Medicaid is a federal/state health insurance program that served more than 86 million lower-income people in fiscal year (FY) 2021. The combined federal and state spending for Medicaid totaled $717 billion that year, $420 billion of which was spent on providing care to Medicaid managed care organization (MCO) members, and $297 billion on services provided to fee-for-service enrollees.
While the role of managed care in Medicaid has grown tremendously over the past decade, with MCOs covering nearly three-quarters of Medicaid enrollees, detailed cost information has not been estimated for the people with MCO coverage. These data historically have been available only for fee-for-service (FFS) Medicaid because of limitations on federal data sources.
This lack of data blocks our understanding of the relative magnitude of the cost drivers in the program and contributes to an uninformed debate about policy reforms to control the growth of spending and improve quality of care.
Obtaining and using cost data by provider type for MCOs can help answer questions such as how much funding do MCO enrollees with diabetes, asthma, and/or hypertension consume? Of these patients, how many also have behavioral health conditions? How many MCO enrollees have six or more emergency department (ED) visits during a year and/or multiple inpatient hospital stays, and what does their resource consumption look like?
Health Management Associates (HMA) has developed a reliable methodology that can be applied to all 50 states, which approximates spending for the major categories of health services that MCOs cover, including: inpatient and outpatient hospital care, physician and other professional services, skilled nursing facilities, clinics, pharmaceuticals, and other services. HMA can determine prices for these services, which, combined with data on the number of encounters, yields reliable cost figures. These cost estimates will be useful in identifying unmet medical needs, gaps in our delivery systems, and areas of high spending where efficiencies and timely care management can be added to slow the growth in total health spending.
This week, our In Focus section examines new federal policy developments affecting Medicaid Section 1115 demonstrations. The Centers for Medicare & Medicaid Services (CMS), on March 4, 2025, rescinded two guidance letters issued by the prior Presidential Administration that defined and provided the framework for state Medicaid programs to cover health-related social needs (HRSNs) using Section 1115 authority.
Though specific Medicaid priorities under the Trump Administration are nascent, Health Management Associates’ federal and state experts are monitoring these developments. This article describes the withdrawn policy, known implications for states with approved and pending proposals, and the imperative to plan for a variety of scenarios and future opportunities.
Background on HRSN Initiative in Section 1115 Demonstrations
CMS-approved Section 1115 demonstrations allow states to pilot alternative methods to improve the accessibility, coverage, financing, and delivery of healthcare services under joint federal-state funded programs, specifically Medicaid and the Children’s Health Insurance Program (CHIP).
Addressing health disparities and promoting integrated care in Medicaid became a key focus of the Biden Administration. In November 2023, CMS introduced a Medicaid and CHIP Health-Related Social Needs Framework, giving state Medicaid agencies the opportunity to address the broader social determinants of health (SDOH) that affect their enrollees, leading to better health outcomes. The agency published an update to the guidance in December 2024. The new initiatives were not intended to replace other federal, state, and local social service programs, but rather to coordinate with those efforts.
Key Takeaways for States
The following critical components of the March 2025 announcement and the present policy landscape should inform state Medicaid agency and stakeholder response and future planning work.
First, this guidance does not affect states with a current, active Section 1115 demonstration, state plan, or 1915 waiver programs that include HRSN. States with HRSN demonstrations will maintain their approved programs; however, states and their partners should prepare for shifts in federal reporting, oversight, and evaluation expectations. Separately, states may wish to re-evaluate their resource allocation and consider adjustments that may be needed to better align with a new federal policy environment.
States seeking any amendment or extension of their demonstration program—even if unrelated to HRSN—should expect this activity to trigger a CMS review of the HRSN component of the 1115. States will need to consider the strategic advantages and necessity of such requests relative to the implications to their HRSN initiative. They also should consider planning for nonrenewal of their HRSN programs in advance of the demonstration’s current expiration date.
Pending state HRSN Section 1115 demonstration proposals are not expected to be approved. The Section 1115 option for federal matching funds to provide up to six months of housing supports, nutrition supports, and associated infrastructure capacity funding no longer aligns with the Trump Administration’s objectives for Medicaid and CHIP. Stakeholders interested in these concepts should consider alternative strategies and investment options.
What to Watch
Notably, CMS did not rescind the 2021 State Health Official Letter RE: Opportunities in Medicaid and CHIP to Address Social Determinants of Health (SDOH) (SHO# 21-001) published during the first Trump Administration. States and their partners should monitor CMS’s actions and signals for the agency’s posture toward SDOH proposals.
A new group of states proposing alternative and revised demonstration concepts and innovations is likely to emerge. These states may provide early signals of the nature and breadth of the Section 1115 demonstrations CMS is willing to consider. With regard to SDOH, states and their partners should consider aligning proposals with the approaches outlined in the 2021 guidance for regular federal program authorities (e.g., 1915(i) state plan options, 1915(c) waiver options) as well as certain managed care authorities.
In addition, states and Medicaid stakeholders should watch for other Medicaid and CHIP policy priorities advanced through demonstration and other authorities, including efforts to address substance use disorders (SUD) and reentry initiatives that focus on supporting individuals who are transitioning from incarceration back into society. SUD and reentry initiatives can intersect with Section 1115 demonstrations and other authorities, such as managed care, in a variety of ways. The intersection of these issues can provide another area of common ground and opportunity to continue work on state reentry initiatives, though likely with new and modified federal parameters.
Connect With Us
HMA is monitoring other developments in Congress and from the White House and agencies affecting federal Medicaid and CHIP policy changes. The complexity and nuances associated with potential future statutory and regulatory changes necessitate thoughtful and immediate impact analysis, scenario planning, and preparations that will allow organizations to pivot if and when policy changes occur. HMA colleagues have expertise in all of the components critical to staying informed, engaged, and prepared for changes to Section 1115 programs—from the policy knowledge to actuarial/budgeting talent, to communications and project management skills, as well as the necessary IT infrastructure.
