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CMS Marketplace Anti-Fraud Actions: Financial and Strategic Implications for ACA Health Insurers

Program integrity has become an urgent, administration-wide healthcare priority, placing the Affordable Care Act (ACA) Marketplace under heightened scrutiny. On September 22, 2026, the Centers for Medicare & Medicaid Services (CMS) announced Federal Marketplace anti-fraud actions with immediate operational and financial implications for insurers.

This week, actuaries from Wakely Consulting Group, an HMA company, examine how Marketplace disenrollment actions could affect health insurers in 2026 and beyond across enrollment, morbidity, risk adjustment, financial reporting, operations, distribution strategy, and future pricing.

CMS Marketplace Anti-Fraud Actions and Unauthorized Enrollment Cancellations

CMS’s three-part program integrity strategy focuses on preventing fraudulent and improper enrollments, removing confirmed unauthorized enrollments, and enforcing Marketplace requirements for agents and brokers. The agency also established a Federal Marketplace anti-fraud coordination group comprising leaders from CMS and the US Department of Health and Human Services (HHS) to direct these efforts.

CMS reported canceling approximately 315,000 enrollments covering more than 760,000 individuals after determining that the coverage was unauthorized. The agency expects approximately $2.2 billion in advance payments of the premium tax credit (APTC) to be returned and will continue working with insurers to identify additional cases, prevent improper subsidy payments, and recoup prior payments.

This action follows a June 2026 report from the HHS Office of the Assistant Secretary for Planning and Evaluation, which identified approximately 1 million highly suspicious agent- and broker-assisted HealthCare.gov enrollments involving applications without a Social Security number and members paying no premium.

Although the absence of a Social Security number does not independently establish fraud, the September announcement sends a strong signal about CMS’s willingness to cancel enrollments confirmed as unauthorized.

Financial and Operational Implications for ACA Marketplace Insurers

Enrollment Losses and Morbidity Risk for ACA Marketplace Plans

In their August 2026 white paper, Implications for Potential Marketplace Unauthorized Enrollment Actions, actuaries from Wakely noted that while the overall enrollment reduction is known, its distribution across issuers and markets is not publicly available. If canceled members are disproportionately healthy or had limited healthcare utilization, their removal could increase average claims among the remaining population. For example, if non-utilizers represented 10 percent of an issuer’s enrollment, removing them would increase average claims per member per month by approximately 10 percent, assuming no other changes.

ACA Risk Adjustment Implications of Marketplace Disenrollments

Changes in enrollment and morbidity could materially affect ACA risk adjustment transfers, but the results will vary according to each issuer’s concentration of confirmed or potentially unauthorized enrollment. Issuers with greater exposure to canceled enrollment could see more favorable risk adjustment results even as average claim costs increase. Those transfers may not fully offset deterioration in the remaining risk pool, which underscores the need for plan- and state-specific analysis.

APTC Recoupment and Financial Reporting Considerations for Insurers

The timing and process to recoup approximately $2.2 billion in APTCs has near-term financial reporting considerations. Issuers should evaluate potential effects on:

Premium and APTC accruals
Risk adjustment transfer accruals
Per member claims cost estimates
Premium deficiency reserve considerations

According to CMS, the cancellations announced in September 2026 will be applied retroactively to original effective dates. The full effect of this heightened scrutiny, however, will depend on how CMS approaches recoupment and how quickly issuers process enrollment and financial adjustments.

Issuers may also incur near-term costs associated with identifying and investigating suspicious enrollments, reconciling records with CMS, processing cancellations, adjusting revenue accruals, supporting affected consumers, and updating broker oversight. Lower enrollment also leaves fewer premium dollars available to cover fixed administrative expenses.

How CMS Disenrollments Could Affect Future Marketplace Premiums

As 2027 premiums are finalized, issuers will need to consider enrollment and morbidity shifts for 2028 prices. Insurers with established monitoring and projection processes will be better positioned to assess new CMS information and adjust forecasts as policy and enforcement evolve for 2026 and 2027.

CMS Broker Enforcement and Marketplace Distribution Risks

In addition to strengthening oversight of enrollment data, CMS has intensified enforcement of agent and broker requirements. Since January 2026, the agency has sent termination notices to more than 200 noncompliant agents and brokers and issued 569 notices of intent to terminate Exchange Agreements associated with 2026 applications that lacked identifying applicant information. Issuers should assess concentration by broker, monitor enrollment quality, and consider how enforcement may affect acquisition channels, member mix, and future growth.

Market-Level Variation in Marketplace Disenrollment Risk

The effects of CMS’s actions are limited to Federally Facilitated Marketplace (FFM) states and state-based Marketplaces using the federal platform (SBE-FM) and do not extend to state-based Marketplaces operating their own eligibility and enrollment systems. Individual issuer effects could vary materially based on several factors, including state, county, issuer, product, broker channel, and member premium contribution.

Some issuers will be more exposed than others, particularly those with more enrollees paying low or $0 net premiums, greater broker reliance, substantial automatic reenrollment, or a strong presence among lower-cost plans. Understanding the financial impact will require analysis at the plan and market levels.

Key Actions for Health Insurers Following CMS Marketplace Disenrollments

Health insurers should assess a range of outcomes at the plan and state levels. This analysis should show how the concentration and health profile of canceled enrollment could affect claims, APTCs, risk adjustment, financial accruals, administrative expenses, distribution, and future rates.

The timing of CMS’s actions will shape those outcomes. Because the announced cancellations apply retroactively to original effective dates, insurers will need to account for APTC recoupment and related enrollment and financial adjustments. The ultimate impact will depend on the data CMS provides, the scope of additional reviews, processing timelines, and any appeals or corrections. Issuers should revisit their forecasts as these details emerge and federal actions continue ahead of the 2027 plan year.

Assessing Marketplace Disenrollment Risk: How HMA and Wakely Can Help

Health Management Associates (HMA) and Wakely Consulting Group combine policy, market, actuarial, and financial expertise to help health plans and state regulators assess the effects of Marketplace program-integrity actions. For insurers, our teams can develop plan-by-plan and state-by-state projections of enrollment, morbidity, claims, APTCs, risk adjustment, and premiums; test prospective and retrospective cancellation scenarios; and translate the findings into pricing, forecasting, distribution, and market strategy decisions.

State insurance regulators in affected FFM and SBE-FP states will need a market analysis of how the cancellations are distributed across issuers and whether changes in enrollment and morbidity could affect rates, risk adjustment, capital, or continued plan participation. Regulators should also evaluate whether approved 2027 rates and financial assumptions remain supportable and monitor solvency and consumer access as insurers adjust to this and CMS’s broader program integrity actions. HMA and Wakely can support this work through state-specific market assessments, issuer-level stress testing, rate and risk-pool analysis, and scenario projections that help regulators identify emerging concerns and act before they threaten market stability.

Pennsylvania Health Policy Conference 2026: What’s Next for Medicaid Enrollees, Rural Hospitals, and the Workforce

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State of Reform (SOR), an HMA Company, hosted its inaugural Pennsylvania Health Policy Conference in Harrisburg on September 16, 2026, bringing together more than 170 interest-holders, including state health and human services departments leaders, policymakers, providers, health plans, community‑based organizations (CBOs), and others to discuss the most pressing health-related issues in the commonwealth.

The conference focused on how federal Medicaid policy changes, managed care challenges, and workforce shortages, are reshaping Pennsylvania’s healthcare landscape while highlighting prevention and cross-sector collaboration as essential to building a more sustainable system. Key discussions are highlighted below.

Central Discussions: Federal Medicaid Policy, Managed Care, and the Workforce

Pennsylvania Medicaid

Valerie Arkoosh, MD, Secretary of the Pennsylvania Department of Human Services (DHS) opened the conference by examining how federal policy and fiscal pressures are likely to affect Pennsylvania’s health and human services system. She discussed the anticipated loss of Medicaid coverage for approximately 310,000 enrollees due to the 2025 budget reconciliation act (P.L 119-21, now known as the Working Families Tax Cut Act [WFTCA]) and the resulting strain on individuals, providers, and the broader healthcare system.

WFTCA and broader financial pressures also raise concerns about the sustainability of hospitals, with closures threatening access to care, especially in rural and underserved communities. Hospitals and safety-net facilities are consistently working against staffing shortages, capacity constraints, and shifting payer dynamics. Pennsylvania is using funds from the Rural Health Transformation Program (RHTP) to support struggling rural hospitals as best it can. DHS has awarded $42 million in RHTP grant fund awards so far to support various rural facilities.

