assistance Program for Territories
  • Food Distribution Program on Indian Reservations (FDPIR)
  • Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
  • National School Lunch Program, School Breakfast Program, and Summer Food Service Program
  • Child and Adult Care Food Program

The notice, however, states that there is a difference between defining a program as a federal public benefit and applying other provisions of PRWORA to those programs. The USDA鈥檚 notice clarifies that providers of non-exempt benefits must verify that applicants have a qualified immigration status for purposes of PRWORA but does not address how verification should be implemented or how exceptions should be applied.

What We Know鈥攁nd Don鈥檛 Know

Though the list of affected programs is extensive, many critical implementation details remain uncertain. Both agencies acknowledge that further guidance will be needed to clarify how these changes will be operationalized.

Organizations should expect additional updates and further clarifications from federal agencies in the coming months. Legal challenges to these changes are almost certainly forthcoming.

Looking Ahead

These policy changes are both significant and still evolving. They will affect how and where services are delivered, as well as whether people choose to access the services at all.

During this period of uncertainty, frequent and transparent communication is essential. Deploy information and updates in multiple formats 鈥攚ritten, verbal, visual鈥攖o reach diverse audiences, including your organization鈥檚 staff and other stakeholders in your community. When policy is fluid and changing rapidly, authentic messaging about what is known and what remains unclear will position your organization as an honest broker and trusted partner.

HMA 量子资源s are tracking these and related developments. For questions and to discuss the impact of these policies on your organization, contact our featured 量子资源s聽below.

Blog

H.R. 1 Signed Into Law鈥擶hat It Means for Medicaid and Public Coverage

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Just one week after we reviewed the Senate鈥檚 version of the budget reconciliation bill, H.R. 1, President Trump has now signed the legislation into law. The final iteration of H.R. 1 includes sweeping changes to Medicaid, the Affordable Care Act (ACA) Marketplaces, and Medicare鈥攕everal of which diverge significantly from the version that the House passed May 22, 2025.

This update outlines many of the most consequential healthcare provisions, with a focus on Medicaid financing, eligibility, and operational impacts. It also highlights how stakeholders can act now to prepare for what happens next.

From Proposal to Policy: What Changed

The Senate鈥檚 amended version of H.R. 1, approved on July 1 and passed by the House on July 3, 2025, reshaped several key provisions in the earlier version of the House bill. Although the bill retains its core focus on tax policy and entitlement reforms, it further constrains state Medicaid financing and eligibility and scales back Marketplace subsidies for certain populations.

According to preliminary  from the Congressional Budget Office, the final bill will reduce federal healthcare spending by approximately $1.15 trillion over the next decade but also will increase the number of uninsured individuals by 11.8 million by 2034 because of changes to both Medicaid and Marketplace programs.

Medicaid Eligibility: A New Era of Policy and Operational Complexity

Mandatory Community Engagement Requirements

By December 31, 2026, states must implement community engagement (work) requirements for certain Medicaid enrollees. These requirements cannot be waived under Section 1115, though states may request 鈥済ood faith鈥� exemptions through 2028.

States must notify enrollees through multiple channels and develop the infrastructure needed to track compliance. Managed care organizations and other entities that have financial relationships with Medicaid services are prohibited from determining compliance.

Tighter Eligibility and Redetermination Requirements

States must now conduct Medicaid eligibility redeterminations every six months for expansion populations. The bill also delays implementation of previously finalized rules that would have streamlined enrollment and imposes new verification requirements, including address checks. For immigrants, H.R. 1 narrows the definition of 鈥渜ualified鈥� individuals who are eligible for Medicaid and CHIP, removing coverage for refugees, asylees, and other humanitarian categories.

Cost Sharing for Expansion Adults

Starting in 2028, states must apply cost-sharing requirements to Medicaid expansion adults with incomes greater than 100 percent of the federal poverty level. Though primary care, mental health, and certain other services are exempt, the policy introduces new administrative burdens for states and many providers.

Medicaid Financing: A Structural Shift

Provider Tax Restrictions

H.R. 1 freezes existing provider tax programs and bars any new taxes. Also, Medicaid expansion states must phase down the maximum allowable tax rate from 6 percent to 3.5 percent by 2032. This change will significantly constrain states鈥� ability to use provider taxes to finance Medicaid and draw down federal matching funds.

Limits on State-Directed Payments

The bill caps state-directed payments at either 100 percent or 110 percent of Medicare rates, depending on the state鈥檚 expansion status. Grandfathered payment arrangements will be phased down by 10 percent annually beginning in 2028. These provisions will require states to reassess supplemental payment strategies and may affect provider participation and access to care.

Other Key Provisions

The Rural Health Transformation Program provides $50 billion over five years to support financially distressed rural providers. H.R. 1 requires that each state submit a plan, and the Centers for Medicare & Medicaid Services (CMS) administrator must approve or deny the plan by December 31, 2025, giving CMS and the US Department of Health and Human Services significant authority to shape the approval/denial processes, as well as critical details of the program and funding decisions.

For the Marketplace, the law eliminates ACA subsidy eligibility for certain lawfully present immigrants, ends conditional eligibility for ACA subsidies as well as passive re-enrollment, and eliminates the cap on ACA subsidy repayment at tax time. It also prohibits individuals who are not enrolled in Medicaid because of a failure to satisfy community engagement requirements from receiving any subsidies.