For questions about these developments and your organization’s plan to adapt to new federal Medicaid policy priorities, contact our featured experts below.
In today’s complex healthcare environment, navigating the scrutiny of regulatory and accreditation bodies like The Centers for Medicare & Medicaid Services (CMS), Department of Health (DOH), The Joint Commission, and Det Norske Veritas (DNV) Healthcare is critical for the success of every hospital and health system. Unexpected surveys, triggered by recertification, validations or even complaints, can occur at any time.
HMA has partnered with the Healthcare Association of New York State (HANYS) to develop the content for Survey Readiness: Prepare, Respond, Succeed, a 5-part virtual series on Wednesdays in April from 1- 2:30pm ET. HMA’s expert faculty will also co-teach the sessions. Attendees will dive deep into organizational strategies and tactics to prepare, manage and respond to surveyors effectively – and get the essential skills to excel in survey readiness.
While some examples in the program will address issues from the New York state perspective, attendees from organizations nationwide should attend. Hospital and long-term care executive team and leaders in quality and compliance, survey coordinators, and risk management will benefit from attending.
Survey Readiness: Prepare, Respond, Succeed
Virtual Series | April 2 – 30
April 2: Survey readiness 101: Overview and getting started
April 9: Preparation: How to mitigate risk and prepare for upcoming surveys
April 16: They’re here: Establishing a survey response and management protocol
April 23: Responding to survey findings: How to develop a strong correction plan and knowing your options
April 30: What’s next: Leveraging survey findings and strengthening organizational quality and compliance
The cost to attend this series is $475.
State hospital associations and their members can enjoy $50 off when using this code when registering: SHADISCOUNT25
Programs for All-Inclusive Care for the Elderly (PACE) plans are programs aimed at keeping low-income older adults living in the community and out of nursing homes, providing home care, prescriptions, meals, and transportation to participants. The Centers for Medicare & Medicaid Services (CMS) recently proposed changes to the risk score model used for PACE (which determines the calculation for how many Medicare dollars PACE gets) that will create funding vulnerabilities in the Medicare rate. If approved, this would likely mean PACE programs get significantly lower funding amounts from Medicare than under the current model. The final notice is expected to be released in April 2025. If approved, this change would be fully phased in by 2029.
PACE enrollees, as compared to enrollees in Medicare Advantage plans, disproportionally have conditions that will no longer be risk-adjustable, such as depression, leading to an across-the-board drop in risk scores. Along with the reduced funding for PACE programs, this risk model change will create data submission issues for PACE organizations and their vendors. When health plans, who are much more risk-score focused in general than PACE plans, underwent this same change, risk scores dropped by between 5%-20%. If PACE programs don’t fix their data submissions in 2025, they’ll lose money in 2026 and beyond.
To sustain and grow, PACE leaders must understand and plan for the change to v28 risk scores. HMA’s team of consultants and our actuaries from Wakely, an HMA Company, have put together an analysis to help PACE plans understand and prepare for the transition:
HMA will create reports showing the current (v22) risk score, the proposed (v28) risk score, and the impact by diagnosis category to help with potential recapture efforts.
Identify data submission problems and suggest strategies for fixing them.
Outline potential financial and operational adjustments uncovered during the analysis.
HMA has found that this the change in the process of diagnosis submission is a blind spot for many PACE plans and may be more critical to mitigate than the impacts from the risk adjustment model change.
HMA & Wakely will be hosting a booth at the National PACE Association Spring Policy Forum in Washington, DC on March 17 and 18. If you are attending, we hope you will visit us there. If you would like help understanding the potential impact to your PACE organization, contact us about developing an analysis to help you respond to these changes.
This week, our In Focus section reviews priorities outlined in recent State of the State addresses, building on an earlier article: A Closer Look at Gubernatorial Healthcare Priorities: 2025 State of the State Address Overview. We examine specific proposals from the governors of Illinois, Indiana, New Mexico, and South Carolina, as detailed in the Health Management Associates Information Services (HMAIS) report, 2025 State of the States Overview. These states offer examples of the trending policy changes and investments governors intend to make, providing valuable insights into the evolving healthcare landscape.
Key Trends in Governors’ Budgets
State of the State addresses provide insights into governors’ priorities, reflecting state budgets, multiyear initiatives, and changes in federal policies and funding. These priorities signal strategic shifts healthcare stakeholders must navigate to remain aligned with the evolving state and federal policy landscapes. Common themes that Health Management Associates (HMA) is tracking this year include healthcare affordability, Medicaid work requirements, workforce shortages, and enhanced oversight of healthcare entities.
Highlights by State
Illinois Gov. J.B. Pritzker delivered a 2025 State of the State Address on February 19, 2025, during which he presented his executive budget proposal for fiscal year (FY) 2026 and discussed strengthening oversight of healthcare entities like pharmacy benefit managers (PBMs) and health insurers. Governor Pritzker introduced the Prescription Drug Affordability Act, which seeks to further regulate PBMs, reduce drug costs, and protect independent pharmacists. More specifically, it would give the state Department of Insurance full statutory authority to examine PBM records and require these organizations to comply with annual auditing and reporting requirements. The governor also called for a ban on prior authorization for behavioral healthcare and proposed requiring insurance companies to reimburse patients for reasonable travel costs for medical appointments when the distance they must travel exceeds network adequacy requirements.
Pritzker’s budget allocations include:
$191.8 million to support the Certified Community Behavioral Health Clinic (CCBHC) Medicaid Demonstration Program
$27.9 million to maintain the state’s maternal and child home health programs
$27.7 million to support nonhospital facilities that provide psychiatric care to people younger than 21 years old
$132 million for Medicaid-like coverage for undocumented adults ages 65 and older
A shift in funding from the state’s Exchange to a State-Based Marketplace, which would end use of the federal platform
In addition, the budget plan eliminates funding for Medicaid-like coverage for undocumented adults ages 42−64, which cost approximately $420 million in one year.