Medicaid managed care

Community HealthChoices (CHC), Pennsylvania’s Medicaid managed long-term services and supports (MLTSS) program, has been at the forefront of the healthcare conversation in the state as a result of the cancellation of its 2024 contract awards for the program. In June 2026, DHS released a request for information seeking responses on several topics that could shape a new CHC re-procurement, including the number of Medicaid managed care organizations (MCOs) within CHC, regional versus statewide coverage, length of contract terms, strategies to align coordination of Medicare and Medicaid, artificial intelligence (AI), and other program recommendations.

During the managed care discussion, Sally Kozak, Deputy Secretary of the Office of Medical Assistance Programs, and Emily Katz, Executive Director of Pennsylvania Medicaid MCOs, joined health plan leaders in assessing how well the physical health managed care program is improving access, quality, and cost management.

The conversation centered on persistent challenges involving provider participation, care coordination, the complexity of administering the programs, and the variation in performance by region. There are opportunities to reform or refine managed care to better align incentives with patient needs and system sustainability.

Workforce shortages

Like all states, Pennsylvania is facing a health professional shortage across all sectors. Jennifer Hale, Director of the Bureau of Policy and Regulatory Management in the Office of Long-Term Living, and Garry Pezzano, President and Chief Executive Officer of LeadingAge PA, highlighted how this issue is affecting people who need long-term care. Speakers emphasized that Pennsylvania’s ability to meet the needs of an aging population will depend largely on strengthening the workforce that delivers these services. They explained several of the strategies underway and being discussed to achieve this goal, for example by improving wages and benefits for direct care workers, strengthening education and training pipelines, expanding loan repayment programs, prioritizing recruitment, and investing in technology for telehealth services and AI-assisted workflows.

Advancing Change: Upstream Interventions and Collaboration

Paying for care continues to be a chief concern. While many of the financial pressures come from within the healthcare system as the result of policy and budgetary challenges, throughout the conference speakers emphasized that many of Pennsylvania’s most pressing healthcare challenges begin outside the healthcare system. Food insecurity, unstable housing, transportation barriers, limited caregiver support, and lack of social and community supports worsen health outcomes and lead to increased healthcare expenditures.

Panelists called for greater investment in upstream prevention services that help people remain healthy and independent before their needs become more acute to contain costs over time. Speakers recommended approaches such as expanding housing supports, food as medicine initiatives, community health worker investments, caregiver supports, reentry services, and technology that allows people to receive care at home, as well as other initiatives to ensure people can remain healthy and independent.

Pennsylvania has already begun investing in several of these areas. The fiscal 2027 budget allocated $1.9 million to the Investments in Health pilot program for housing stability services and reentry supports for incarcerated individuals. Federal matching dollars for the first year of this program total $5.2 million. Another tool, PA Navigate, connects people with CBOs, state agencies, and providers that can help people access basic necessities.

Speakers also stressed that these efforts will have limited reach if organizations operate separately. Better coordination among healthcare providers, MCOs, CBOs, hospital systems, and state agencies can reduce the fragmentation, make services easier to navigate, and help funding and data systems support common goals. That message was consistently expressed throughout the conference: Pennsylvania’s healthcare challenges cannot be addressed by one sector alone, and progress will depend on sustained collaboration among the organizations that serve individuals and communities.

Looking Ahead

If you are looking for strategies and solutions to address urgent healthcare policy and operational challenges, Health Management Associates (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 meetings 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, 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.

VA Community Care Program: Richard Topping to Discuss NextGen VA at HMA 2026 Conference

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Health Management Associates (HMA) is pleased to welcome The Honorable Richard F. Topping, Assistant Secretary for Management and Chief Financial Officer at the US Department of Veterans Affairs (VA), to HMA’s US Healthcare 2026: Signals, Signs & Flashing Lights conference, October 5-7, 2026, in New Orleans, LA. His participation will give health plans, providers, technology companies, and other organizations interested in working with the VA Community Care program a timely opportunity to hear directly from senior VA leadership about the priorities shaping the program’s next phase.

VA Community Care Priorities and Opportunities for Collaboration

HMA’s Jean Glossa, MD, MBA, FACP, will join Mr. Topping during Community Care for Veterans—NextGen VA to discuss priority healthcare issues for the VA. They will examine the VA care delivery system, Mr. Topping’s areas of oversight, and opportunities to better integrate care delivered by VA providers with services furnished by contracted community providers.

In addition to its direct care system, the VA operates six national payer programs, including VA Community Care—now the fourth-largest health insurer in the United States. Mr. Topping will describe how the VA is shifting Community Care from a network administration model toward a true healthcare purchasing and performance‑management model. CCN NextGen is the VA’s first major modernization of Community Care contracting since the MISSION Act, which took effect in 2019. This 10‑year, multiple‑award IDIQ structure will increase competition, enable regional adaptability, and support iterative improvements through sequential task orders opening up new opportunities for industry to partner with the VA.

Explore Best Practices for Working with the VA

Mr. Topping also will participate in one of HMA’s Coffee Conversations and Collaborations, a highly interactive format, which fosters practical discussion. Participants will have an opportunity deepen their knowledge about effective approaches to working with the VA, ask questions, and share experiences. This combination of senior-level perspective and smaller group dialogue makes Mr. Topping’s participation especially relevant for managed care plans, provider organizations, technology firms, and other partners monitoring the direction of VA Community Care.

Join VA and Healthcare Leaders at HMA’s 2026 Conference

HMA is honored to host Mr. Topping and create space for a substantive discussion about the future of VA Community Care. Register for HMA’s US Healthcare 2026 conference to hear directly from leaders who are shaping public healthcare and connect with peers working to turn policy priorities into stronger systems of care.

Medicaid Managed Care Enrollment Declines in Q2 2026: HMA Analysis of State Trends and Market Share

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Health Management Associates (HMA) analyzed monthly Medicaid managed care enrollment data reported by 34 states in the second quarter of 2026. Enrollment totaled 59.2 million members in June 2026—a decline of 3.5 million members (5.5%) from June 2025. The broader Medicaid and CHIP population has declined at approximately the same pace as managed care, with the Centers for Medicare & Medicaid Services (CMS) data showing a 5.9% decrease from May 2025 to May 2026.

The findings establish a timely baseline before new eligibility policies take effect. Under the 2025 budget reconciliation act (P.L. 119-21), now known as the Working Families Tax Cut (WFTC) Act, most states must implement Medicaid community engagement requirements for certain adults beginning January 1, 2027, conduct eligibility redeterminations every six months for this population, and implement other policies that will narrow Medicaid eligibility.

Medicaid Managed Care Enrollment Trends in Q2 2026

HMA Information Services (HMAIS) tracks monthly Medicaid enrollment for all states, including managed care enrollment in the subset of states with managed care programs. Among the 34 states with managed care programs that reported enrollment data in the second quarter of 2026:

Enrollment changes varied across states, reflecting a combination of state-specific demographic, administrative, operational, and policy factors.
Only three states—Mississippi, Nevada, and South Carolina—reported modest gains in Medicaid managed care enrollment since June 2025.
Arizona, Indiana, and Louisiana each reported double-digit declines, ranging from 10.1% to 21.1%.
The seven non-expansion states in this analysis—Florida, Georgia, Mississippi, South Carolina, Tennessee, Texas, and Wisconsin—experienced a decline of 455,000 (3.8%), bringing enrollment to 11.6 million enrollees.

Among the expansion states in the analysis, enrollment decreased by 3 million (5.9%) to 47.6 million. The larger decline among expansion states is particularly relevant because adults in expansion states will be most directly affected by the new community engagement and six-month redetermination policies. Details are illustrated in Figure 1.

Figure 1. States Included in the Medicaid Managed Care Enrollment Analysis, June 2026

Note: States colored as blue shown on the map above are included in the HMA Enrollment Analysis.

National Medicaid Managed Care Market Share

HMAIS also tracks Medicaid managed care ownership, program participation, and tax status for nearly 300 plans. In this June 2026 snapshot, Centene covered 17.9% of enrollees, followed by Elevance at 10.7%, UnitedHealth Group at 8%, and Molina at 6% (see Figure 2). These four organizations represented 42.6% of enrollment in the HMAIS dataset, underscoring continued concentration among large, national Medicaid managed care organizations. (Note: The number and mix of plans changed over the past 12 months, and several state enrollment reports reflect different reporting months. Other limitations are discussed in the Data Considerations section of this article.)

The enrollment declines as well as pressure from acuity, utilization, and payment rates are compelling Medicaid managed care organizations (MCOs) to reassess where they participate, including whether individual markets can support sustainable performance. For example, one national Medicaid MCO has publicly discussed exiting unprofitable Medicaid markets and left one state market in August 2026 with plans to exit another at the end of the year. These decisions illustrate how enrollment contraction can interact with rate adequacy, acuity, utilization, and state-specific contract performance to influence plan participation.