In addition, a new 1915(c) waiver option allows states to offer home and community-based services (HCBS) without requiring that they provide institutional level of care but only if waiting lists for existing services are not extended. Another provision excludes family planning and abortion service providers from receiving Medicaid funding if they received at least $800,000 in Medicaid reimbursements in 2023.

Finally, the law includes a one-year, 2.5 percent increase to the Medicare physician fee schedule conversion factor, which will be in effect for calendar year 2026 and expire thereafter.

What Stakeholders Should Do Now

States can begin planning for eligibility system changes, redetermination volume, and community engagement implementation, all of which require an understanding of the potential interactions of the federal Medicaid, Medicare, and ACA Marketplace policy changes. In addition, state officials should consider reassessing provider tax structures and supplemental payment strategies, where applicable. They need to engage early on rural health transformation funding opportunities and other provider supports.

Health plans can forecast enrollment and risk mix changes. They have opportunities to support states in compliance efforts to avoid federal funding recoupments. In addition, plans must prepare for new administrative requirements related to cost sharing and work requirements, among other policy changes on the horizon. Consumer communications should also be a focus area.

Providers and community-based organizations will need to prepare for greater uncompensated care needs and costs, which can lead to potential revenue loss, as well as new reporting and program integrity expectations. They also will play an integral role in assisting patients in maintaining coverage and navigating new requirements.

Vendors and health information exchanges have several opportunities to support the implementation of new requirements in H.R. 1 alongside the changing regulatory priorities. Examples include reviewing system capabilities to support new eligibility, verification, and reporting requirements and coordinating with states to ensure smooth implementation and program integrity.

Looking Ahead

The passage of H.R. 1 marks a turning point in federal health policy. Although the law鈥檚 fiscal goals are clear, its operational impacts will unfold over the coming months and years. States, plans, providers, and community organizations must now pivot from policy analysis to implementation readiness.

HMA will continue to monitor federal guidance, state responses, and stakeholder strategies. For more detailed analysis or support with scenario planning, contact聽our 量子资源s below.

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Medicaid Spending in Federal FY 2024 Totals Nearly $909 Billion

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This week, our In Focus section highlights findings from the Centers for Medicare & Medicaid Services (CMS) preliminary CMS-64 Medicaid expenditure report for federal fiscal year (FFY) 2024. According to the preliminary estimates, Medicaid expenditures on medical services across all 50 states and six territories in FFY 2024 totaled $908.8 billion.

This figure provides important context and an initial baseline for tracking Medicaid spending trends following the enactment of H.R. 1, the One Big Beautiful Bill Act. According to the Congressional Budget Office鈥檚 preliminary , H.R. 1 will reduce federal Medicaid and Children鈥檚 Health Insurance Program (CHIP) spending by approximately $1.02 trillion over the next decade (2025鈭�2034)鈥攁 significant share of total Medicaid expenditures.

Total Medicaid Managed Care Spending

The following analysis is based on a 量子资源 Information Services (HMAIS) analysis of the draft CMS-64 report. This report contains preliminary estimates of Medicaid spending by state for FFY 2024. CMS  state expenditures through the automated Medicaid Budget and Expenditure System/State Children鈥檚 Health Insurance Budget and Expenditure System (MBES/CBES). The CMS-64 form identifies annual expenditures through these systems.

Key findings from HMAIS鈥� analysis, as also shown in Table 1, include:

  • Total Medicaid managed care spending (federal and state share combined) reached $517.5 billion in FFY 2024, up from $508.1 billion in FFY 2023.
  • This amount represents a 1.9 percent year-over-year increase from FFY 2023 to FFY 2024, a notable slowdown compared to the 8.5 percent growth observed in our聽analysis聽of year-over-year spending from FFY 2022 to FFY 2023.
  • Managed care accounted for 56.9 percent of total Medicaid spending in FFY 2024, down 2.6 percentage points from the previous year.
  • In terms of dollars, the increase in Medicaid managed care spending from FFY 2023 to FFY 2024 was $9.4 billion, compared with $39.8 billion from FFY 2022 to FFY 2023.

These figures include spending on comprehensive risk-based managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), and prepaid ambulatory health plans (PAHPs). PIHPs and PAHPs refer to prepaid health plans that provide only certain services, such as dental or behavioral health care. Fee-based programs, such as primary care case management models, are not included in this total.

Table 1. Medicaid MCO Expenditures as a Percentage of Total Medicaid Expenditures, FFY 2020鈭�2024 ($M)

Medicaid Managed Care Spending Insights

Medicaid managed care expenditures have grown consistently each year with total Medicaid expenditures. In FFY 2024, however, the growth in the share of managed care expenditures was notably lower than in the previous four years. The slower growth in managed care spending aligns with the post-COVID-19 policy unwinding period, during which many states completed eligibility redeterminations that had been paused during the public health emergency, driving historic enrollment increases (see Figure 1).