Indiana Gov. Mike Braun delivered his address on January 29, 2025, during which he discussed his support for state legislation that would address healthcare costs. Governor Braun urged the legislature to pass multiple bills, including:
House Bill (HB) 1003: Specifies that the state’s Medicaid Fraud Control Unit (MCFU) may investigate provider fraud, insurer fraud, and duplicate billing and would require more healthcare price transparency, stop anticompetitive practices that drive up prices, and put an end to surprise billing
Senate Bill (SB) 3: Would mandate that third party administrators, PBMs, employee benefit consultants, and insurance providers acting on behalf of plan sponsors have a fiduciary duty to the plan sponsors
HB 1004: Would bolster oversight of nonprofit hospital financials
The governor also encouraged the legislature to support efforts focused on PBM reforms.
Governor Braun’s proposed budget for the 2025−27 biennium recommends a general fund appropriation of more than $5 billion in FY 2025−26 and $5.3 billion in FY 2026−27 for the state Office of Medicaid Policy and Planning. Moreover, the state is still managing the effects of a nearly $1 billion shortfall it identified in the Medicaid budget in FY 2024. The Indiana Family and Social Services Administration predicts total Medicaid expenditures will reach nearly $21 billion in FY 2025, up 6.4 percent from $19 billion in 2024 and will likely increase by at least another $1 billion in both 2026 and 2027.
New Mexico Gov. Michelle Lujan Grisham delivered her 2025 State of the State Address on January 21, 2025, wherein she discussed the new state Health Care Authority (HCA), which launched in July 2024. According to Governor Grisham, the HCA has helped the state to increase Medicaid provider rates, create a Health Care Affordability Fund, and expand the Health Care Professional Loan Repayment Program. To continue with HCA’s work, the governor announced that in March 2025, the state will be sending more than $1 billion to New Mexico hospitals through the Medicaid provider tax. She also recommended that the state legislature approve $50 million in additional funding for the Rural Health Care Delivery Fund, which supports getting new and expanded primary, behavioral, maternal and child, and specialty healthcare services into rural areas.
In her proposed FY 2026 budget, the governor recommends:
$13 million in recurring funds to increase reimbursement rates up to 150 percent of Medicare rates
$5.3 million for the Program of All-Inclusive Care for the Elderly (PACE)
$2.5 million for increased assisted living facility rates
$2.9 million to increase behavioral health rates for non-Medicare equivalents
$30 million annually over three years to expand Medicaid services, including medical respite for people who are homeless, food support for certain individuals who pregnant, infrastructure to provide medical services to people who are justice-involved, and infrastructure to provide housing and food supports.
In addition, the budget recommends a $100 million special appropriation to address behavioral health needs, which will fund the 988 program, an investment to secure a federal match for the CCBHC Initiative, more drug and alcohol treatment services at the New Mexico Behavioral Health Institute, and medical and behavioral health providers at the Corrections Department.
South Carolina Gov. Henry McMaster delivered his 2025 State of the State Address on January 29, 2025, in which he discussed the state’s siloed health and human services delivery system, which he said creates a difficult landscape to navigate for people with physical disabilities, special needs, and mental health issues. Governor McMaster said the state must make immediate changes to the Department of Mental Health and Department of Disabilities and Special Needs and proposed making the boards of commissioners that run the departments directly accountable to the governor.
The governor’s proposed FY 2025−26 budget highlighted his priority of reimplementing Medicaid work requirements through a Section 1115 demonstration waiver, which the state previously had in place during President Donald Trump’s first administration. Governor McMaster has already requested an expedited approval of the demonstration, which would expand Medicaid eligibility to 100 percent of the federal poverty level (FPL) for parents who are working or going to school. Under South Carolina’s existing eligibility rules, parents no longer qualify for Medicaid if they earn more than 67 percent of the FPL. The work and school requirements would only apply to parents with incomes of between 67 percent and 100 percent of the FPL.
The budget also recommends approximately $79 million in recurring funds to support the state’s Medicaid program. Those funds would be allocated as follows:
$5.7 million toward increasing behavioral health provider payment rates
$5.4 million toward increasing opioid use disorder provider reimbursement rates
$10 million toward reducing waiting lists for home and community-based services
$2.4 million toward intensive partial hospitalization and outpatient behavioral health programs
In addition, the budget recommends funding for the Department of Public Health and $1.6 million in nonrecurring funds and $625,000 in recurring funds for the Healthy Moms, Healthy Babies program and its mobile maternity care vehicle.
Connect With Us
HMAIS has prepared a comprehensive report summarizing each State of the State address and governors’ proposed budgets, which is available to HMAIS subscribers. It also comprises a section highlighting trends in the issues covered in each speech, including maternal health, substance use disorder, Medicaid work requirements, prescription drug prices, and provider rates.
HMA supports healthcare stakeholders in responding to these developments, offering strategic guidance and expertise to help navigate the evolving policy landscape and align with the shifting priorities outlined in these addresses. Contact one of our experts below for more information about the report or to connect with one of HMA’s state policy and market experts.
Each year on March 2 we observe World Teen Mental Wellness Day, which aims to raise awareness and destigmatize mental health issues experienced by teenagers, and to expand the conversation around available resources. There is an ongoing mental health and substance use crisis in our country. Families everywhere experience difficult and challenging experiences as their loved ones are cycled in and out of a system dealing with workforce shortages and resource issues. HMA works extensively to address the opportunities and challenges inherent in our struggling behavioral health system, including substance use disorder and on child welfare and family resilience programs throughout the country. #WorldTeenMentalWellnessDay
One such program is Lifting Voices, an independent initiative developed by Heidi Arthur and Ellen Breslin, both HMA Principals, who co-founded the initiative, informed by their own family members’ experience and by their expertise in behavioral health policy and practice. As parents of children who nearly died on multiple occasions from severe behavioral health conditions, the co-founders are driven to inform the transformation of the youth behavioral healthcare system. As behavioral health professionals who found themselves struggling to navigate the many challenges facing their own children, they realized that their knowledge, desperation, and resources afforded their children access to interventions that should be available to every child and youth in need of services. Their experience of the care delivery system has also inspired their commitment to highlight the urgent improvements necessary to support struggling children and parents affected by the nation’s youth behavioral health crisis.