Figure 2. National Medicaid Managed Care Enrollment Share by Parent Organization, June 2026

How Medicaid Work Requirements and Eligibility Policies Could Affect Enrollment in 2027

In June 2025, approximately 20.4 million people were enrolled in Affordable Care Act Medicaid expansion plans—5 million of whom reside in California, and nearly 2 million live in New York. The WFTC Act applies requirements to Affordable Care Act (ACA) expansion adults and certain Medicaid Section 1115 demonstration populations in 44 states beginning January 2027.

In September 2026, CMS published an implementation resource that outlines an optional framework that states may use to identify and verify individuals who qualify for the medical frailty exclusion. Although the framework gives states options for consideration, they still must determine which health conditions to cover and data sources to use when additional documentation is requested and how to notify members of their determinations. Many states have already made decisions about these issues, which could materially affect administrative workload, the consistency of determinations, and whether eligible individuals maintain coverage as well as the number of people who retain coverage and the composition of the population that remains enrolled.

In addition, a few states have already started implementing the new eligibility policies. For example, Nebraska launched Medicaid work/community engagement requirements on May 1, 2026. Montana began implementation on July 1, 2026, while Arkansas began a soft launch in July 2026 before enforcement begins in January 2027. Iowa intends to begin early implementation December 1, 2026. Although Montana and Arkansas are not managed care states, they, along with Nebraska, can offer directional insights on beneficiary response, exclusion determinations, procedural losses, appeals, and administrative workload before nationwide implementation.

Notably, the second quarter enrollment decline predates full implementation of the new federal eligibility policy changes and community engagement requirement, which means future enrollment changes may not be entirely attributable to the WFTCA requirements.

Organizations should continue to monitor total enrollment, churn, eligibility category, risk mix, and transitions to Marketplace or uninsured status.

Data Considerations. HMA Information Services (HMAIS) tracks monthly Medicaid managed care enrollment, ownership, program participation, and tax status for approximately 300 plans. The data in this analysis have some important limitations. States report enrollment figures at different points throughout the month, with some data reflecting beginning of the month totals and others capturing end of month enrollment. In addition, some state datasets encompass all Medicaid programs that offer managed care plans, whereas others reflect only a subset of the managed Medicaid population. As a result, the analysis can be used to identify direction, magnitude, and market signals rather than as a comprehensive state-by-state comparison.

The HMAIS enrollment reports and analyses, available through subscription, use data from nearly 300 health plans in 39 states, DC, and Puerto Rico. HMAIS’s Medicaid enrollment data, financials, procurement tracking, and a robust library of public documents equips stakeholders with timely, actionable intelligence. Subscribe here.

Preparing for Enrollment Shifts

WFTC Act implementation will require state-specific policy decisions, eligibility system changes, new data-matching processes, staff training, beneficiary outreach, and workable approaches to identifying people who qualify for exemptions for medical frailty and other conditions. Differences in data availability, verification pathways, documentation requirements, and review processes could produce materially different effects on enrollment, continuity of coverage, beneficiary experience, and the risk profile of the population that remains enrolled.

Healthcare executives and state Medicaid leaders should establish a baseline, monitor emerging implementation signals, and model the operational and financial implications. Priority measures include enrollment and churn, procedural terminations, exclusion determinations, appeals, transitions to other coverage, changes in acuity and utilization, payer mix, and geographic variation. These insights can inform decisions about eligibility operations, beneficiary support, capitation and rate development, network strategy, provider reimbursement, revenue forecasting, and uncompensated care exposure.

MCOs are unable to help states with determining eligibility determination or compliance, cannot receive capitation rate bumps for non-medical activities, or use their own work programs to help beneficiaries meet the community engagement requirements but may be able to provide support through outreach and education. CMS has indicated it expects to provide additional guidance on what activities are appropriate. MCOs can potentially use their existing relationships with beneficiaries, care managers, providers, and community organizations to help members understand and navigate the new requirements.

HMAIS provides the market intelligence needed to track these shifts, including state-reported enrollment, plan ownership, financial performance, procurement activity, and related public documents. HMA consultants extend that intelligence through state- and market-specific scenario modeling, policy and operational analysis, and implementation support—helping clients forecast enrollment and revenue, assess payer mix and utilization effects, strengthen eligibility and beneficiary support workflows, evaluate competitive positioning, and prepare for changes in program financing and oversight.

Contact HMA to translate evolving enrollment and implementation signals into an actionable strategy for your state, market, or organization.

HMA Conference to Open with State Leaders’ Insights on Healthcare Policy and Program Pressures

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The Health Management Associates (HMA) Conference, US Healthcare 2026: Signals, Signs & Flashing Lights, will open October 6, 2026, with a discussion between two distinguished state officials—Bruce D. Greenstein, Secretary of the Louisiana Department of Health, and Stephen Cha, MD, Commissioner of the New Jersey Department of Human Services. Their conversation will frame the major policy, financial, and operational issues confronting the states and set the tone for deeper discussions throughout the conference about solutions being designed and implemented across the healthcare sector.

Navigating a New Federal Landscape

Mr. Greenstein, chief technology officer at the US Department of Health and Human Services (HHS) during the first Trump administration, and Dr. Cha, who has served in a range of roles at HHS and its agencies, bring both state and national perspectives to the discussion. Drawing on their experiences, they will discuss the challenges confronting public healthcare programs and the consequential choices before them.

Those choices are becoming increasingly significant as federal policy changes reshape public healthcare coverage and financing. State leaders must protect access, sustain systems of care, and accept greater accountability for spending. Mr. Greenstein and Dr. Cha will explore the difficult tradeoffs behind their decisions, the potential consequences for health plans, providers, community organizations, and the people they serve. They will also address how leaders can manage fiscal and operational pressures without losing sight of quality and outcomes.

In addition, the conversation will answer key questions about the future of state health and human services programs, including:

How can artificial intelligence, data, and other technologies help states reduce administrative burden, improve oversight, and make programs more responsive?
Where can states work more effectively with health plans, providers, technology companies, and other industry partners, and where is closer coordination with sister agencies essential to advancing shared goals?

Mr. Greenstein and Dr. Cha will offer examples of how their states and their peers in other states have responded to these issues.

Representing states with different political and policy environments, they also will explore where leaders across party lines are reaching similar conclusions—even when their strategies differ—and which practical challenges receive scant attention. Their exchange will consider how states should define success amid changing federal expectations, which outcomes matter most, and what early evidence can show whether a policy is working or health outcomes are beginning to deteriorate.

Michael O. Leavitt, former Utah Governor and US Secretary of HHS, and co-founder of Leavitt Partners, an HMA Company, will moderate the discussion, adding his state and federal expertise and knowledge to a timely conversation about governance, accountability, and value.

The opening plenary session will take place Tuesday, October 6, from 8:30 to 9:30 a.m. in New Orleans, LA.

2027 Maternity Care Coding Changes: How Providers, Health Plans, and States Can Prepare for Service-Level Reimbursement

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What the shift away from global obstetric billing may mean for care delivery, coding and documentation, reimbursement, quality measurement, and more.

AT A GLANCE: Beginning January 1, 2027, maternity care reimbursement will change from bundled global obstetric codes toward more granular, service-level reporting for antepartum care, labor management, delivery, and postpartum care. The new approach is intended to more accurately capture how maternity care is delivered today across multiple clinicians, settings, modalities, and risk profiles. Organizations should begin assessing operational, financial, contracting, and data implications now.

What Is Changing?

Under the new approach, maternity services will be recognized and reported at the service level rather than through a single global obstetric payment. The impacts will unfold over time and will depend on final policy, coding guidance, fee schedules, contracts, and implementation decisions specific to payers, providers, and local markets.

What This Will Mean?

This change is more than a coding update. It will affect payment policy, claims systems, documentation workflows, actuarial assumptions, provider contracts, quality and access monitoring, data reporting, and patient care models. For Medicaid agencies, health plans, federally qualified health centers (FQHCs), hospitals, physician and midwifery practices, and professional associations, the transition creates implementation risks and uncertainties as well as opportunities to modernize maternity care financing around person-centered perinatal care, social needs screening and management, telemedicine, home monitoring, and postpartum support. Early preparation can reduce disruption and enable increased visibility into access, quality, equity, outcomes, and total cost.

New Questions Stakeholders Will Need to Answer

How will payment rates, fee schedules, and contracts change when maternity care is no longer paid as a single global payment?
What documentation, coding, and billing workflows will providers need to update before the new codes (and/or potential interim codes, depending on the Centers for Medicare & Medicaid Services (CMS) decision-making) take effect in order to ensure that care is correctly reimbursed?
What systems changes and staff training will be needed?
What claims edits, utilization management rules, encounter data processes, and reporting systems will need to be revised?
How will payers distinguish routine care, higher-risk care, care coordination, social needs services, telehealth, and home monitoring?
How can stakeholders use new data to assess access, quality, equity, outcomes, and total cost of maternity care?