Figure 1. Total and MCO Medicaid Expenditures, FFY 2020鈭�2024 ($M)

In addition, 量子资源 (HMA) has access to data in the Transformed Medicaid Statistical Information System (T-MSIS) and has analyzed MCO spending in major categories of healthcare, including inpatient and outpatient hospital care, physician and other professional services, skilled nursing facilities (SNFs) and home and community-based services (HCBS), clinics, pharmaceuticals, and other services. Similarly, based on the CMS-64 data, in FFY 2024, the largest non-managed care spending categories included:

  • HCBS: $108.8 billion
  • Inpatient hospital services: $71.9 billion
  • Nursing facilities: $46.3 billion

HMA鈥檚 analysis of the T-MSIS database shows that while managed care remains the dominant delivery system model for Medicaid, spending in certain categories, such as SNFs and professional services, is growing faster. This shift may explain the declining share of managed care in overall Medicaid expenditures, even as absolute spending remains high. Further details can be found here and here.

Federal Versus State Spending

This year鈥檚 data reflect the phase-out of the temporary 6.2 percentage-point federal medical assistance percent increase under the Families First Coronavirus Response Act, which ended December 31, 2023. In FFY 2024, 64.7 percent of FFY 2024 spending came from federal sources (see Table 2).

Table 2. Federal versus State Share of Medicaid Expenditures, FFY 2020鈭�2024 ($M)

What to Watch

Looking ahead, state Medicaid agencies will need to reassess financing strategies as total Medicaid federal funding declines because of H.R. 1 and other federal regulatory oversight and policy changes take effect. H.R. 1 includes provisions to gradually reduce allowable state provider tax rates from 6 percent to 3.5 percent by 2032, potentially requiring states to restructure financing or identify cost-saving measures.

CBO projections  that the Medicaid provisions in the bill will increase the number of uninsured individuals by an estimated 7.8 million by 2034.

Connect with Us

HMAIS, a subscription-based tool offered by HMA, provides detailed state by state analysis of the CMS-64 data and Medicaid managed care enrollment trends. For more information about the HMAIS subscription and access to the CMS-64 data, contact聽our 量子资源s below.

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From State Discussions to National Policies: Healthcare in Focus

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Since January 1, 2025,  (SOR), an HMA Company, has hosted eight conferences across states. SOR conferences give providers, health plans, lawmakers, and other stakeholders from all areas of healthcare the opportunity to have real-time discussions about pressing healthcare issues. These events provide a forum to bring together leaders with different perspectives and areas of 量子资源ise to discuss, digest, and synthesize issues and challenges at the state and local levels. These discussions allow states and their partners to improve healthcare delivery and prepare for changes before they happen.

This article explores common themes and issues addressed during the state-specific meetings.

Common Trends and State Priorities

Although each state has unique challenges and priorities, there is clear overlap in the issues being addressed. The exchange of ideas and best practices at these meetings is fostering a collaborative approach to tackling some of the most pressing challenges facing our nation today. Key themes include:

  • Improving healthcare accessibility and affordability.聽Many states are grappling with similar issues, such as the rising costs of medical services and federal policy changes that will have varying implications for the healthcare sector, especially publicly financed health insurance programs. From new rules coming out of the Centers for Medicare & Medicaid Services (CMS) to the 鈥淥ne, Big Beautiful Bill Act,鈥� which calls for reducing Medicaid funding and federal work requirements, healthcare industry leaders have been considering how these provisions will affect public healthcare programs. It was evident that these issues are at the forefront of state priorities, as leaders from different regions shared their strategies and experiences.
  • Assessing the evolving landscape for artificial intelligence (AI) and other technologies. Stakeholders discussed the state-specific landscape and opportunities for technologies such as AI, health data information, wearable health tools, and other digital health solutions. They explored opportunities to improve access to services and achieve efficiencies, while seeking to understand the potential limitations of advancements in technology.
  • Addressing the opioid crisis.聽States are taking various approaches to combat the opioid epidemic, from increasing funding for addiction treatment programs to implementing stricter regulations on prescription medications. The urgency of this issue was palpable, with speakers and participants sharing personal stories and data to underscore the impact of the crisis on their communities. Many panel discussions also focused on approaches to improve behavioral health coverage parity, access to 988 services, and care coordination.
  • Attracting and retaining all types of clinicians. Each state has designated health professional shortage areas and is thinking creatively about how recruit and keep healthcare practitioners. For example, many sessions at the SOR events explored where states are investing in educational programs to train the next generation of healthcare professionals. Loan repayment programs are also being expanded to incentivize clinicians to work in underserved areas. In addition, states are streamlining licensure processes to make it easier for healthcare providers to practice across state lines.

The conferences also provided a platform to discuss a range of other healthcare and health-related issues. Payment reform was a hot topic, with states exploring ways to make healthcare more affordable and efficient. Attendees were engaged in discussions about the impact of the federal Medicaid policy changes to coverage for health-related social needs (HRSNs), and the importance of community level strategies to address factors like housing, food security, and transportation. Maternal healthcare, the reentry population, the aging population, and rural health were other significant topics, each contextualized by the state-specific challenges and innovative solutions being explored.