The co-founders published the initial Lifting Voices report in October 2023. Since then, the team has engaged multiple youth and family collaborators and state and national partners. They presented the report and their ongoing efforts at national and state conferences.
They developed a second iteration of the surveys and a website to scale the dissemination effort, with collaborators, Kelsey Engelbracht who developed the website and Sheilah Gauch who helped to develop the survey.
“We felt an imperative to lift the voices of youth and families experiencing mental health and substance use conditions,” says co-founder, Ellen Breslin.
Heidi Arthur added, “So far we’ve received just over 100 survey responses. As we reach each 100-response milestone we plan to collaborate with our network of youth and family advisors to distill key findings that we can share in order to inform improvements to the system.” They plan to release the first report in May 2025.
In February 2025, the team was invited by the Substance Abuse and Mental Health Services Administration (SAMHSA) Office of Recovery to participate in workgroups providing input into a toolkit for family and caregivers and to further define and describe SAMHSA’s framework of community-based recovery supports.
You can join national organizations and state agencies in disseminating the secure, anonymous Lifting Voices surveys by simply sharing the Lifting Voices | transform behavioral health link and inviting families and youth to participate.
Findings will be disseminated with the goal of sharing the experience that youth/young adults and parents/caregivers are having as they seek services for child and youth mental health and/or substance use.
To learn more about this project, or inquire about ways that HMA can help with other behavioral health, child welfare, or substance use disorder issues, contact a member of our behavioral health team.
This week, our In Focus section highlights President Trump’s Make America Healthy Again (MAHA) executive order, which is designed to address the challenges driving chronic diseases in the United States. Our article delves into the key components of the order, presents a data snapshot about the state of children’s health, and discusses implications for stakeholders seeking to prepare for and inform the transitions impacting the future of children’s health.
Presidents can use executive orders to communicate their priorities and set a framework and timelines for federal agency actions. Historically, these orders have provided strong signals for the initiatives and policy direction that federal departments and agencies will pursue. Health Management Associates (HMA), experts are monitoring the MAHA directive and several other executive orders, alongside other Trump Administration actions.
Executive Order: Making Children Healthy
On February 13, 2025, President Trump signed an executive order establishing the Make America Healthy Again Commission, chaired by US Department of Health & Human Services (HHS) Secretary Robert F. Kennedy, Jr. The commission, which builds on the Secretary’s prior work, is charged with combating “critical health challenges facing citizens, including the rising rates of mental health disorders, obesity, diabetes, and other chronic diseases.”
Initially, the commission will focus on studying and addressing childhood chronic diseases. The order directs the commission to release within 30 days an assessment that summarizes what is known about the childhood chronic disease crisis, identifies gaps in knowledge, and includes international comparisons. This report will serve as the foundation for developing a strategy to improve the health of children, which is due within 180 days of the order.
Data Snapshot: Childhood Chronic Conditions
Evaluating existing data and identifying gaps in data for children are critical initial steps toward developing a comprehensive and evidence-driven federal policy agenda. At present, 90 percent of the $4.5 trillion in annual US healthcare expenditures are used to provide services to people with chronic and mental health conditions. Many of the risk factors for developing these conditions begin in childhood and some are preventable. For example:
Obesity affects 20 percent of children and 42 percent of adults, putting them at risk of chronic diseases such as type 2 diabetes, heart disease, and some cancers. More than one in three young adults ages 17−24 are too heavy to join the US military. The youth obesity rate from 2017−2020 was 19.7 percent, a 42 percent increase from the rate in 1999−2000. Lifestyle choices, combined with social and environmental factors like access to healthy foods and neighborhood walkability and safety can significantly reduce the risk of developing obesity.
In 2022, diabetes and the complications associated with it accounted for $413 billion in total medical costs and lost wages in the United States. While few children have type 2 diabetes, nearly one in five adolescents (12−18 years old) have prediabetes and may develop diabetes in adulthood. Like obesity, both personal choices and adverse social and environmental factors can increase the lifetime risk of developing diabetes.
Approximately 4.9 million children in the United States have asthma, which is incurable but can be managed. Asthma is one of the main causes for missed school days among children. Many US schools have poor indoor air quality, which can expose children to allergens, irritants, and triggers such as mold, dust, and pests. Conditions in children’s homes also can exacerbate asthma.
How Federal Programs Impact Children’s Health
Numerous federal programs directly and indirectly affect children’s health. Examples include:
Nationally, more than 38 percent of children have Medicaid coverage, with rates exceeding 50 percent in some states and territories (e.g., Louisiana, New Mexico, Puerto Rico). Medicaid’s requirement to cover Early Periodic Screening, Diagnostic and Treatment (EPSDT) has long been the vehicle for addressing the chronic healthcare needs of children on Medicaid. For example, for children with asthma, in addition to covering medications to prevent and treat exacerbations, some states will reimburse providers for conducting home health assessments to identify and remediate triggers in the home. In addition, federal funding through both Medicaid and US Department of Education supports school nurses and school-based health centers, which can be critical resources in addressing the chronic healthcare needs of students, such as the administration of Insulin or providing inhalers to children experiencing asthma.
To receive funding through the National School Lunch and School Breakfast programs, schools must provide meals aligned with the “meal pattern” established by US Department of Agriculture, which specifies the amount of food among various groups and an age-based maximum for calories, saturated fat, and sodium. Under current guidelines, by 2027, school meals also will be expected to comply with limits on added sugars.
Participants in the Special Supplemental Nutrition Assistance Program for Women, Infants, and Children (WIC), which provides participants with certain foods to meet their nutritional needs, have a lower risk for preterm birth, low birthweight infants, and infant mortality.
