Weekly Roundup -
August 12 , 2026
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SFY 2027 Budgets Signal How States Are Responding to Medicaid and SNAP Funding Provisions in the WFTCA
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.
Federal Policy News
Fueled By Leavitt Partners Weekly Health Intelligence
Trump Takes Another Step Toward Reshaping the Childhood Vaccine Schedule
On Monday, August 10, President Trump signed an Executive Order (EO), titled, “Delivering Gold Standard Childhood Vaccine Recommendations for Americans.” The EO follows multiple efforts on the part of the Administration to revise the childhood vaccine schedule, including a May 2026 EO that directed the CDC and the Advisory Committee on Immunization Practices (ACIP) to review the “Assessment of the U.S. Childhood and Adolescent Immunization Schedule Compared to Other Countries,” a report developed under the direction of a December 2025 Presidential Memoranda and released by HHS in January. The report recommended several changes to the childhood vaccine schedule, which were subsequently adopted by then-acting CDC Director Jim O’Neill in a decision memorandum. The revised schedule was later blocked by a federal district court judge, who ruled that ACIP had not been sufficiently consulted in the development and adoption of the schedule. During the signing of the August 10 EO, Dr. Heidi Overton, Deputy Director of the White House Domestic Policy Council, stated that the EO was intended to advance the schedule that was delayed by the court.
Monday’s EO once again seeks to implement the revised schedule informed by the report released in January such that vaccine recommendations are made for different patient categories as follows:
- “Immunizations recommended for all children: measles, mumps, rubella, diphtheria, tetanus, pertussis, polio, Haemophilus influenzae type B, pneumococcal disease, human papillomavirus, and varicella;”
- “Immunizations recommended for certain high-risk groups or populations: respiratory syncytial virus monoclonal antibodies, hepatitis A, hepatitis B, meningococcal B, meningococcal ACWY, and dengue; and”
- “Immunizations based on shared clinical decision-making: hepatitis A, hepatitis B, rotavirus, meningococcal disease, influenza, and COVID-19.”
- The EO also recommends that the combined measles, mumps, rubella (MMR) vaccine be administered in “three separate single-disease shots once such products are domestically available.” The EO directs all executive departments and agencies to review the recommendations and advance them, “to the fullest extent allowable by law,” and directs states to “consider updating relevant laws and regulations that define the scope of immunization requirements for contexts such as school enrollment and attendance based on the scientific assessment and best practices from peer, developed countries.”
The EO also directs the HHS Task Force on Safer Childhood Vaccines to establish and present plans to the Assistant to the President for Domestic Policy, to:
- Increase manufacturing production of single-dose vaccines “while guaranteeing continued availability of combination vaccines and those vaccines recommended for shared clinical decision-making;”
- Adjust the federal childhood vaccine schedule with “ideal timing and sequencing,” identified through “gold standard science;”
- “Develop additional alternative adjuvants to aluminum and conduct comparative safety and efficacy studies;”
- “Ensure continuous evaluation of the risk/benefit profiles of all childhood vaccines based on United States and international data;” and
- “Improve vaccine safety monitoring, transparency, and research.”
Finally, the EO directs the Attorney General and Justice Department to ensure that states and federal grantees are compliant with “Federal statutory obligations related to parental authority, religious freedom, disability accommodations, and equal protection under the law.” The EO is likely to be the subject of lawsuits, which could impact implementation by HHS.
HHS Takes Aim at Food Ingredients and Ultra-Processed Foods
On August 10, the U.S. Department of Health and Human Services (HHS) announced two updates to long-awaited U.S. Food and Drug Administration (FDA)-led initiatives related to federal nutrition oversight: reforms to the “Generally Recognized as Safe” (GRAS) notification process, and an effort to establish a federal definition of “ultra-processed foods.”
- FDA issued a proposed rule that would require companies to notify FDA when concluding that a food substance is “Generally Recognized as Safe.” Currently, companies can self-affirm that a new substance has undergone a scientific review and qualifies as GRAS. Companies are permitted to conduct their own safety evaluations and need not notify FDA of the GRAS determination. The new proposed rule would “convert the voluntary GRAS notification program to a mandatory GRAS notification program.” The rule would also allow FDA to consider “noncompliance as a factor in its prioritization of food substances for post-market review.” For products already on the market, manufacturers would be required to provide the FDA with information about how the product is used. FDA intends to make the information on how GRAS substances are used available in a public database. The proposed rule is open for public comment until early December.