Supporting Next Steps

HMA can help stakeholders understand the implications of the new coding structure, evaluate policy and operational options, create a practical path forward, and operationalize that plan across programs, systems, contracts, and care delivery models.

Stakeholder	How HMA Can Help	HMA Services Include
States	Assess Medicaid policy impacts, update provider guidance, model budget and rate implications, align managed care contracts, and design monitoring strategies for access, quality, equity, and outcomes	Revenue Cycle Management Actuarial Analysis Market Analysis and Strategic Planning Financial Modeling Operational Planning and Implementation Support Research and Evaluation Contract Review and Negotiation Support Business Analytics Clinical and Health-Related Social Needs Service Model Development Quality Measurement and Accreditation Support Information Technology Advisory Services
Providers: FQHCs, hospitals, physician practices, and midwifery groups	Help organizations prepare for coding, documentation, billing, revenue cycle, and clinical workflow changes; identify training needs; and evaluate how new payment rules affect service delivery and financial sustainability
Health plans	Revise payment policies, claims logic, provider communications, contract terms, encounter data processes, and network oversight approaches to support a smooth transition
Associations and coalitions	Translate the changes for members, develop implementation roadmaps, convene stakeholders, identify advocacy priorities, and support coordinated action across the maternity care environment

Frequently Asked Questions

What is changing in maternity care reimbursement in 2027?

Maternity care reimbursement is shifting from bundled global obstetric billing toward more granular, service-level reporting for antepartum care, labor management, delivery, and postpartum care.

Who will be affected by the maternity care coding changes?

OB/GYN practices, hospitals, FQHCs, midwifery groups, health plans, Medicaid agencies, professional associations, and other organizations involved in maternity care financing, delivery, claims, contracting, or oversight will be affected by these significant changes.

What should organizations do first?

Start with an impact assessment: inventory current payment arrangements, map services and documentation, identify systems changes and training needs, model financial effects, review contracts, and develop implementation roadmaps.

MESC 2026 Highlights: Medicaid Modernization, AI, Eligibility, and Program Integrity

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Key Insights from the 2026 MESC Conference and What They Mean for Your Organization

State Medicaid agencies and partner organizations are facing one of the most consequential periods of operational change in more than a decade. Those challenges were a central focus of the 2026 Medicaid Enterprise Systems Conference (MESC), August 17-20, 2026, in Portland, OR, where state, federal, and industry leaders discussed how technology, data, and operational modernization are becoming essential tools for implementing policy change.

During the conference, leaders of Health Management Associates (HMA) and HealthTech Solutions, an HMA company, reinforced a consistent theme: We have moved beyond the era when Medicaid enterprise systems modernization simply meant replacing aging technology. Instead, states are building the infrastructure needed to manage continuous policy evolution, support more sophisticated program integrity efforts, adapt to changing eligibility requirements, and provide the financial and operational visibility necessary to navigate an increasingly complex Medicaid environment. That direction is also reflected in recent Medicaid Enterprise Systems IT Standards Request fo r Information that the Centers for Medicare & Medicaid Services (CMS) issued to gather stakeholder input on how to advance a more standardized, interoperable, and cost-effective MES ecosystem.

What We Learned at MESC

Modernization Is Becoming an Ongoing Operating Capability

Medicaid modernization is moving beyond the replacement of legacy systems. States are building the capabilities needed to manage continuous change. That work includes stronger governance through better data and more disciplined implementation practices; clearer ownership for decisions, risks, dependencies, and outcomes; and the development of cross-functional teams. Policy, operations, technology, finance, communications, and program leadership must work together from the beginning.

What it means for states and partners
Modernization programs need a clear operating model that defines decision rights, measures of success, implementation responsibilities, and long-term support. Partners should help build state capability instead of focusing only on system delivery.

Modularity Now Means Managing the Connections Between Systems

Modularity can give states more flexibility, support specialized solutions, and reduce dependence on one large platform. Modularity, however, also creates more connections and business relationships that must be managed. A modular environment involves multiple vendors, systems, interfaces, data flows, release schedules, and support models. Because difficulties can arise when these elements are disconnected, MESC sessions emphasized the need for enterprise integration and coordination. States must manage testing, release planning, architecture, data contracts, vendor handoffs, and incident resolution.

What it means for states and partners
Modularity requires more than modular procurement. States need an enterprise layer that manages the relationships between components. Partners should understand how their work affects the broader Medicaid ecosystem.

Federal Requirements Are Shaping the Modernization Agenda

CMS and other federal requirements continue to influence state priorities. Certification remains important, along with federal reporting, data quality, security, interoperability, and program integrity. The conference also reflected growing pressure to prevent fraud, waste, and abuse earlier in the Medicaid life cycle. States are strengthening provider enrollment, referral intake, payment controls, analytics, and audit preparation. These efforts move program integrity closer to the front door. The goal is to identify risk before it becomes a payment error or an investigation.

What it means for states and partners
Compliance and program integrity should be part of solution design from the beginning. States and partners should build evidence, controls, testing, and monitoring into normal operations. These activities should not be postponed until certification or an audit is approaching.

Eligibility Changes Require New Data and Operational Models

Changes to Medicaid eligibility are creating new demands for states. Workforce and community engagement requirements are one example. States may also need enhanced verification, new exemption processes, shorter response timelines, and stronger outreach.

These changes extend beyond eligibility systems. They shape how states communicate with members, support contact centers and caseworkers, manage appeals, connect data sources, and help people understand what they need to do to maintain coverage. MESC sessions underscored the value of listening to stakeholders and explored how health information exchange data and other sources could support exemption decisions and reduce preventable coverage loss.

What this means for states and partners
Eligibility modernization must connect policy to daily operations. States need reliable data and clear workflows. They also need ways to explain changes and track outreach. Partners can translate policy into decision logic, test cases, notices, training, and operational procedures.

AI Means Governed Support for Real Medicaid Work

AI was a major topic of discussion at MESC. The strongest examples involved practical work rather than general experimentation. States are exploring AI for policy questions, quality assurance, document review, contact center support, knowledge management, and program integrity. These use cases can reduce administrative burden and help staff manage complex workloads. Conference speakers clarified that AI is no substitute for reliable governance structures. States need reliable content, security controls, privacy protections, human review, workforce training, and performance monitoring.

What this means for states and partners
AI adoption should begin with a specific business problem. States should define who is accountable for the outcome and how the tool will be monitored. Partners can support use case selection, governance, procurement, testing, implementation, and workforce adoption.

How HMA Can Help

MESC 2026 reinforced the argument that Medicaid modernization is no longer a discrete technology project. States and their partners are responding to federal requirements, modular system complexity, eligibility changes, AI adoption, and heightened program integrity expectations at the same time.

HMA and HealthTech Solutions help organizations turn that complexity into an actionable modernization strategy. Our teams bring together Medicaid policy expertise, operational experience, technology strategy, procurement support, compliance knowledge, and implementation discipline so clients can make better decisions and execute with confidence.

We support organizations in assessing current systems and capability gaps, prioritizing technology investments, translating policy into operational and technical requirements, managing vendor selection and procurement, strengthening compliance and program integrity, and adopting AI in ways that are effectively governed, practical, and aligned with Medicaid business needs.

Contact HMA experts to get your questions answered.

Federal and State Medicaid Leaders and VA Assistant Secretary to Discuss Public Healthcare Transformation at HMA Conference

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Health Management Associates (HMA) is pleased to announce that Caprice Knapp, PhD, Principal Deputy for the Center for Medicaid & CHIP Services, will participate in two sessions at HMA’s US Healthcare 2026: Signals, Signs & Flashing Lights conference, October 5-7, 2026. in New Orleans, LA. As states, plans, providers, and community partners prepare for a new era in Medicaid and other public healthcare programs, these conversations will focus on practical solutions, implementation realities, and the partnerships needed to move from policy change to sustainable results.

State Medicaid and CHIP Strategies for Applied Behavior Analysis and Autism Services

As the prevalence of autism has increased, state investments in Applied Behavior Analysis (ABA) and related services have grown substantially. This preconference session will examine federal guidance and state strategies for supporting appropriate, high-quality care for children with autism while helping programs strengthen oversight, access, and service delivery.

Medicaid Policy Changes and Their Ripple Effects Across Healthcare

Changes in Medicaid policy and financing will not stay confined to Medicaid. Coverage churn across Medicaid, the Affordable Care Act (ACA) Marketplace, and employer-sponsored insurance can reshape risk pools, influence plan participation, increase provider financial exposure, and leave more people uninsured. This session will bring federal and state leaders together to discuss how Medicaid agencies and their partners are responding, where collaboration is most needed, and what strategies will be needed to navigate the next phase of public healthcare transformation.