Federal programs affect children’s home and school environment in other ways, and the health implications of those funding choices may not be explicitly recognized or prioritized. For example:
Housing assistance programs in some cases prevent families from experiencing homelessness but may place them in living situations where exposure to environmental hazards such as mold, pests, or pollution and neighborhood factors like crime and lack of walkability may adversely affect their health.
Some federal agriculture programs are specifically designed to make nutritious foods available (e.g., Gus Schumacher Nutrition Incentive Program, or GusNIP), while others support agriculture without specifically bringing a health lens to those programs.
Implications for Stakeholders
The President has directed that the strategy address “appropriately restructuring the Federal Government’s response to the childhood chronic disease crisis, including by ending Federal practices that exacerbate the health crisis or unsuccessfully attempt to address it, and by adding powerful new solutions that will end childhood chronic disease.” Though we do not know what the Make our Children Healthy Again Assessment and Strategy will recommend, we anticipate it will present both opportunities and risks for organizations focused on children’s health. As the commission begins its work, organizations can take the following actions:
Consider policy opportunities: Review your organization’s strategic plan as well as your operational and policy priorities and consider how they may fit into this framework. This could be the time to suggest changes to federal grants you receive or federal regulations or requirements that negatively affect your ability to keep children healthy.
Prepare for potential funding disruptions: It is possible that programs you rely on will have changes in scope or funding levels. Review your offerings for children with chronic conditions and identify substitutes or complements to your main priorities. Consider partners you might work with to keep work going that may not have the same level of federal support in the future.
Be prepared to share the real-world impacts of policy changes: Begin gathering data, stories, and compelling information to share about chronic conditions affecting children that can be used in future public comment opportunities, shared with the media, and discussed with your federal, state, and local representatives. Think about how to talk about these issues in a clear and compelling way that will resonate with each of those audiences.
Find partners and allies: As you consider the policy opportunities and risks, think about other organizations that share your interests and how you can work with them in complementary ways. It can be compelling to policymakers when stakeholders who might not naturally be aligned on other issues can unite around a specific policy area.
Connect with Us
Healthcare stakeholders with a commitment to healthy children and healthy adults have an opportunity to support the specific policies and funding opportunities that may emerge from the MAHA order. To learn more about these policy changes, the impact on your organization, and actions your organization can take, contact our one of our featured experts below.
More than ever, facing the challenges of housing insecurity is becoming a top priority for communities nationwide. Here’s why.
Direct impact on health: The quality of housing directly affects physical and behavioral health. People experiencing homelessness are at higher risk for illness, mental health issues, and death. Substandard housing leads not only to higher incidence of illness, but also greater exposure to toxins like lead and asbestos that exacerbate health problems.
Cost burdens of housing issues: Overcrowding, substandard housing, eviction, and homelessness all lead to poor economic outcomes, lower infant birthweights, mental health challenges, chronic disease, and higher mortality.
Effects on healthcare access: Due to high housing costs,half of renters delay medical care because they can’t afford it. And people experiencing homelessness or housing insecurity have a much harder time accessing healthcare.
Rise in homelessness: After homelessness hit a record high in 2023, it increased another 18% from 2023 to 2024. More than 771,800 people in the U.S. lived without housing in 2024.
To address these issues, we are announcing the launch of the HMA Housing and Health Solutions team. HMA has brought together a team of experts who understand the challenges that homelessness and housing insecurity present to community health. Bringing together partners across all sectors, we help craft effective solutions for populations that lack access to stable housing and healthcare.
Our team includes former directors of national, state, and municipal government housing departments, nonprofit affordable housing organizations, and housing financing and investment.
We’re pleased to announce the addition of two well-renowned housing experts to the team. Andy McMahon joins HMA after spending over seven years at UnitedHealthcare and UnitedHealth Group. Andy has over two decades of executive experience spanning healthcare, housing, human services and community development, and worked with UHC Medicaid plans nationwide on various policy issues to improve care for the most complex populations. Doug Shoemaker joins HMA after leading Mercy Housing California for 13 years. Prior to Mercy Housing, Doug directed the Mayor’s Office of Housing and Community Development in San Francisco. Doug focuses on the intersection of housing, community development and healthcare to advance projects and policy that improve outcomes for lower-income individuals and communities.
Come meet some of our team members at the NAEH conference Feb 26 and 27 in Los Angeles, CA and visit us at the HMA booth in the exhibit hall. HMA’s Dena Hasan will be presenting, “Does Secret Domestic Violence Housing Lead to Unsheltered Homelessness?” on 2/26 at 2:30 in San Gabriel ABC, and “Does Medicaid Hold the Key to Housing?” at 3:45pm in Santa Anita AB.
This week, our In Focus section highlights insights from a new Health Management Associates (HMA) issue brief, Digital Quality Transformation. The brief, released in January 2025, explores the transition from traditional manual data extraction for use in quality measurement to fully automated digital quality measurement (dQM). It examines the challenges, benefits, and policy changes that are driving this transformation with a focus on how payers and providers can leverage digital tools and open data standards to improve efficiency, reduce costs, and enhance patient care and value-based payment models.
Following is a summary of key points from the brief about the evolution of traditional quality reporting in healthcare, which has depended on structured claims, administrative data, and manual chart abstraction. This process tends to be expensive, inefficient, and unable to capture data from a population perspective. We highlight the challenges and strategic steps that organizations should be taking now to prepare for the federally required dQM transition.
Current State
Traditional manual quality measurement methods are costly and inefficient. Generally, providers are expected to submit a sample of medical records (usually about 400 charts per measure). Once received, trained staff extract key data fields from those charts and enter them into another database, where the data are then used to augment claims data. This process results in significant gaps in and delays in information regarding quality of care, is prone to manual entry errors, and represents only a small portion of the patient population. Accreditation bodies like the National Committee for Quality Assurance (NCQA) are moving away from these outdated methods, signaling a shift toward more comprehensive and automated collection of clinical data. Facilitating this movement is the increasing availability of digital tools, APIs, and interoperability standards designed to streamline data exchange.