What to Watch

The federal health policy landscape will continue to change over the coming months, which will greatly affect how states approach healthcare, especially Medicaid services. The policy changes and the downstream implications for state and local governments and their partners will be at the heart of discussions at the upcoming 量子资源 (HMA) National Conference, Adapting for Success in a Changing Healthcare Landscape, and State of Reform conferences. Key topics include:

  • The federal budget. On July 1, 2025, the Senate approved a tax and spending package that would cut over $1 trillion from healthcare, including $940 billion from Medicaid over 10 years. The bill introduces work requirements, provider tax limits, and stricter eligibility checks and is projected to increase the number of uninsured people by nearly 12 million, according to the Congressional Budget Office. The bill鈥檚 provisions will likely significantly disrupt the federal share of Medicaid funding so states will need to prepare and decide how to fund optional programs. Stakeholders will also want to prepare for the churn among their clients and expected drop in enrollment in publicly financed programs.
  • Medicaid work requirements. The federal work requirements in the House-passed and Senate-passed budget bills will require states to make policy and operational changes, including new systems and processes that meet the new federal mandates. State officials will have to tailor their work requirement programs to meet the capabilities and interests of the people who live in their respective states.
  • The impact of CMS actions. The Trump Administration鈥檚 new regulations and executive actions, particularly those announced by the Centers for Medicare & Medicaid Services (CMS), will affect states in various ways. The聽聽changing portfolio, for example, may provide states with new opportunities to participate in care delivery models. CMS鈥檚 decision to聽聽of new or existing requests for federal matching funds through Section 1115 demonstration waivers for designated state health programs and designated state investment programs may influence how states fund and deliver HRSN services.

Connect with Us

Join a range of healthcare stakeholders, including HMA 量子资源s, at one of the upcoming . These events provide a unique opportunity to delve into state and local-specific discussions, allowing for a deeper understanding of regional healthcare challenges and solutions.

We also invite you to continue these important conversations at the national level at HMA鈥檚 2025 conference, , which will take place October 14鈭�16 in New Orleans, LA. This conference will focus on both state and federal issues, fostering collaboration and learning among state and federal agencies, payers, health systems, providers, and other key stakeholders.

For more information on the HMA conference, contact Andrea Maresca. For more information on State of Reform, contact SOR program director Katharine Weiss.

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What the Senate’s Budget Approval Means for the Future

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On July 1, 2025, the US Senate voted 51鈥�50, to advance its version of , continuing the budget reconciliation process. Like the bill that the House passed in May, the Senate language calls for making significant changes to the Medicare, Medicaid, Affordable Care Act (ACA) Marketplace programs, as well as health savings accounts (HSAs) and publicly funded programs such as the Supplemental Nutrition Assistance Program.

Relative to the House bill, however, the Senate differs substantially in approach and scope. Thus, the bill has been sent back to the House for consideration. Speaker of the House Mike Johnson (R-LA) intends to accelerate voting with the goal of clearing the legislation in the House by July 4, 2025.

Key Differences Between House and Senate Bills

Notable differences between the House and Senate packages pertain to the following:

  • Medicaid Provider Payments: The Senate version includes more restrictive changes to federal Medicaid provider taxes and state-directed payment policies. These changes are expected to affect hospitals that rely on Medicaid supplemental payments. The Senate bill also would create a $50 billion Rural Health Transformation Program to mitigate financial strain on healthcare providers in rural communities. The provision includes several stipulations regarding distributions, allocations, eligibility standards, and permissible uses of the funds, which will likely prompt considerable ongoing engagement from stakeholders if signed into law, particularly among hospitals and clinics that will face substantial headwinds under other components of the legislation.
  • ACA Marketplaces: Like the House bill, the Senate version includes provisions to recapture full ACA subsidy amounts, restrict subsidy eligibility for certain immigrant populations, and require verification of ACA subsidy eligibility. The Senate bill neither appropriates funding for cost sharing reduction subsidies nor includes provisions regarding the Marketplace Integrity and Affordability rule, which the Centers for Medicare & Medicaid Services (CMS) finalized on June 20, 2025. In addition, the Senate bill offers several smaller flexibilities intended to increase usage of HSAs but does not include the full suite of HSA changes included in the House bill. The Senate language also does not call for expanding individual coverage health reimbursement arrangements (ICHRAs).
  • More Limited Medicare Package: Although the Senate language restores the ORPHAN Cures Act and adds a modest one-year payment increase under the Medicare Physician Fee Schedule (PFS), the bill omits a number of significant Medicare policies included in the House version, including a much broader PFS investment tied to the Medicare Economic Index, as well as multiple pharmacy benefit manager (PBM) reforms under Medicare Part D. The Senate legislation also excludes two Medicaid PBM provisions that the House had included.

Estimates from the Congressional Budget Office

The Congressional Budget Office (CBO) has provided several  of the cost and coverage impacts of the healthcare and tax provisions in multiple versions of the reconciliation legislation. CBO has provided cost estimates for the , as well as the Senate  but has yet to release information on the final Senate version. Of note, CBO estimated the following:

  • The Medicaid, Medicare, and ACA related provisions in the Senate substitute amendment would reduce healthcare spending by approximately $1.15 trillion over the next 10 years.
  • The House bill would, by 2034, add 10.9 million people to the number of uninsured individuals in the United States.

What to Watch

Stakeholders should plan for the financial, policy, and operational impacts of the many provisions that could be enacted, including:

  • New administrative requirements for enrollment that will place additional obligations on individuals seeking coverage and which will require more state resources to implement and manage. Community engagement and work requirements are scheduled to take effect December 31, 2026.
  • Downward Medicaid financial pressures due to fewer federal funds, which will stress state budgets and states鈥� ability to maintain existing programs. This situation could lead some states to scale back eligibility for Medicaid, limitenrollment for optional programs, or some combination of these. Additionally, states could be expected to address increases in uncompensated care among their providers.
  • A pause on implementation of previously finalized regulations that streamlined the Medicaid enrollment process for individuals.