- HHS also highlighted action to advance a proposed definition for “ultra-processed food” through rulemaking. On August 3, FDA and U.S. Department of Agriculture (USDA) submitted to OMB for review a white paper with the proposed definition. The white paper remains under regulatory review with OMB, and HHS did not indicate in its announcement what the definition will include.
Head Start Rules Could Look Very Different Under New HHS Proposal
On August 6, HHS and the Administration for Children and Families (ACF) released a proposed rule, “Renewing the Promise of Head Start for the Next Generation,” that would roll back various federal Head Start regulations. The proposal would shift several key operational requirements from the federal government to states, including standards related to child-to-staff ratios, classroom group sizes, staff qualifications, background checks, and transportation requirements. It would also reduce the cap on administrative spending (allowable costs to develop and administer a Head Start program) from 15 percent to 5 percent, and set new nutrition and physical activity requirements, including aligning meals with the USDA Dietary Guidelines for Americans. Congressional Democrats and some early childhood advocates contend that weakening federal standards could lead to larger class sizes, inconsistent program quality across states, and reduced services for children and families. The most recent unified agenda includes several other similar proposed rules for other programs, indicating that ACF may take similar action to reduce federal requirements and delegate authority to states and localities within Family Violence and Prevention Services, Refugee Resettlement Programs, and the Child Care and Development Fund (CCDF). The Head Start proposed rule is open for comment until October 6.
FDA Looks Ahead to the Next Medical Device User Fee Deal
On August 5, FDA held a public meeting to present and discuss recommendations for the upcoming Medical Device User Fee Amendments (MDUFA) reauthorization before the current authorization expires on September 30, 2027. At the public meeting, FDA experts gave a presentation on the upcoming MDUFA reauthorization, how the program has performed in recent years, and the proposed recommendations in the FDA-Industry negotiated commitment letter for the next reauthorization.
FDA reported positive results from MDUFA in recent years, noting that “FDA has met, or has the potential to meet, all 15 of the FDA’s submission review goals for FY 2024 and all 13 of the FDA’s submission review goals for FY 2025.” Before the meeting, FDA published a draft commitment letter for this MDUFA reauthorization that outlines the proposed recommendations for the next program term. FDA summarized the recommendations during the meeting, discussing 15 broad categories of recommended changes, including expanding FDA staffing, developing FDA’s digital health capacity, and further incorporating patient data and real-world evidence. The comment period for the proposed reauthorization closed August 7, 2026.
Following this meeting, FDA will finalize and transmit the commitment letter to Congress, specifically the House Energy and Commerce Committee and the Senate HELP Committee, by January 15, 2027. A similar process is taking place between FDA and regulated industry for drugs and biologics. Next year, Congress is expected to hold hearings and mark ups related to the user fee reauthorizations with the goal of passing legislation to continue the user fee programs before the current programs expire on September 30, 2027.
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State Policy News
Arkansas Seeks Temporary Renewal of ARHOME Medicaid Expansion Demonstration
The Arkansas Advocate reported on August 6, 2026, that Arkansas has formally requested that the Centers for Medicare & Medicaid Services (CMS) extend its Arkansas Health and Opportunity for Me (ARHOME) Medicaid expansion demonstration through December 31, 2028, following CMS’ rejection of the state’s longer term renewal request. The temporary extension would give the state additional time to design and implement a new Medicaid delivery system, which could include managed care, fee-for-service, or another approach. State officials also cited the need to avoid transitioning to a new delivery model at the same time new federal work requirement policy takes effect. ARHOME currently covers more than 200,000 Medicaid expansion members.