Federal Policy Landscape
The 21st Century Cures Act, the Office of the National Coordinator for Health IT (ONC) Cures Act Final Rule, and the Centers for Medicare & Medicaid Services (CMS) Interoperability and Patient Access Rule collectively are contributing to improve the ability of providers, payers, and applications to access health information using HL7 FHIR APIs. Although it is unclear whether the Trump Administration will revise aspects of certain existing regulatory policies, the commitment to interoperable, standardized, reusable data has been a bipartisan issue and was supported by the previous Trump Administration. This transition to digital health measures could even accelerate to meet changing expectations for efficiency and improved quality.
Key federal and state efforts include:
Roadmap for Digital Quality Measurement
The CMS Digital Quality Measurement Strategic Roadmap outlines necessary actions for a transition to fully digital measures by 2030. Organizations like the NCQA already are converting healthcare quality measures (e.g., HEDIS®) into digital formats using non-claims-based data sources in preparation for a full transition to digital measures in 2030. Key stakeholders, including the Digital Quality Implementation Community (DQIC) led by Leavitt Partners, an HMA company, are driving industry alignment with these new federal mandates. Organizations that proactively invest in digital quality measurement will be well-positioned for future compliance and improved healthcare outcomes.
States are also starting to plan for the implementation of these digital requirements. The One Utah Health Collaborative Digital Health Interoperability Pilot, led in partnership with Gov. Spencer Cox and Leavitt Partners is one example of state-level leadership to support and maximize the use of digital health measures. The pilot is designed to enable providers, payers, and individuals to aggregate and share clinical and claims information from anywhere in Utah’s healthcare ecosystem. The statewide Fast Healthcare Interoperability Resources (FHIR)-based ecosystem leverages modern application programming interface (API) standards as required at the federal level. This pilot will aid Utah in its fully digital quality measurement transition by ensuring that health data are standardized and easily accessible, which is crucial for accurate and efficient quality measurement.
Challenges and Opportunities in Digital Quality Transformation
As the industry moves toward full adoption of dQM by 2030, healthcare organizations should be focusing on how to strategically leverage this transformation. Though the transition to digital quality measurement presents significant opportunities, key challenges include:
Workforce adaptation: Healthcare professionals accustomed to traditional reporting methods may need significant training to effectively use real-time data for decision making.
Shifts in payer-provider dynamics: With greater data transparency, reimbursement models may evolve rapidly, demanding more agile contract negotiations.
Data governance: Ensuring that the influx of newly accessible clinical data are properly validated and interpreted.
Vendor management: Organizations will need to rethink their relationship with vendors, specifically as plans reduce their reliance on manual processes.
New vendor requirements may pivot toward data validation and analytic tools to ensure compliance with NCQA’s standards.
Compliance with FHIR-based data exchange and CMS’s Interoperability & Patient Access Rule, which mandates standardized data sharing across different systems.
Data standardization: Different healthcare systems will need to use common data formats and terminologies to ensure interoperability.
What’s Next
As federal policies and regulations accelerate the transition to dQM, healthcare stakeholders must prepare by investing in interoperable technologies and adapting their quality reporting business processes accordingly. They should track developments and new opportunities at the federal and state levels and direct organizational attention and resources to the multiyear transition through the following approaches:
Evaluating of the current landscape, envisioning future pathways for dQM, and establishing achievable objectives for their organization
Developing strategic plans with the achievable objectives and enumerating tactical and implementation plans that address identified risks
Focusing on implementation, identifying and dashboarding your key performance indicators and metrics, making adaptations based on your evaluation
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Providers, payers, patients, and states all have a vested interest in ensuring fully digital quality measurement, as it will be essential to staying ahead in this rapidly evolving landscape. For details about this analysis, its implications for states and other organizations, and additional information, contact our experts below.
This week, our In Focus section highlights key insights from a new Health Management Associates (HMA), white paper, Concentration of Specialty Services in Medicaid. Experts from HMA and Wakely, an HMA company, used the national Transformed Medicaid Statistical Information System (T-MSIS) database to learn more about specialty provider networks and examine the provision of specialty services across various states.
The analysis, released in January 2025 with support from the Robert Wood Johnson Foundation, focuses on three representative services that are relatively common, potentially difficult for Medicaid beneficiaries to access, significantly affect quality of life, typically accessed as elective procedures, and unlikely to be provided by other clinicians, such as primary care or mid-level practitioners.
T-MSIS Analysis Overview
T-MSIS analytic files are a comprehensive resource for Medicaid encounter, beneficiary demographics, program enrollment, service utilization, and payment data. Individual states compile their Medicaid claims data and submit monthly files to the Centers for Medicare & Medicaid Services (CMS). As each state submits data individually, numerous state-specific variations occur in data availability and quality. Currently, T-MSIS data are available for 2016−2023. HMA data scientists have permission to use the T-MSIS files for healthcare services research.
This paper examines services in 10 states that met a threshold of data integrity in the T-MSIS dataset for 2022. Other important design aspects of the analysis are as follows:
The three service procedures included in the analysis are total knee replacement (TKA), cataract removal, and impacted tooth extraction.
Selected states represented a diverse sample of geographic, socioeconomic, and other demographic factors.
The analysis includes non-dually eligible adult populations, ages 22−64 years.
The data cover all services provided in 2022 for each procedure and the providers who rendered the service; facilities are excluded.
Concentration of Specialty Providers
Table 1 summarizes findings about the concentration of specialty services.
The authors further analyzed the provision of services and, building on a previous study, examined network concentration. Findings were as follows:
When looking at the same procedure across states, no consistent pattern emerged regarding which states had the highest and lowest concentration of services in the top 10/25 percentile of providers.
However, when looking at the same procedure across multiple states, TKA tended to have the lowest concentration of services among those studied.