The combination of the House and Senate reconciliation bills and the recently finalized Marketplace Program Integrity and Affordability rule indicate an uncertain future for cost sharing subsides and enhanced premium tax credits in Marketplace programs. Healthcare stakeholders should prepare for the impact of the expiration of the enhanced premium tax credits would have on benefit packages, enrollee risk profiles, uncompensated care, and other key issues affecting access, cost, and outcomes.

Connect with Us

To learn more about the these policy changes and the impact on your organization,聽contact our featured 量子资源s below.

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Forty Years Supporting Medicaid at HMA

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This month鈥檚 Vital Viewpoints podcast features a special conversation with Jay Rosen, founder, president, and chairman of 量子资源 (HMA), as he reflects on the evolution of Medicaid and the 40th anniversary of HMA鈥檚 founding. From his early days shaping Michigan鈥檚 Medicaid program in Michigan’s Office of Health and Medical Affairs, to building a national firm dedicated to public sector healthcare, Jay鈥檚 story is one of purpose, persistence, and visionary leadership. Over four decades, Jay has guided HMA鈥檚 strategic vision, growth, client service, and innovation in publicly funded healthcare.

Jay began his career at a time when Medicaid was still finding its footing. In the 1970s and early 1980s, states were grappling with how to operationalize a new federal promise鈥攈ealthcare for low-income and aging Americans. Jay saw firsthand the complexity and urgency of that challenge. But he also saw opportunity: to build something better, smarter, and more accountable. That vision led to a fateful meeting at a Big Boy diner in East Lansing, Michigan, where Jay, Paul Allen (Michigan鈥檚 then Medicaid director), Elliot Wicks, and Jay Endsley laid the groundwork for what would become HMA on June 13, 1985, the date HMA was founded.

The 1980s saw extreme economic distress in the U.S., with healthcare costs rising by 1,520% annually. Pressure on the federal government to reduce financial support for public sector health programs meant state governments had to lead the way. Managed care emerged as a novel idea, using risk-bearing intermediaries between the state as a payer and providers/consumers. Michigan was an early adopter of managed care.

Over the next four decades, managed care programs evolved to bring more accountability in Medicaid, transforming the state鈥檚 role from administrator to regulator. The state agency could focus on using its levers to improve performance of public programs. Reporting requirements, data-driven decision making, quality measurement and other innovative tools were introduced.

鈥淥ne-third of the country is on Medicaid, covering 90 million people, including the most expensive, vulnerable populations. Medicaid operates well despite financial challenges, addressing significant societal obligations,鈥� says Rosen.

Now, as we celebrate the 60th anniversary of Medicaid in July, the program faces new operational and financial pressures, but also new tools — like AI and digital health technologies to meet the moment. Innovation in Medicaid isn鈥檛 optional, it鈥檚 essential. 聽HMA 量子资源s work with states and other organizations to harness these tools and stay current with these new initiatives.

Hear more from Jay in this month鈥檚 podcast episode, 鈥�Medicaid At (Another) Crossroads: The Future of Public Healthcare Coverage鈥�.  And as you look ahead to the future of Medicaid, trust HMA to be your partner for the next 40 years to come. #HMAknowsMedicaid

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HMAIS Report Examines Medicaid Financial Accountability Policies and Emerging Strategies

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This week, 量子资源 Information Services (HMAIS) released a new report that provides a detailed, state-by-state analysis of how Medicaid managed care programs are implementing and enforcing medical loss ratio (MLR) requirements. The comprehensive report, Medicaid Financial Accountability and Risk Sharing Arrangement Report, looks at 43 states and the District of Columbia, drawing from the most recent publicly available rate certifications and model contracts.

The report鈥攁vailable exclusively to HMAIS subscribers鈥� supports policy analysts, actuaries, and other interested Medicaid stakeholders with comparative analysis and identification of emerging trends, outliers, and best practices in managed care oversight.

Key Highlights in the 2025 Report

The HMAIS team examined rate certifications and model contracts, primarily covering rate periods ending in or extending through 2025. The report also reflects recent federal policy changes, including the  requiring the inclusion of state-directed payments in MLR calculations鈥攁n update that is already influencing how states structure their payment, reporting, and oversight processes.

Each state profile outlines key elements of the following:

  • MLR thresholds and remittance obligations
  • Risk corridors and reinsurance strategies
  • Other risk mitigation strategies, including high-cost drug pools and retroactive eligibility adjustments

Key findings include:

  • Standardization is at 85 percent: Most states with risk-based programs (22) enforce the federal minimum MLR of 85 percent.
  • Stricter Thresholds: 11 states have adopted thresholds above 85 percent, with some reaching as high as 91.3 percent (Mississippi).
  • Most states require managed care organizations to remit funds if they fall below the MLR threshold. Enforcement varies, however, with strict enforcement in states like Georgia, Indiana, and Iowa, which require 100 percent of the shortfall to be returned, and more flexible policies in other states.
  • The analysis finds states are modifying certain traditional policies and tools to strengthen financial accountability mechanisms and evolve policies to address the changing federal policy landscape. For example, in lieu of remittances, Oregon and Tennessee allow plans to reinvest funds in the community.
Connect With Us

As states continue to refine their approaches to financial accountability and program integrity and design innovative approaches to address enrollee healthcare needs, the HMAIS report offers a timely and actionable reference point.