The following current and former Medicaid directors will join Dr. Knapp:

Ann Jensen, Administrator, Nevada Medicaid Nevada Health Authority
Cheryl J. Roberts, JD, Senior Advisor; Former Medicaid Director, Virginia Department of Medical Assistance Services
Ryan Schwarz, MD, MBA, Medicaid Director & Assistant Secretary for MassHealth, Massachusetts Executive Office of Health & Human Services
Scott Partika, Director, Ohio Department of Medicaid

VA Community Care and NextGen Healthcare Innovation for Veterans

As the nation’s largest integrated health system serving military veterans, the VA is working with health plans, providers, health systems, technology firms, and other innovators to bring effective solutions from across the healthcare marketplace to people who have served our nation. Approximately 42 percent of the healthcare services that veterans receive today is delivered through the contracted Community Care program, and that share is expected to grow. Assistant Secretary Richard F. Topping will discuss the VA’s vision for the future of Community Care, the critical role industry partners will play, and how the VA intends to learn from the field, adopt proven practices, leverage emerging technologies, and foster innovation that improves access, quality, and outcomes for veterans.

As Medicaid, VA Community Care, and other public healthcare programs enter a period of significant change, HMA’s conference will focus on the partnerships, operational strategies, and solutions needed to move from policy to implementation.

Rural Health Transformation Program: The Window to Build Sustainable Change Is Now

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The Rural Health Transformation Program (RHTP) is entering a critical implementation phase. As states begin deploying historic federal investments in rural healthcare, attention is shifting from grant awards to execution, performance measurement, and sustainability. Recent Centers for Medicare & Medicaid Services (CMS) approvals of additional state RHTP initiatives, coupled with upcoming reporting requirements and future funding determinations, are heightening the focus on how states, providers, technology companies, and community organizations will demonstrate progress and long-term value.

This article examines emerging themes in RHTP implementation, including the growing emphasis on chronic disease prevention, technology-enabled care delivery, performance measurement, and sustainability planning. Health Management Associates’s (HMA) multidisciplinary teams also are available to support organizations seeking to maximize the long-term value of RHTP investments beyond the initial federal funding period.

Common Priorities Emerging in State Rural Health Transformation Program Plans

State RHTP strategies vary considerably; however, state applications share several priorities aligned with CMS’s funding priorities. Technology modernization, telehealth, workforce development, chronic disease management, behavioral health, maternal health, and care coordination appear throughout state proposals. Through its work with states, providers, and rural communities, Health Management Associates (HMA) has identified another common thread across applications: rural health challenges are deeply interconnected.

Providers struggling with workforce shortages are often serving populations with higher rates of chronic disease. Communities facing limited specialty access frequently experience transportation barriers and gaps in digital connectivity. Behavioral health needs intersect with physical health conditions, maternal health outcomes, and emergency department utilization. States are responding by increasing their focus on and pursuit of broader transformation strategies.

During a recent HMA webinar, RHTP Beyond the Grant Approval: Building Sustainable Rural Transformation, speakers highlighted one of the most important directional lessons emerging from early RHTP implementation: technology, workforce, access, care delivery, and prevention strategies must be designed as mutually reinforcing investments and not as siloed initiatives.

Chronic Disease Prevention and Management Is Central to Rural Health Transformation

Our work with states and their RHTP partners indicates that chronic disease prevention, monitoring, and management have become a central organizing principle for many RHTP investments. Technology modernization, telehealth expansion, workforce initiatives, behavioral health integration, and community-based care models are frequently being positioned as complementary strategies to improve population health and address the conditions that drive preventable morbidity, mortality, and healthcare costs in rural communities. This includes ensuring rural residents receive care earlier, stay connected and engaged in their care longer, and avoid preventable deterioration in health status.

As HMA experts discussed during the recent webinar, this represents an important shift. Historically, many healthcare systems have been structured around treating disease after complications emerge. RHTP creates an opportunity to invest in more effective models, including those that can identify risk sooner, improve follow-up with patients, and strengthen connections between patients and care teams.

Telehealth, Data Platforms, and AI Support in Rural Health Transformation

Technology appears throughout nearly every state strategy and is often viewed as one of the most visible components of RHTP. HMA webinar speakers emphasized that technology is a vital enabling capability in RHTP initiatives.

Technology alone is unlikely to produce meaningful transformation.

HMA is working with states and their partners on strategic approaches to technology adoption. For example, states, providers, care teams, and patients should consider technology initiatives that can strengthen care models, extend workforce capacity, improve coordination and collaboration in support of population health, and generate actionable insights.

Sustainability Planning Must Begin Early in the Rural Health Transformation Program

Every state and RHTP participant understands that this federal funding is temporary. The urgent challenge is to identify, early and explicitly, which initiatives can produce enough value to warrant ongoing support after the funding period concludes.

While some states awarded the first year of RHTP funding quickly, many of these awards may serve as a bridge while states establish the structures and policies needed to support long-term RHTP initiatives. CMS’s reporting and ongoing evaluation of RHTP programs will require states to embed sustainability into program design, governance, measurement, financing, and partnerships from the outset.

States will need to provide RHTP participants with clear baselines and direction on meaningful outcomes. It also requires thinking beyond grant budgets to identify long-term operational and financial models capable of supporting ongoing services.

What States, Providers, and Technology Partners Should Do Next

The window for shaping long-term RHTP success is open now. State and local government and partner organizations have an opportunity to move beyond individual projects and build integrated strategies.

HMA’s multidisciplinary teams support program design, implementation planning, data strategy, technology modernization, performance measurement, governance, financing strategy, partnership development, and sustainability planning. As states and RHTP participants make decisions regarding governance, technology, data strategy, care models, and performance measurement, HMA can help ensure decisions and investments are optimized to make the progress needed to secure future funding and sustain transformation beyond the grant period.

Connecting the Dots: Medicaid Program Integrity Enters a New Era of Strategy and Operational Readiness

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There is no shortage of news, federal activity, and operational urgency concerning fraud, waste, and abuse (FWA) in healthcare. Across Medicare, Medicaid, the Affordable Care Act Marketplaces, and other federally funded health programs, the executive branch is advancing a more aggressive program integrity agenda. The US Department of Health and Human Services (HHS), including the Centers for Medicare & Medicaid Services (CMS) and HHS Office of Inspector General, as well as the US Department of Justice, are placing greater emphasis on payment accuracy, provider and vendor oversight, data-driven detection, and defensible compliance processes.

As scrutiny intensifies, organizations across the healthcare ecosystem are challenged to move beyond traditional audit and recovery activities toward a more proactive, enterprise-wide approach to managing risk and preventing FWA. Although these trends affect all healthcare stakeholders, the implications for Medicaid are particularly significant given the program’s scale, complexity, and reliance on partnerships among state agencies, managed care organizations, providers, and technology vendors.

To better understand how organizations should respond, Jennifer Colamonico connected with Clint Eisenhower, Regional Director at Health Management Associates (HMA), and Jennifer Bridgeforth, Associate Principal at HMA. The discussion below incorporates insights from HMA colleagues Christine Rein, Amber Swartzell, and Elizabeth Linville, who joined HMA’s August 12, 2026, webinar on how new program integrity expectations are affecting Medicaid payment, operations, and compliance strategies.

Jennifer Colamonico: We hear a lot lately about heightened scrutiny and program integrity. What’s fundamentally different about this moment from what Medicaid leaders and their organizations have experienced in the past?

Clint Eisenhower: The biggest shift is that program integrity can no longer be viewed as a narrow compliance function. What we are seeing now is a move toward enterprise accountability—and we are really at the outset of this journey. Program integrity touches finance, operations, eligibility, screening, compliance, provider oversight, analytics, clinical teams, procurement, technology, and leadership decision-making. A provider issue can become a payment issue. A data gap can become an audit issue. A documentation weakness can become a compliance issue. The organizations that are best positioned are the ones that understand how those functions connect and can demonstrate that they are managing risk in a coordinated, evidence-based way.

From a leadership standpoint, leaders of Medicaid organizations can’t simply ask whether they have a program integrity function. We know—and federal and state regulators know—that most organizations do. Instead, leaders need to ask whether that function is designed to withstand increasing scrutiny while it also helps the organization manage risk, support stronger operational performance, and continue to serve Medicaid beneficiaries effectively.

Q: Many organizations are trying to figure out whether this is just another enforcement cycle or something more significant. How are you advising clients to think about the current level of federal scrutiny?

Eisenhower: Every organization should be asking where its greatest vulnerabilities are—whether its controls, oversight processes, policies or operational capabilities may not be sufficient to address them. From there, leaders can prioritize what should be addressed now and what can be phased in.

We’ve worked with agencies and organizations first on the objective assessment of their risk and moved to translate the findings into operational change, which may include developing roadmaps, updated workflows, and& stronger policies, among other actions.