Regardless of procedure and state, the 50 percent of providers with the lowest number of procedures tended to provide fewer than 10 percent of the total services combined.
These findings suggest that the specialty networks within each state are highly nuanced, and state policymakers need to look at individual specialty networks when considering health policy. State policymakers and managed care organizations (MCOs) need to examine each specialty individually to assess the distribution of services and access to care.
Looking Ahead
Timely access to healthcare services is critical for ensuring optimal health outcomes. The report authors’ analysis of T-MSIS data showed significant concentration of selected specialty services among providers, which may affect appropriate access to these services.
The analysis of concentration of specialty services among Medicaid specialty providers can guide MCOs and state policymakers in developing strategies to improve network adequacy, including clarifying the level of network adequacy and developing policies to assess and regulate access to specialty care. Addressing gaps in access to specialty care can contribute to better health outcomes for Medicaid beneficiaries and may be aligned with provisions in value-based contracts.
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Medicaid consumers, providers, MCOs, and states all have an interest in ensuring access to specialty care for Medicaid beneficiaries. The methodology applied in the analysis for the HMA white paper can be applied and adapted for future analysis to monitor network stability and to compare access among various payers.
For details about this analysis, its implications for state and local policies, and additional research using T-MSIS, contact our experts below.
As policymakers engage the state budget process, Medicaid continues to play a critical role. This role is programmatic, serving as the source of coverage for 1 in 4 Ohioans, including as the finance mechanism for half of all births in the state and the primary source of coverage for the elderly and disabled. However, a number of proposals are currently being discussed by the House, including changing how poverty programs are adjusted for inflation, reversing some Medicaid payment expansions, lowering the minimum federal funding rate for Medicaid, making the federal funding rate the same for all Medicaid expansion populations, limiting taxes on Medicaid providers, capping the amount spent per Medicaid enrollee, standardizing how administrative costs are matched, and other unspecified changes to Medicaid funding through Medicaid match. But these proposals can’t be viewed in isolation because the program is deeply intertwined with Ohio’s ability to have a balanced budget, serving a role in reducing direct state spending by enabling the draw down of federal dollars through “FMAP.” But what is FMAP and what happens if Congress fundamentally changes how it’s calculated?
FMAP
The Federal Medical Assistance Percentage (FMAP) is a critical component of Medicaid funding, ensuring that states receive federal support to provide healthcare services to low-income individuals. FMAP is calculated based on a state’s per capita income relative to the national average. States with lower per capita incomes receive a higher FMAP, meaning the federal government covers a larger share of Medicaid costs, while states with higher per capita incomes receive a lower FMAP. The FMAP formula ensures that states with greater financial need, like Ohio, receive more federal assistance. For Federal Fiscal Year (FFY) 2025, Ohio’s FMAP is 64.6%, which means that for every dollar Ohio spends on most Medicaid services, 64.6 cents comes from the federal government. Even then, much of the state share is financed through fees on entities like hospitals, nursing facilities and health insurance companies.
Contextually, Ohio is a “recipient state,” indicating it receives more in federal tax revenue than it collects to finance the program. And, as was noted in the initial testimony offered in the Ohio House, Ohio continues to lag other states in terms of economic growth and has an aging population. As such, the availability and predictability of federal funding is a critical input in future years, particularly in long term care where most of the expense will continue to increase. With Congress deliberating all of these proposals, what could the impact be in Ohio? To illustrate, it may be good to focus on one area: the elimination of enhanced federal funding for those covered by the Medicaid expansion.
Impacts
There has been some discussion during testimony that if the FMAP rate for the expansion population were to change, it could trigger an automatic end to the expansion itself. Importantly, there would be a disproportionate impact in Ohio’s rural counties where expansion coverage rates are higher. In fact, as of December 2024, 362,829 individuals in rural Ohio counties received their coverage through expansion, alone. These individuals, in addition to the 1.1 million others in these Ohio counties, rely on Medicaid for essential healthcare services, including addiction treatment.
In states with expansion, coverage for individuals with SUD has doubled highlighting the importance of maintaining robust funding for these programs. Expansion has also been the primary source of funding for addiction treatment in the state, with Medicaid covering half of all buprenorphine treatments. If expansion were eliminated due to the change in FMAP, the consequences for treatment may mean either a greater obligation on the state to finance those services directly, or, Ohio may exacerbate the opioid use disorder crisis, putting additional strain on our healthcare system, particularly for behavioral health providers.
Conclusion
As we consider the future of Ohio’s Medicaid expansion, it’s essential to recognize the critical role that FMAP plays in sustaining our healthcare system and supporting our state’s economy. Any changes to the FMAP rate must be carefully evaluated to ensure that we do not undermine the progress we have made in expanding access to care and addressing the opioid crisis.
Beyond the immediate impact on healthcare services, changes to FMAP could also have broader economic implications for Ohio. Medicaid represents about 4% of the state’s GDP, playing a vital role in supporting jobs and economic activity. If just 1% of that GDP were suddenly eliminated due to a cut in federal or state funding, the consequences could be severe. A sudden reduction in Medicaid funding could lead to job losses in the healthcare sector, reduced economic activity, reduced labor force participation, and increased financial strain on state and local governments. The ripple effects would be felt across the economy, impacting not only healthcare providers but also businesses and communities that rely on the stability and support provided by Medicaid as well as the budgetary stability it provides to Ohio’s process.
This week, our In Focus section examines governors’ healthcare priorities from their 2025 State of the State addresses. This article highlights common themes in addresses delivered between January 6, 2025, and January 16, 2025, and delves into specific proposals in Georgia, Iowa, New York, and Oregon, as analyzed in the Health Management Associates (HMA), Information Services (HMAIS) interim report, 2025 State of the State Overview.
State of the States in the Current Environment
Governors use their State of the State addresses to outline their priorities for the year, giving insight into the agendas and initiatives that their executive branches may pursue independently or in collaboration with their state legislature. These priorities often are informed by the status of the state’s budget, with some governors advancing healthcare proposals that will address budget deficits and others seeking to invest in services and workforce initiatives.