This report is just one component of the broader HMAIS subscription platform, which offers exclusive access to:

  • Searchable files that enable comparative analysis of key state program information and data
  • Timely updates聽on Medicaid policy developments
  • Downloadable state-by-state and industry files

For聽health plans, state agencies, provider organizations, partners, and advocacy groups, subscribing to HMAIS means staying ahead of regulatory changes, identifying emerging trends, and making informed decisions about strategy, compliance, and program design. For more information about the new report, contact featured HMAIS team member聽below.

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Disaggregating Managed Care Payments: New Insights into Medicaid Spending

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As states and stakeholders seek greater transparency and accountability in Medicaid, a new analysis from 量子资源 (HMA), offers a fresh perspective on how dollars flow through the system. Drawing on publicly available data from the Transformed Medicaid Statistical Information System (T-MSIS), HMA disaggregated funding dispersed to Medicaid managed care organizations to discern spending for specific categorically eligible populations. The findings significantly enhance policy discussions and can facilitate development of pragmatic and specific care management interventions that support quality patient care.

For policymakers, regulators, and other stakeholders, this level of disaggregation provides a clearer view of how public dollars are used鈥攁nd where there may be opportunities to improve performance or reinvest savings. It also supports more informed rate development and contract negotiations, particularly as states pursue value-based purchasing and other reforms. As Medicaid continues to evolve, especially in the context of budget pressures and changes in enrollment and risk profiles of enrollees, understanding the financial picture of managed care programs is essential to ensuring sustainability.

HMA鈥檚 team of 量子资源s鈥攊ncluding actuaries, former Medicaid directors, and data analysts鈥攈as deep experience working with T-MSIS data and advising states, plans, and providers on Medicaid program analysis, evaluation, and strategy. For more information about working with T-MSIS data and the insights it can provide, contact聽our 量子资源s below.

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Medicaid Expansion: Data-Driven Insights into Healthcare Needs

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As the US Senate debates H.R. 1鈥攁 sweeping legislative package that the House passed on May 22, 2025, which would impose nationwide Medicaid work and community engagement requirements by the end of 2026鈥� 量子资源鈥� (HMA鈥檚) latest analysis offers insights into the potential impact of these changes. Drawing on Transformed Medicaid Statistical Information System (T-MSIS) data, HMA 量子资源s examine the health and demographic profiles of the approximately 16 million individuals who comprise the Medicaid expansion population.

This 10-slide presentation of findings underscores the high prevalence of chronic and behavioral health conditions among these individuals, raising important questions about how new eligibility requirements could affect access to care and health outcomes. Notably, the presentation contextualizes health needs with Medicaid spending patterns, comparing the Medicaid expansion group with other eligibility categories, such as dual eligibles and children. We explore how the proposals of the nine state 1115 demonstration applications could affect the work requirements policy and implementation landscape. It also breaks down pharmacy spending by therapeutic class, spotlighting common conditions like opioid use disorder.

These insights are especially valuable for Medicaid managed care organizations, providers, and other stakeholders that will play a key role in designing work requirement initiatives and operationalizing any new requirements. Our May 22, 2025, article鈥�Building State Capacities for Medicaid Work and Community Engagement Requirements鈥攄elves into the issues that are central to such discussions.

With deep 量子资源ise in Medicaid policy, demonstration design, and advanced analytics, HMA is uniquely positioned to help states, plans, and providers navigate the evolving federal landscape. For more information about HMA鈥檚 T-MSIS capabilities, contact featured 量子资源s聽below.

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The Medicaid HRSN Pivot: What鈥檚 Next for States, Plans, and Providers?

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On March 4, 2025, the Centers for Medicare & Medicaid Services (CMS) rescinded the 2023 and 2024 guidance on Health-Related Social Needs (HRSN) Section 1115 demonstrations. This policy shift signals a significant pivot in federal Medicaid priorities under the current administration. While states with approved HRSN demonstrations may continue operating under existing terms, the path forward for pending proposals and future renewals is less certain. 

This article explores key considerations 量子资源 (HMA), 量子资源s identified for states that need to realign HRSN activities with other activities to align with the Trump Administration鈥檚 federal policy objectives and priorities for Section 1115 Medicaid and CHIP demonstrations. 

Background on HRSN Initiatives in Section 1115 Demonstrations 

In November 2023 and December 2024, CMS published guidance on a new Section 1115 demonstration that gave state Medicaid and CHIP agencies the opportunity to address the broad environmental conditions, or social determinants of health (SDOH), that affect people鈥檚 health. This initiative permitted states to address the individual-level adverse social conditions of enrollees that contribute to negative health outcomes. To assist states in their efforts, CMS approved Section 1115 demonstrations that piloted the provision of housing, food, non-medical transportation, and other environmental supports that meet enrollees鈥� HRSNs. 

What does CMS鈥檚 rescission of the HRSN demonstration policy initiative mean for states planning their next steps and priorities for Medicaid and CHIP? 