Indiana Prepares HIP 3.0 Section 1115 Waiver Application for CMS Approval
The Indiana Family and Social Services Administration (FSSA) announced on August 5, 2026, that it is planning to submit a five-year Section 1115 demonstration waiver application for Healthy Indiana Plan (HIP) 3.0 to the Centers for Medicare & Medicaid Services (CMS). The proposed waiver would transition coverage for the expansion population to a standalone Section 1115 demonstration, re-implement cost-sharing, and establish incentives to reduce copayments for HIP members that complete preventative care visits or other healthy activities. Cost sharing would not exceed five percent of a member’s income on a quarterly basis. The new demonstration aims to promote preventative care, encourage member engagement, and maintain HIP’s fiscal sustainability. FSSA will accept public comments through September 4. If approved, the demonstration would go into effect on October 1, 2027.
Massachusetts Invests in Hospital-to-Home Program to Reduce Delayed Discharges
The Massachusetts Health Policy Commission (HPC) announced that nearly $1.4 million will be directed to the three-year Promoting Appropriate Transitions to Home (PATHways) investment program to help hospitals discharge residents over the age of 60. Through this program, seven hospitals will receive up to $210,000 each to partner with aging-services organizations and connect patients with nonmedical supports such as meals, medication management, and transportation. The program aims to address hospital capacity constraints, with roughly 2,000 Massachusetts patients remaining hospitalized each day despite being medically ready for discharge and the share of patients hospitalized for more than a month rising to 8.3 percent in 2024 from 3.8 percent in 2017. The state expects to evaluate patient and caregiver experience, length of stay, readmissions, nursing-home admissions and provider costs.
New Mexico Awards $50 Million to Expand Rural Healthcare Access and Delivery Funding
The New Mexico Health Authority announced on August 5, 2026, that the state has awarded 41 rural health providers across the state $50 million total from the state’s Rural Health Care Delivery Fund. This most recent grant cycle prioritized primary care, behavioral health, maternal and child health services, and specialty care.
Utah Medicaid Program Faces Shortfall
Utah Department of Health & Human Services (DHHS) Commissioner Tracy Gruber confirmed in an interview with FOX 13 News that DHHS identified a $100 million to $200 million Medicaid budget shortfall, driven by higher-than-expected costs among remaining members following post-pandemic disenrollment, rising healthcare expenses, and forecasting errors. Medicaid enrollment reportedly has fallen by roughly 200,000 since the end of the COVID-19 public health emergency to about 318,000, but DHHS said the remaining population includes a greater concentration of high-cost utilizers. Lawmakers may tap Medicaid-specific rainy-day funds to address the deficit. DHHS said no benefit cuts are currently planned.
Private Market News
Fueled By Wakely Consulting Group
CVS Triples Net Income Thanks to Booming Health Plan Profitability
CVS Health reported a strong second quarter, with net income nearly tripling to $3 billion, driven by a significant turnaround in Aetna’s insurance business as Medicare Advantage profitability improved following benefit changes and market exits. The company raised its 2026 earnings outlook, while its pharmacy, PBM and retail business also posted strong results, supported by Rite Aid acquisitions and continued growth in GLP-1 weight loss drug offerings. Access more news and insights in the Wakely Wire.
Major Health Systems in Texas Broadening their Outpatient Reach
HCA Healthcare purchased 40 Texas MedClinic locations, branding them under its CareNow division to boost urgent care presence in Houston, Austin, and San Antonio. Methodist Healthcare announced it acquired 18 of the Texas MedClinic urgent care facilities in the San Antonio area as part of HCA’s acquisition. St. David’s HealthCare acquired 14 of the urgent centers in Central Texas under the HCA acquisition.
Our Insights
Fueled By Experts Across Our HMA Companies
Health Management Associates
Why CMS Must Modernize Quality Measurement for 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.
Rural Health Transformation Program: Beyond the Grant Approval Phase – Implementing for Sustainability (August 19)
Rural Health Transformation Programs (RHTPs) are creating new opportunities for rural communities to improve both access to care as well as health outcomes while strengthening the long-term sustainability of local healthcare providers. This webinar will go beyond the grant planning processes and explore how an effective RHTP implementation process can support measurable improvements in population health, enhance financial viability for rural hospitals and healthcare organizations, and foster stronger systems of care across our rural communities.
Participants will explore opportunities for creating cross-initiative implementation strategies that enhance the impact of individual initiatives such as workforce, telehealth, maternal care, EMS, behavioral health and chronic disease monitoring and management.