Monitoring governors’ policy priorities and initiatives is especially important in 2025 given the changing federal landscape. The transition in both the administration and Congress will require state leaders to carefully consider the risks and opportunities. As detailed below, governors’ responses will unfold differently across states and markets.
Common Threads
In all, 24 governors delivered a State of the State Address between January 6, 2025, and January 16, 2025. Many gubernatorial leaders have similar areas of priority and concern, with some continuing multiyear initiatives to address unmet behavioral health needs and control healthcare costs. Table 1 identifies the themes emerging from the first group of addresses.
Governors also are considering possible policy changes under the new Trump Administration. For example, some governors reported that their state is looking to strengthen or add Medicaid work requirements to their programs, resuming initiatives that were initially pursued during the first Trump Administration. Though not directly related to healthcare, governors’ decisions to mirror President Trump’s Department of Government Efficiency, with Iowa as an example, could indirectly affect local programs and markets. Other states are considering the implications of possible changes to federal Medicaid funding. A deeper look into the priorities in Georgia, Iowa, New York, and Oregon follows.
Georgia
Gov. Brian Kemp delivered Georgia’s State of the State address on January 16, 2025, during which he focused his healthcare remarks on the state’s Pathways to Coverage Section 1115 demonstration. Georgia’s waiver extends Medicaid coverage to able-bodied adults who earn up to the federal poverty level if they meet certain work requirements. The governor emphasized that he intends to work with the Trump Administration to further advance innovative approaches to healthcare access.
Governor Kemp stated that his administration is making it easier to apply for Medicaid coverage and will submit an amendment to the Centers for Medicare & Medicaid Services (CMS) that would extend the Pathways demonstration for five years beyond the current expiration date of September 30, 2025. The state plans to request several changes to the demonstration, including:
Changing the reporting requirements for qualified work activities
Adding more activities that qualify for program eligibility
Adding a retroactive coverage policy
Removing premiums and Member Reports Accounts
The governor’s proposed fiscal year (FY) 2026 budget includes $324 million to fully fund projected Medicaid enrollment and utilization growth and $36 million in additional support for pharmacy benefits, including recently approved gene therapy treatments for sickle cell disease.
Iowa
Iowa Gov. Kim Reynolds delivered the Condition of the State Address on January 14, 2025, during which she called for increased Medicaid reimbursement rates for OB/GYNs and primary care physicians who provide care to people with complex pregnancy cases, as well as certified nurse midwives. The governor also said she was in favor of adding doula services as a covered Medicaid benefit. Governor Reynolds is one of several governors who have announced plans to pursue a Section 1115 demonstration for Medicaid work requirements for able-bodied adults.
Governor Reynolds’s proposed FY 2026 budget includes investing $642,000 in newly unbundled Medicaid maternal rates, and more than double investments in five existing state healthcare loan repayment programs. The governor also proposes to establish a Medicaid Graduate Medical Education enhanced payment to draw down more than $150 million in federal dollars for more residency spots in Iowa’s teaching hospitals.
New York
New York Gov. Kathy Hochul delivered her State of the State Address on January 14, 2025, at which time she also released a State of the State Book. Addressing behavioral health is one of her chief priorities, and proposals include:
Allowing more involuntary commitments for people with severe mental illness
Developing programs to support youth mental health through after school programs
Expanding peer support programs
Improving the diagnostic process for children with complex needs
Supporting mental wellness in historically marginalized neighborhoods
Expanding Mobile Medication Units to bring opioid treatments to underserved areas
Governor Hochul intends to expand support for the state’s healthcare safety net. This part of her agenda would provide financial assistance to struggling medical facilities and hospitals through expansion of the state’s Safety Net Transformation Program and participation in the US Food and Drug Administration’s program that allows states to import lower-cost drugs from Canada.
The governor’s proposed $252 billion budget for FY 2026 would allocate $35.4 billion for the state Health Department’s Medicaid budget—a 14 percent increase from last year. Governor Hochul plans to offset some of the spending hike with revenue from the newly approved managed care organization tax, which is expected to raise $3.7 billion to help balance the state budget over three years.
Oregon
Gov. Tina Kotek delivered Oregon’s 2025 State of the State Address on January 13, 2025. The governor has a significant focus on mental health and substance use disorder treatment, as well as housing as an HRSN. Governor Kotek wants to strengthen the behavioral health system and proposed adding new treatment beds, increasing treatment capacity, eliminating backlogs at the state’s health licensing boards to improve access to qualified counselors, improving the provider pipeline, and increasing worker retention. During her speech, the governor also called for improved frontend care coordination to decrease the overflow of people at the Oregon State Hospital.
In addition, the governor intends to work toward improving care for the civil commitment population (i.e., people who are involuntarily detained in a psychiatric hospital) by dedicating permanent supportive housing funds to expanded residences with onsite services. Governor Kotek has directed her team to develop a new intensive permanent supportive housing model to more effectively support people with serious mental health needs.
Governor Kotek’s proposed budget for the 2025−2027 biennium includes $39.6 billion for the Oregon Health Authority, representing a 10.4 percent increase from the approved budget for 2023−2025. This budget includes $29.6 billion for the state Medicaid program and $1.6 billion for the Behavioral Health Division, in addition to $732.4 million for the division from the General Fund.
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HMAIS has prepared a comprehensive report summarizing each State of the State Address, which is available to HMAIS subscribers. The report also examines proposed budgets, highlighting key financial commitments and allocations that underscore these priorities for the upcoming year. The first iteration of the report covers AR, AZ, CO, CT, GA, IA, ID, KS, KY, MA, MT, ND, NE, NH, NJ, NV, NY, OR, RI, SD, VA, VT, WA, and WY. The document will be updated periodically as speeches occur.
Contact our experts below for more information about the report or to connect with one of HMA’s state policy and market experts.