First, CMS鈥檚 March 4 rescission has no impact on states with a current, active Section 1115 demonstration that includes HRSN. States with HRSN demonstrations can maintain their approved programs until the scheduled expiration date; however, requests to amend any aspect of the program before it expires could subject the state to renegotiation of HRSN components that align with the new federal direction. 

Second, states with pending HRSN Section 1115 demonstration proposals should proactively consider new coverage approaches to authorize services that address an individual鈥檚 SDOH. Pending proposals developed using the now rescinded guidance may require substantial changes to gain approval. States should also prepare for additional public comment periods if revisions significantly alter the original design. 

Looking ahead, CMS is not expected to renew demonstration components that no longer align with current federal objectives. This projection pertains to any demonstration component, not just the rescinded HRSN guidance. States should start planning now for how they will sustain successful HRSN-related outcomes through alternative coverage pathways. 

Strategic HRSN Pivot Considerations 

While the HRSN guidance has been rescinded, CMS has not withdrawn the 2021 State Health Official Letter  (SHO# 21-001), published during the first Trump Administration. This leaves room for states to pivot HRSN initiatives into other federal authorities, such as: 

  • State Plan Amendments and Waivers. These approaches include state plan options, 1915 waiver options, CHIP Health Services Initiatives, as well as certain special program authorities like Program of All-Inclusive Care for the Elderly or Money Follows the Person.聽
  • Behavioral Health Integration: States may expand SDOH supports for individuals with substance use disorder, serious mental illness, or serious emotional disturbance, leveraging still-active guidance from first Trump Administration, Letter to State Medicaid Directors聽(SMD # 17-003) and聽聽(SMD # 18-011). By expanding activities focused on improving addiction or behavioral health treatment for Medicaid or CHIP beneficiaries, states could explore novel approaches to offering SDOH services.聽
  • Childhood Chronic Disease Prevention: States could consider aligning SDOH activities with the Make America Healthy Again initiative of the current administration by focusing on environmental factors that adversely affect an enrollee鈥檚 health, such as poor nutrition, chronic stress, overexposure to synthetic chemicals, and mental health challenges.聽
  • Justice-Involved Populations: States could explore聽聽and SDOH supports for individuals transitioning from carceral settings to the community, including compliance with new Medicaid requirements for incarcerated youth under the Consolidated Appropriations Act of 2023.聽
  • School-Based Health Services. States could explore SDOH activities as part of new approaches to address gaps in the provision of school-based health services to Medicaid and CHIP eligible children. CMS and the US Department of Education launched a joint effort to expand school-based health services by establishing the聽聽to help states increase healthcare access to children enrolled in Medicaid and CHIP. States could explore SDOH initiatives that expand the capacity of school-based entities that provide assistance under Medicaid or CHIP.聽
Looking Ahead 

As states recalibrate their Medicaid and CHIP strategies, understanding how they can align with evolving federal priorities is critical for all stakeholders. Notably, Medicaid stakeholders, including managed care organizations, hospitals and health systems, and providers, also have several opportunities, including: 

  • Inform State Strategy: Plans and providers can share data and outcomes from HRSN interventions to help states assess the value of these services and whether they should continue under alternative authorities.聽
  • Shape New Demonstration Designs: As states pivot to align with new federal priorities, plans and providers can offer practical insights into how SDOH interventions could be integrated into behavioral health, reentry, school-based services, and chronic disease prevention efforts.聽
  • Strengthen Community Partnerships: Continued collaboration with community-based organizations will be essential to maintain service delivery and demonstrate impact in new policy contexts.聽
Connect With Us 

HMA鈥檚 team鈥攊ncluding former CMS Section 1115 leaders and other colleagues steeped in Medicaid and CHIP policies and operations鈥攐ffers unique 量子资源ise in designing demonstrations that reflect current federal policy priorities and maximize state outcomes in alignment with program objectives that CMS will support. 

For questions about these developments and your organization鈥檚 plan to adapt to new federal Medicaid policy priorities, contact our featured 量子资源s聽below. Connect with our 量子资源s and other leaders experienced in new pathways for covering effective services at the聽, October 14-16, 2025, in New Orleans, LA.聽

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Medicaid Redetermination Ripple Effects in the Individual Market

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As Congress intensifies negotiations over budget reconciliation, including potential changes to Medicaid financing and Affordable Care Act (ACA) subsidies, new data from Wakely Consulting Group, an HMA (量子资源) company, sheds light on how the effects of the Medicaid redetermination process continued to unfold well into 2024. Appendix A of the May 2025 white paper , provides a full-year view of enrollment and morbidity trends, showing that the influx of former Medicaid enrollees had some negative effects on risk scores. In fact, relative risk increased across all market types鈥攕tate-based exchanges (SBEs), in federally facilitated exchange (FFE) Medicaid expansion states, and FFEs in non-expansion states鈥攄espite substantial enrollment growth.

Data presented in Wakely鈥檚  and their 量子资源s鈥� findings challenge the conventional assumption that higher enrollment dilutes risk and suggest that many new enrollees may have had unmet health needs or delayed care. The data also show that states with the highest enrollment growth did not necessarily experience the greatest morbidity shifts. This decoupling of enrollment and morbidity complicates forecasting for insurers and policymakers alike, especially as Congress debates Medicaid funding and ACA subsidy structures in the ongoing budget reconciliation process.