Q: There’s a lot of discussion about moving beyond the traditional pay-and-chase model, but what does a program integrity-first approach look like in practice?

Jennifer Bridgeforth:HMA is working with many state leaders and healthcare organizations that are navigating significant changes across Medicaid financing, eligibility and enrollment systems, and program administration. At the same time, new federal policy and budget constraints are prompting many states to rethink how services are delivered, managed, and financed. Whether a state is redesigning benefits, implementing new eligibility processes, restructuring payment approaches, or pursuing broader delivery system reforms, program integrity considerations need to be embedded into those decisions from day one.

That includes documentation requirements, monitoring protocols, data validation, and accountability structures built into the program design.

It also means aligning oversight efforts with emerging federal and state priorities. We are seeing increased attention on areas such as nonemergency medical transportation, applied behavior analysis, personal care services, durable medical equipment, and behavioral health services, as well as techniques such as evaluation and management coding, and identifying high-volume billing patterns. Medicaid leaders need to design programs and workflows that identify risks earlier, support appropriate access to care, and create feedback loops that strengthen operations over time, reducing reliance on a traditional pay-and-chase approach.

Q: One challenge we hear about frequently is how to strengthen oversight without creating barriers to care. How can organizations strike that balance, particularly in areas like behavioral health and applied behavior analysis (ABA), where access is already strained?

Bridgeforth: That balance is critical. Many of the areas under scrutiny are also in which there is tremendous demand and, in some markets, a shortage of providers. ABA and behavioral health are good examples. The answer cannot be to discourage appropriate access. Instead, organizations need stronger documentation, clearer policies, better training, and a shared understanding of what compliant billing and service delivery look like.

Provider education is one of the most important tools. When providers are asked to document more or differently, it can feel like administrative burden. Education has to explain not only what the requirements are, but why they matter.

Eisenhower: Health plans and providers have a strategic opportunity here. States still need partners to help achieve access goals and improve outcomes. Plans, providers, and vendors that can demonstrate strong program integrity policies and effective oversight can position themselves as trusted partners. They help states pursue access and quality goals with greater confidence that those initiatives will not create unnecessary compliance exposure.

Q: Organizations are investing heavily in analytics and AI capabilities. Where do you see the greatest opportunity for these tools to strengthen program integrity efforts?

Bridgeforth: Advanced analytics and AI are becoming increasingly important for detection and prevention. Real-time monitoring, claims pattern analysis, and predictive tools can help organizations identify risk earlier and take action before issues become larger findings or recoveries. But technology is valuable only if the organization has the governance, workflows, documentation, and case management processes to act on the data that the tools identify.

Cross-program compliance is also important. Many organizations operate across Medicaid, Medicare, Marketplace, commercial, and other public programs. When program integrity is approached at the enterprise level, improvements in one area can strengthen compliance across multiple product lines or programs.

Q: You’ve worked with states and healthcare organizations at very different stages of maturity. What are some of the most common gaps or challenges you’re helping clients address today?

Bridgeforth:We’ve worked with organizations atvery different stages of maturity.For example, we supported an organizational assessment and gap analysis that helped a client identify major opportunities across its program integrity function. The team developed a roadmap organized across seven FWA pillars, identified 52 enhancement opportunities, translated those into 184 key actions, and developed 116 success measures so leadership could monitor progress over time.

HMA and HealthTech Solutions, an HMA Company, also supported a statewide implementation that included electronic visit verification improvements, prepayment analytics, post-payment analytics, and modernization of claims review processes. The effort the state move from manual, reactive processes toward a more proactive model, with insights from post-payment analytics informing prepayment edits that could be updated in weeks rather than months.

Q: If you’re a Medicaid leader looking ahead to the next 12 to 24 months, what should be at the top of your program integrity agenda?

Eisenhower: Many of the steps that reduce program integrity risk are the same steps that help organizations perform better: stronger governance, better data, clearer accountability, more consistent workflows, improved provider relationships, and effective monitoring. The upside is not only avoiding findings or reducing audit exposure. It is also ensuring Medicaid dollars are directed to the right beneficiaries, the right services, the right providers, and the right outcomes.

How HMA Can Help

HMA helps states, health plans, providers, and healthcare organizations assess program integrity risk, strengthen governance and compliance infrastructure, design and implement payment integrity strategies, support provider education, modernize analytics and monitoring, and translate findings into measurable operational improvements. HMA can meet organizations where they are, whether they need a targeted assessment, a phased roadmap, implementation support, data analytics support, or enterprise-wide program integrity transformation.

For more information, go to: https://www.healthmanagement.com/services/our-medicaid-consultants-help-you-develop-innovative-strategies/.

SFY 2027 Budgets Signal How States Are Responding to Medicaid and SNAP Funding Provisions in the WFTCA

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State fiscal year (SFY) 2027 budgets provide insights into how states are responding to the Medicaid and Supplemental Nutrition Assistance Program (SNAP) funding and operational changes included in the 2025 budget reconciliation legislation, P.L. 119-21, the Working Families Tax Cut Act (WFTCA). Many of the law’s most significant changes will phase in, with full implementation set for 2029. Nonetheless, states are already adjusting their budgets, operational infrastructures, eligibility requirements, and financial strategies to address WFTCA’s new administrative requirements, reductions in federal Medicaid funding, and increased SNAP cost sharing responsibilities, among other reforms.

In its newly updated report, Fiscal Year 2027 Enacted State Budget Overview (subscriber access required), Health Management Associates Information Services (HMAIS), examined state Medicaid agency funding and budget provisions that signal how states are preparing for WFTCA implementation. As of July 31, 2026, all states except South Carolina had enacted their SFY 2027 budgets, and many states that enacted two-year spending plans in 2025 have now approved supplemental budgets. Some states are investing in staffing, eligibility systems, compliance activities, and other infrastructure to maintain coverage and services wherever possible, while others are identifying reductions or alternative funding strategies as they look ahead to more limited federal funding and future budget tradeoffs.

Following is a snapshot of the key trends and state responses to WFTCA policies, which the full report covers in more detail.

Medicaid and SNAP Policy Changes Shaping State FY 2027 Budgets

Major WFTCA provisions affecting state budgets include work/community engagement requirements and more frequent eligibility checks for expansion beneficiaries, an increased state share of SNAP administrative costs, and restrictions on provider taxes and state directed payments.

Medicaid Community Engagement Requirements Drive New State Investments. States that expanded Medicaid eligibility through the Affordable Care Act (ACA) must implement an 80-hour per month community engagement/work requirement for expansion populations by January 1, 2027. These enrollees will also be subject to six-month eligibility reviews.

In anticipation of significant administrative demands, states allocated funding for more staff, IT enhancements, provider and community education, as well as public education to assist individuals subject to the new requirements. States already had been working to meet this requirement before the Centers for Medicare & Medicaid Services (CMS) released the Medicaid Community Engagement Requirement for Certain Individuals Interim Final Rule (CMS-2454-IFC) on June 1, 2026. They may need to adjust their funding requests and implementation strategies to align with the new federal mandates. Examples of state responses include:

Illinois allocated $55 million to the Department of Human Services to hire 450 additional staff and update eligibility determination systems to implement new eligibility and work requirements for Medicaid and SNAP.
Kentucky’s biennial budget includes $35 million in SFY 2027 and $11 million in SFY 2028 to implement Medicaid work and community engagement requirements and other related needs.
Maine’s supplemental SFY 2025–27 budget includes funding to establish 35 eligibility specialist positions as well as other workers to implement work requirements.

States Budget for Higher SNAP Administrative Costs and Error Rate Penalties. States are now responsible for 75% of SNAP administrative costs, up from 50% previously. Beginning in federal fiscal year 2028, the WFTCA imposes a cost sharing requirement on states that have a SNAP payment error rate of more than 6%. In response, many states included funding or budget language to address these new fiscal and administrative responsibilities. Examples include:

Arizona is allocating $31.8 million for the Department of Economic Security to cover the larger state share of administrative costs, as well as $10.8 million and 88 full-time equivalent (FTE) positions to reduce the SNAP error rate.
California’s Department of Social Services is set to receive a $30.6 million general fund increase to account for the increase state share of administrative expenses, a nearly $8 million total increase for CalFresh staffing for WFTCA and federal changes and a $4.8 million total increase for enhanced monitoring of CalFresh to meet new error rate requirements.
Florida is setting aside $4 million for the Department of Children and Families to procure a vendor to help reduce the SNAP error rate.
Iowa included an increase of $8.7 million for the increased state share of SNAP administrative costs.
Applying a slightly different approach to the error rate, Alabama’s budget requires the Department of Human Resources to develop a plan that will modify SNAP benefits or eligibility as necessary to cover any penalty imposed on the state in SFY 2028.

