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 Health Management Associates (HMA) colleagues’ 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 
• Expanded exemption frameworks tied to functional ability to work 
• New reporting and oversight obligations 
• Increased reliance on enrollee notifications and engagement 

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—particularly through income-based compliance pathways—which 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 compliance workflows. States will need to identify affected populations, track compliance, adjudicate exemptions and hardships, and manage appeals—all within tight implementation timelines. 
• Invest in verification infrastructure. Although automation opportunities exist, particularly using income and existing eligibility data, many determinations (e.g., medical frailty, caregiving, hardship) will require individualized review and new documentation standards. 
• Strengthen cross-agency coordination and data integration. Effective implementation will depend on integrating data from workforce, social services, and other programs to support compliance and reduce manual processes. 
• 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. States that effectively leverage automation and streamline enrollee-facing processes will be better positioned to maintain coverage continuity while meeting federal requirements. 

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. Plans are often the primary point of contact for members and will need to support awareness, compliance, and navigation of new requirements. 
• 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. Increased churn driven by documentation delays and administrative barriers may affect financial performance, care continuity, and quality outcomes. 
• Align with state expectations and funding constraints. Because these activities fall outside traditional Medicaid benefits, states and plans must carefully define roles, accountability, and funding mechanisms. 

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

Many of the most complex determinations—such as medical frailty and caregiving—cannot 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 
• Integrated data systems and verification pathways 
• Clear division of responsibilities across interest-holders 
• Coordination across policy, operations, and frontline personnel 

Act Now to Influence Community Engagement Rollout 

States and stakeholders face dual, immediate priorities—preparing 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’s 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 
• Evaluate verification strategies and data integration opportunities 
• Define roles and expectations across plans, providers, and partners 
• Develop targeted communication and engagement strategies 
• Conduct readiness assessments and system testing 

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

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

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

Sustaining Medicaid and Marketplace Accessibility Amid Federal Policy Changes 

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

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

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

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

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

Rural Health Transformation Program Implementation and Early Priorities 

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

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

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

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

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

AHEAD Model: Advancing Total Cost of Care and Population Health 

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

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

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

AI in Healthcare: From Innovation to Real-World Impact 

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

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

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

Looking Ahead 

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

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

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