What to Watch

As federal lawmakers consider reforms that could alter Medicaid eligibility, subsidies, and risk adjustment mechanics, these findings underscore the importance of monitoring not just how many people enroll, but who they are and the type of care they need. The individual market鈥檚 evolving risk profile will have direct implications for premium setting, subsidy design, and the financial stability of plans that serve this population.

Connect with Us

Wakely is experienced in all facets of the healthcare industry鈥攆rom carriers to providers to government agencies. Wakely鈥檚 actuarial 量子资源s and policy analysts continually monitor and analyze potential changes to inform clients鈥� strategies and propel their success.

For more questions about the analysis contact聽our 量子资源s below.

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Medicaid Managed Care Enrollment Update 鈥� Q1 2025

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In this week鈥檚 In Focus section, 量子资源 Information Services (HMAIS) draws on its database of monthly enrollment in Medicaid managed care programs to provide the latest quarterly analysis of Medicaid managed care enrollment, offering a snapshot of developments across 28 states. [1] The data and insights are particularly timely as stakeholders, including states, Medicaid managed care organizations (MCOs), hospitals and health systems, and providers, continue to plan for multiple possible federal policy changes and the operational realities that will follow.

HMAIS also compiles a more detailed quarterly Medicaid managed care enrollment report representing nearly 300 health plans in 41 states. The 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. Table 1 shows a sampling of plans and their national market share of Medicaid managed care beneficiaries based on a total of 66 million enrollees. These data should be viewed as a broader representation of enrollment trends rather than as a comprehensive comparison.

Key Insights from Q1 2025 Data

The 28 states included in our review have released monthly Medicaid managed care enrollment data via a public website or in response to a public records request from 量子资源 (HMA). This report reflects the most recent data posted or obtained.  HMA has made the following observations related to the enrollment data:

  • Year-over-year growth. As of March 2025, across the 28 states reviewed, Medicaid managed care enrollment declined by 2.5 million members year-over-year, a 3.9 percent drop as of March 2025 (see Figure 1). This marks a continuation of the downward trend reported in late 2024, though with notable variation across states.

Figure 1. Year-over-Year Growth in Medicaid Managed Care States, 2020鈭�24, March 2025

  • Localized growth amid broader declines. While most states experienced enrollment reductions, Indiana and North Carolina bucked the trend with measurable gains, suggesting the influence of state-specific policy shifts or demographic factors. Oregon and Texas also saw modest growth.
  • Sharpest contractions. Illinois, Maryland, and South Carolina, reported double-digit percentage drops, underscoring the uneven impact of redeterminations and eligibility changes.
  • Difference among expansion and non-expansion states. Among the 21 states included in our analysis that expanded Medicaid, enrollment fell by 1.8 million (-3.6%) to 48.6 million. In contrast, the seven non-expansion states saw a steeper proportional decline (-5.4%), to a total of 12.2 million enrollees.

Table 1. Monthly MCO Enrollment by State, January 2025 through March 2025

Note: In Table 1 above and the state tables that follow, 鈥�+/- m/m鈥� refers to the enrollment change from the previous month, and 鈥�% y/y鈥� refers to the percentage change in enrollment from the same month in the previous year.

It is important to note the limitations of the data presented. First, states report the data at the varying times during the month. Some of these figures reflect beginning of the month totals, whereas others reflect an end of the month snapshot. Second, in some instances, the data are comprehensive in that they cover all state-sponsored health programs that offer managed care options; in other cases, the data reflect only a subset of the broader managed Medicaid population. This limitation complicates comparison of the data described above with figures reported by publicly traded Medicaid MCOs. Hence, the data in Table 1 should be viewed as a sampling of enrollment trends across these states rather than a comprehensive comparison, which cannot be established solely based on publicly available monthly enrollment data.

Market Share and Plan Dynamics

Using our data repository from 300 health plans across 41 states, HMAIS鈥檚 report addresses corporate ownership, program participation, and tax status. As of March 2025, Centene continues to lead with 17.7 percent of the national Medicaid managed care market, followed by Elevance (10.8%), United (8.8%), and Molina (6.3%), as Table 2 shows.

Table 2. National Medicaid Managed Care Market Share by Number of Beneficiaries for a Sample of Publicly Traded Plans, March 2025

What to Watch

The policy backdrop remains fluid. The US House of Representatives鈥� passage of the One Big Beautiful Bill Act introduces sweeping changes to Medicaid financing, including proposed cuts of up to $715 billion. Additional federal proposals, such as mandatory work requirements, could further reshape enrollment patterns.

Stakeholders should prepare for:

  • Implementation of work/community engagement mandates for certain adult populations
  • Potential redesign of Affordable Care Act expansion programs
  • Retraction of federal regulations focused on streamlining of eligibility and redetermination processes to improve accuracy and efficiency
Connect with Us

HMA is home to 量子资源s who know the Medicaid managed care landscape at the federal and state levels. As the Medicaid landscape continues to evolve, HMAIS equips stakeholders with timely, actionable intelligence. Our subscription service includes enrollment data, financials, waiver tracking, and a robust library of public documents.

For more information about the HMAIS subscription, contact our 量子资源s below.

[1] Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin.

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