States Assess the Impact of Federal Restrictions on Medicaid Financing Tools. The WFTCA freezes current provider tax programs, bars new ones, and requires Medicaid expansion states to phase down the minimum allowable tax rate from 6% to 3.5% by 2032. It also caps state directed payments at 100% of Medicare rates for expansion states and 110% for non-expansion states. Grandfathered payment arrangements will be phased down by 10% annually beginning in 2028.

While this provision will not fully impact states until the next fiscal year, some states are already alerting policymakers and Medicaid organizations that the change will significantly affect their approach to financing the state share of Medicaid costs. States signaling the challenges ahead include:

New York reported that its assessment tax on managed care organizations (MCOs) is noncompliant with WFTCA.
California’s MCO tax is also noncompliant and will expire December 31, 2026. The state’s budget does include an WFTCA-compliant tax that will generate $575 million in SFY 2027, $2.3 billion in SFYs 2028 and 2029, and $1.7 billion in SFY 2030.
Although West Virginia’s final budget includes $877 million from Health Care Provider Tax collections to cover medical services and associated administrative costs, this amount is $46.1 million more than was included in Gov. Patrick Morrisey’s proposed budget. The governor’s proposed budget highlighted how the state will be able to rely less on funds accrued from this tax because of the WFTCA’s limits on provider taxes.

States Increase Investments in Program Integrity and Fraud Prevention

Multiple state budgets also account for the federal government’s crackdown on fraud, waste, and abuse (FWA) in Medicaid and other public benefit programs. Missouri’s Department of Social Services budget includes $17.9 million for the Missouri Medicaid Audit and Compliance Unit to design, implement, maintain, and operate a Medicaid provider enrollment system; $7 million for a case management, provider enrollment, and fraud detection system; and $6.7 million to expand efforts to eliminate fraud through proactive measures using data analytics.

Florida allocated $10.8 million total to combat public assistance fraud, including $2 million in nonrecurring state funds for the Department of Financial Services to competitively procure and implement a public assistance fraud software solution to prevent, detect, and investigate SNAP fraud.

In addition, Rhode Island’s budget establishes an Office of the Inspector General to combat FWA of public funds; Arizona is increasing staff for its Medicaid Fraud Control Unit by four FTE positions; and Colorado included funds to improve the state’s provider directory and conduct a pediatric behavioral therapy audit.

WFTCA Could Reshape Medicaid Financing, Enrollment, and Market Strategy

The WFTCA will reshape Medicaid financing, eligibility, enrollment, and program operations over the next several years, requiring states, health plans, providers, and other stakeholders to adapt to an evolving policy and market landscape. Although many provisions phase in through 2029, SFY 2027 budgets demonstrate that implementation is already underway. New York, for example, projects annual federal funding for Medicaid and the Essential Plan will decline from $77.5 billion in SFY 2027 to $68.5 billion in SFY 2030—a nearly $10 billion annual reduction. California estimates federal community engagement requirements could reduce program costs by $357.6 million in SFY 2027 and approximately $9.6 billion through SFY 2029–30.

HMA Helps Organizations Navigate Medicaid Transformation and WFTCA Implementation

States and other stakeholders will need to continue to adapt as the full effects of WFTCA and other federal priorities take hold. Health Management Associates (HMA) brings the expertise, tools, and insights needed for stakeholders to stay on top of the rapidly changing environment. Contact HMA’s Medicaid experts to discuss how state budget and policy decisions affect your organization’s strategy, operations, and long-term positioning in this evolving healthcare landscape.

The full report is available to HMAIS subscribers through our Medicaid competitive intelligence, strategy, and transformation tool.

Why CMS Must Modernize Quality Measurement for Value-Based Care

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How should quality measurement evolve as CMS expands value-based care?

As the Centers for Medicare & Medicaid Services (CMS) shifts Medicare toward prospective payment and accountable care, quality measurement must evolve from encounter-based reporting to longitudinal, digital measurement that evaluates patient outcomes across the full care journey. Payment reform and measurement reform must advance together to support value-based care.

Key Takeaways

CMS is shifting Medicare toward prospective, population-based payment models.
Traditional encounter-based quality measures were designed for fee-for-service care.
Digital quality measures should evaluate longitudinal outcomes, prevention, and care coordination.
Interoperability infrastructure—including Fast Healthcare Interoperability Resources (FHIR) APIs and Qualified Health Information Networks (QHINs)—should enable measurement rather than function solely as a compliance requirement.
Healthcare organizations need integrated policy, data, analytics, governance, and technology capabilities to succeed in value-based care.

Across the Innovation Center strategy, accountable care initiatives, and the National Quality Strategy,[1] the policy direction is increasingly clear: payment models should reward positive outcomes, seamless care coordination, and high performance across the entire patient journey—not just an isolated activity.

Prospective payment encourages primary prevention, cohesive team-based care, virtual engagement, timely social needs response, and proactive follow-up. However, the quality measurement architecture supporting Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs)[2] and Promoting Interoperability (PI)[3] is not keeping pace. Too much of today’s quality measurement focuses only on encounters, service-oriented events, fixed reporting periods, and discrete measure submissions. As a result, CMS risks building future payment models on measurement logic designed for a traditional transactional healthcare system.

Success in value-based care requires the ability to manage longitudinal data, understand quality measure logic, close care gaps proactively, establish accountable care relationships, and translate digital infrastructure into measurable improvements in quality, outcomes, and cost performance.

The central challenge is not whether quality measurement becomes digital. It is whether digital quality measurement becomes truly aligned with prospective accountability.

CMS Focuses on Outcomes

CMS’s recent strategies point toward coordinated, team-based, accountable care in which clinicians and other entities are responsible for quality, cost, and outcomes over time. This policy shift recognizes that meaningful improvement often happens outside the walls of a triggering encounter: closing a care gap before a visit, preventing deterioration, reconciling medications after a transition, engaging a patient between appointments, or coordinating services across settings.

Prospective payment rewards organizations for managing risk. Quality measurement should therefore follow the same logic. Clinical quality measures used for accountability should evaluate patient-centered outcomes, longitudinal trajectories, prevention and early detection, patient experience, and cross-provider coordination. Technical capability measures matter but should not be confused with patient outcome signals.

A measurement system built for the future must be able to evaluate whether accountable entities are improving patient outcomes over time. It should capture prevention, patient experience, care coordination, and total cost management in ways that reflect real clinical accountability. That is a different task than confirming whether documentation was completed during a denominator-eligible encounter.

dQMs Should Not Simply Digitize Legacy Reporting

Digital quality measures (dQMs) are quality measures expressed as standardized computable specifications, using FHIR and Clinical Quality Language (CQL) to automate measure calculations, reduce manual data abstraction, and provide more timely insights into patient care. Traditional clinical quality measure models were developed when interoperable, electronic clinical data were limited, and manual abstraction was standard practice. Because many still reflect important evidence-based care, those measures should not necessarily be discarded, but technical specifications must be re-evaluated to effectively operate in a healthcare environment in which connected networks, APIs, and broader data liquidity make earlier identification, cross-setting coordination, and proactive outreach the new normal.

MVPs are an important evolutionary step for MIPS. By grouping measures and activities around specialties, conditions, or episodes of care, MVPs can make quality reporting more coherent and clinically relevant than traditional MIPS. However, MVPs do not automatically transform the core logic of quality measurement, nor do they enable the individual measures to function as a cohesive unit. If the measures inside an MVP remain tied to encounter-triggered denominators, legacy numerator-denominator constructs, and retrospective submissions, the program may become more organized without advancing value-based care. Successful administrative reporting is not the same as patient improvement, and any quality measurement system used for prospective population-based accountability should make that distinction explicit.

CMS’s digital quality measurement agenda[4] offers a major opportunity. Digital quality measures can draw from standardized electronic data, support FHIR-based exchange, reduce manual abstraction, and create more timely feedback loops for quality improvement. In a mature interoperable environment, data from EHRs, claims, registries, health information exchanges, devices, and other relevant sources help organizations identify care gaps before visits occur and effectively track outcomes across settings. However, digitization alone is not modernization. A quality measure can be expressed in FHIR-CQL and packaged as a dQM while still carrying assumptions from the previous era of clinical quality reporting. If the underlying logic remains anchored in payment-coded encounters and retrospective documentation, the industry will simply automate yesterday’s measurement model.

Without modernization across both quality measurement and payment, CMS will create an increasingly digital system that remains fundamentally encounter-based. Organizations may invest in coding, documentation, attestation, and measure optimization while remaining only loosely connected to the outcomes that matter to patients and purchasers. The result would be more burden, more opportunities for gaming, and weaker alignment between quality reporting and the goals of value-based care. While this might reduce some reporting friction, it would not support the prospective accountability CMS is advancing.

