Lessons Learned from State-Led Transformation Efforts
As federal and state healthcare policy continues to evolve, the need for cross-sector collaboration has never been more urgent. The 2025 budget reconciliation act (OBBBA, P.L. 119-21) introduces significant changes to Medicaid eligibility and financing, prompting a shift in strategy for policymakers and advocates working to advance whole-person care and address social determinants of health (SDOH). The new policies reflect a reorientation of Medicaid financing, with a greater emphasis on state flexibility, targeted benefits, and value-based care.
In this environment, enhanced partnerships and strategic alignment across sectors will be essential to sustain community-based services and workforce investments. In this article, Health Management Associates (HMA), experts highlight key observations from multiple state transformation programs, including actionable strategies for leveraging these assets and meeting the needs of at-risk populations.
Revisiting SDOH Initiatives in a New Policy Context
Whole-person care models have long called for integrated, multidisciplinary approaches. These models—once buoyed by COVID-19 pandemic-era funding and broad federal support—must now be recalibrated to align with new federal priorities. Current federal priorities emphasize streamlined benefits, fiscal discipline, and state-led innovation, which presents both challenges and opportunities for advancing integrated care. This shift has heightened the need to clarify roles and responsibilities across clinical and community settings, focusing on how to maintain essential linkages to primary and preventive care, especially for individuals for whom access remains fragile.
In addition, the ongoing healthcare workforce crisis intensifies the need for creative approaches to whole-person care models. Solutions must go beyond traditional payment models, leveraging existing social care networks, shared hub functions, alternative payment strategies above base rates, and braided funding streams.
State and federal initiatives can be used to sustain momentum and test emerging models. For example, the Rural Health Transformation Program (RHTP) offers a critical opportunity to support these efforts. With $50 billion in funding over five years, RHTP is designed to help states implement innovative models that improve rural health outcomes, strengthen workforce capacity, and address SDOH. States will be finalizing their applications to meet the November 5 deadline. HMA is tracking how these applications align with the strategies outlined below, using the program’s baseline and performance-based funding to invest in infrastructure, workforce development, and cross-sector partnerships.
Key Lessons from State Transformation Programs
Drawing on recent transformation programs, HMA experts identified several key lessons, including:
- Prioritize Intensive, Community-Based Outreach: States and health plans should invest in community-based outreach strategies that reach populations facing the greatest SDOH barriers, including funding models that support navigation and engagement beyond traditional clinical settings and leveraging shared infrastructure to extend reach.
- Update Community Health Worker (CHW) Benefit Structure to Maximize Impact: States, in collaboration with their partners, should revisit CHW benefit design to allow for greater flexibility. Reducing reliance on clinical supervision and referral-only pathways can help CHWs operate more effectively in terms of outreach, education, and engagement.
- Strengthen Workforce Retention through Flexible Financing: Healthcare stakeholders should explore braided funding, shared hub models, and alternative payment models that go beyond base rates. These approaches can sustain staff and morale amid shifting demands and constrained budgets.
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The strategies in HMA’s recent report for Illinois, Medicaid Financing for Social Health: A Resource Compendium for Illinois Community-Based Organizations & Networks, can be adapted to other states and communities. By sharing lessons and adopting best practices from transformation programs nationwide, we can reinforce pathways to integrated care and ensure that populations continue to receive the support they need—even in the face of unprecedented challenges.
HMA experts are helping states, healthcare plans, and community partners adapt and thrive as federal and state policy landscapes continue evolving. HMA teams are applying their cross-sector expertise in SDOH, workforce development, and state-specific knowledge to help organizations better plan, implement, and develop programs to solve healthcare challenges in their community. For questions about the report or opportunities for your organization, reach out to our experts below.