Promoting Interoperability Is Necessary Infrastructure

The same concern applies to PI. Interoperability is essential to modern accountability, but when PI operates primarily as a scored compliance category—through Certified Electronic Health Record Technology (CEHRT),[5] attestations, fixed reporting windows, and required measure sets—it can become a parallel administrative layer rather than the infrastructure that enables better outcomes. This creates a subtle but important policy risk: CMS may reward technical compliance even when the measurement system does not reliably demonstrate improvements in longitudinal health.

This argument is not anti-interoperability. In fact, prospective payment absolutely depends upon a reliable interoperability infrastructure. QHINs,[6] FHIR APIs, patient access capabilities, health information exchange, e-prescribing, and electronic public health reporting are all foundational to a digital learning health system and to effective longitudinal care management.

The issue is how interoperability is recognized as an integral part of a prospective quality strategy. PI should function less like an independent scoring domain and more like the infrastructure that allows accountable entities to understand their patient populations healthcare needs, efficiently exchange actionable care plans, identify care gaps, incorporate patient-generated data, and continuously evaluate outcomes over time.

Conclusion: Success in Value-Based Care Requires Operational Transformation

CMS is moving toward prospective payment, accountable care, interoperability, and outcome-based accountability, but payment reform and measurement reform must advance together. If CMS continues to place modern payment models on top of legacy measurement logic, the system may become more digital without becoming more meaningful. The next phase of quality strategy should use interoperability not as an end goal, but as the operating foundation for measuring what prospective payment is intended to reward—better outcomes across the full patient journey. For healthcare organizations, the implications are immediate. Success in value-based care will require more than compliance with reporting requirements. It will require the ability to manage longitudinal data, understand measure logic, close care gaps proactively, establish accountable care relationships, and translate digital infrastructure into measurable improvements in quality, outcomes, and cost performance.

As CMS expands accountable care and prospective payment, organizations will need quality measurement systems that evaluate outcomes across the patient journey—not simply document clinical encounters. Digital quality measurement, interoperability, longitudinal analytics, and proactive care management will increasingly become core capabilities for success in value-based care.

HMA’s perspective: Digital quality measurement should not simply automate legacy quality reporting. It should measure whether accountable organizations improve patient outcomes over time.

HMA’s Digital Healthcare Quality Transformation service brings a unique combination of expertise spanning healthcare policy, value-based care strategy, interoperability, data quality, digital quality measurement, analytics, governance, and operational transformation. We work with health plans, providers, ACOs, states, and healthcare innovators to bridge the gap between regulatory compliance and real-world performance, helping organizations build the data infrastructure, governance frameworks, care delivery capabilities, and measurement strategies needed to succeed in an increasingly digital and outcomes-driven healthcare ecosystem. By connecting strategy, technology, and execution, HMA helps clients move beyond compliance and develop the capabilities necessary to deliver measurable improvements in quality, patient outcomes, operational performance, and value.

Frequently Asked Questions

What are digital quality measures (dQMs)?

Digital quality measures (dQMs) use standardized electronic clinical data to evaluate healthcare quality and outcomes. dQMs leverage standards such as Fast Healthcare Interoperability Resources (FHIR) and Clinical Quality Language (CQL) to automate measure calculations, reduce manual data abstraction, and provide more timely insights into patient care. When implemented effectively, dQMs enable healthcare organizations to identify care gaps, monitor performance, and improve patient outcomes using interoperable data.

Why is CMS modernizing quality measurement?

The Centers for Medicare & Medicaid Services (CMS) is modernizing quality measurement to support its transition from fee-for-service reimbursement to prospective, value-based payment models. As Medicare increasingly rewards organizations for improving patient outcomes, managing population health, and coordinating care across settings, quality measurement must evolve beyond encounter-based reporting to evaluate performance across the entire patient journey.

Why are traditional quality measures no longer sufficient?

Many traditional clinical quality measures were designed for a healthcare system built around individual encounters, retrospective reporting, and manual data collection. While many remain clinically important, they often do not fully capture longitudinal care management, prevention, patient engagement, or care coordination. As payment models shift toward population-based accountability, quality measurement must better reflect how organizations improve health outcomes over time.

What is longitudinal outcomes measurement?

Longitudinal outcomes measurement evaluates patient care across time rather than during a single point in time. Instead of measuring whether a required action occurred during an office visit, longitudinal measurement assesses whether healthcare organizations identify care gaps, coordinate services, engage patients, prevent disease progression, and improve health outcomes throughout the patient’s care journey.

How do MIPS Value Pathways (MVPs) support value-based care?

Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs) organize quality measures, improvement activities, and cost measures around specific specialties, conditions, or episodes of care. This approach makes reporting more clinically relevant than traditional MIPS reporting. However, achieving meaningful value-based care also requires measures within MVPs to evolve beyond encounter-based logic and better reflect longitudinal accountability and patient outcomes.

What role does interoperability play in quality measurement?

Interoperability enables healthcare organizations to securely exchange clinical information across providers, health plans, public health agencies, and patients. Standards such as FHIR APIs, Qualified Health Information Networks (QHINs), electronic health records (EHRs), and health information exchanges support more complete patient information, improve care coordination, and provide the data needed for digital quality measurement and population health management.

How are digital quality measures different from electronic clinical quality measures (eCQMs)?

Electronic clinical quality measures (eCQMs) digitized many traditional quality measures by using electronic health record data instead of manual chart abstraction. Digital quality measures (dQMs) build on this foundation by using modern interoperability standards, including FHIR and CQL, to improve data exchange, automation, and scalability. However, simply expressing a measure digitally does not modernize its underlying clinical logic.

Why is prospective payment changing quality measurement?

Prospective payment models reward healthcare organizations for managing the health of patient populations rather than billing for individual services. Because providers are increasingly accountable for outcomes, prevention, care coordination, and total cost of care, quality measurement must evaluate these longitudinal activities instead of focusing primarily on documentation associated with individual encounters.

What capabilities do healthcare organizations need to succeed in value-based care?

Success in value-based care requires more than meeting reporting requirements. Organizations need the ability to integrate longitudinal clinical and claims data, understand quality measure logic, identify and close care gaps proactively, exchange data through interoperable systems, support coordinated care teams, monitor patient outcomes continuously, and use analytics to improve quality, cost, and operational performance.

How can healthcare organizations prepare for the future of CMS quality measurement?

Healthcare organizations can prepare by investing in interoperability, data governance, digital quality measurement capabilities, analytics, and clinical workflows that support proactive care management. Organizations that align policy, technology, quality measurement, and operational transformation will be better positioned to succeed as CMS expands prospective payment, accountable care, and outcomes-based reimbursement.

[1] Centers for Medicare & Medicaid Services. CMS National Quality Strategy. Available at: https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.

[2] Quality Payment Program. MIPS Value Pathways (MVPs). Available at: https://qpp.cms.gov/reporting-requirements/ways-to-report/mvp.

[3] Quality Payment Program. Promoting Interoperability: APP Requirements. Available at: https://qpp.cms.gov/reporting-requirements/ways-to-report/app/promoting-interoperability.

[4] Centers for Medicare & Medicaid Services. Optimal health for All Within Nation’s Health and Long-Term Care Systems: CCSQ FY2025–2028 Strategic Roadmap. March 11, 2026. Available at: https://www.cms.gov/newsroom/blog/optimal-health-all-within-nations-health-long-term-care-systems-ccsq-fy2025-2028-strategic-roadmap.

[5] Centers for Medicare & Medicaid Services. Certified EHR Technology. Available at: https://www.cms.gov/medicare/regulations-guidance/promoting-interoperability-programs/certified-ehr-technology.

[6] Ibid

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561 Results found.

CMS Marketplace Anti-Fraud Actions and Unauthorized Enrollment Cancellations

Financial and Operational Implications for ACA Marketplace Insurers

Preparing for Enrollment Shifts

What Is Changing?

What This Will Mean?

New Questions Stakeholders Will Need to Answer

Supporting Next Steps

Frequently Asked Questions

What We Learned at MESC

How HMA Can Help

How should quality measurement evolve as CMS expands value-based care?

Key Takeaways

CMS Focuses on Outcomes

dQMs Should Not Simply Digitize Legacy Reporting

Promoting Interoperability Is Necessary Infrastructure

Conclusion: Success in Value-Based Care Requires Operational Transformation

Frequently Asked Questions

What are digital quality measures (dQMs)?

Why is CMS modernizing quality measurement?

Why are traditional quality measures no longer sufficient?

What is longitudinal outcomes measurement?

How do MIPS Value Pathways (MVPs) support value-based care?

What role does interoperability play in quality measurement?

How are digital quality measures different from electronic clinical quality measures (eCQMs)?

Why is prospective payment changing quality measurement?

What capabilities do healthcare organizations need to succeed in value-based care?

How can healthcare organizations prepare for the future of CMS quality measurement?