Advancing Community Health Through CHWs: Research, Recommendations, and Action (Aug. 26)
Community Health Workers (CHWs) play a critical role in connecting communities to trusted health information, services, and resources. This webinar will share Health Management Associates (HMA) will present key findings from an assessment conducted by HMA, with support from Michael Reese Health Trust and Community Memorial Foundation, that examined examines how health-related information reaches, is interpreted by, and flows through CHWs Community Health Workers in Cook County, Illinois. Participants will also learn about HMA’s key findings and recommendations for strengthening health information systems, elevating the value of the CHW workforce, and advancing partnerships that support equitable, community-centered care. The session will further highlight opportunities for state agencies, funders, health systems, CHW employers, and community organizations to translate these findings into policy, funding, and practice.
Webinar Replay – Summer Webinar Series: How New Program Integrity Expectations Affect Medicaid Payments
This webinar contextualized solutions for healthcare leaders to enhance their approach to program integrity and fraud, waste, and abuse. HMA consultants delivered analysis and actionable insights on the evolving policy and operational environment.
US Healthcare 2026: Signals, Signs & Flashing Lights
The agenda is now live for US Healthcare 2026: Signals, Signs & Flashing Lights, the Health Management Associates (HMA) national conference, October 5-7, 2026, in New Orleans, LA. Healthcare leaders will join peers, policymakers, innovators, and industry experts to discuss the most significant trends in healthcare, including historic policy and financing changes in Medicaid, program integrity, artificial intelligence (AI), behavioral health transformation, affordability challenges, and emerging care delivery models. HMA is offering two special preconference sessions that combine our expert-led learning with valuable networking opportunities.
Is Your Healthcare Strategy Built for Change?
In this episode of Vital Viewpoints on Healthcare, HMA Regional Director Cara Henley discusses how healthcare organizations can plan for constant policy change without losing focus on their mission. Drawing on decades of experience in Medicaid policy, ACA implementation, and state healthcare transformation, Cara shares practical strategies for successfully transitioning policy upheaval into operational success.
Wakely
ACA Marketplace Insurer Exits Are Reshaping the Market. Here’s How Health Plans Should Respond.
Health insurers participating in the individual Affordable Care Act (ACA) Marketplace are facing one of the most challenging operating environments since the program’s early years. As enhanced subsidies expire, regulatory uncertainty grows, enrollment declines, and claims costs increase, many insurers are reevaluating their participation in the market.
This white paper from Wakely actuaries examines what these changes mean—not only for carriers leaving the market, but for the organizations that remain.
Based on publicly announced insurer participation changes as of July 26, 2026, the report analyzes how ACA Marketplace exits are likely to affect pricing, risk adjustment, network strategy, operations, and long-term growth opportunities for health plans across the country.
Replay Watch
From Policy to Practice: Exploring CMMI Value Based Care Initiatives and Unlocking Value in Safety-Net Care
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RFP Calendar
RFP Calendar
| Date | State/Program | Event | Beneficiaries |
|---|---|---|---|
| Date: Summer 2026 | State/Program: Illinois Foster Care | Event: RFP Release | Beneficiaries: 33,000 |
| Date: July 28, 2026 (Delayed) | State/Program: Nevada Children's Specialty | Event: Awards | Beneficiaries: NA |
| Date: August 2026 | State/Program: Indiana | Event: RFP Release | Beneficiaries: 1,400,000 |
| Date: January 1, 2027 | State/Program: Illinois | Event: Implementation | Beneficiaries: 2,400,000 |
| Date: January 1, 2027 | State/Program: Nevada CO D-SNP | Event: Implementation | Beneficiaries: 88,000 |
| Date: January 1, 2027 | State/Program: Wisconsin LTC GSR 3 | Event: Implementation | Beneficiaries: 56,000 (all GSR) |
| Date: January 1, 2027 | State/Program: Illinois Tailored Care Management Program | Event: Implementation | Beneficiaries: 22,400 |
| Date: July 1, 2027 | State/Program: Nevada Children's Specialty | Event: Implementation | Beneficiaries: NA |
| Date: September 2, 2026 | State/Program: Missouri | Event: Proposals Due | Beneficiaries: 1,000,000 |
| Date: Fall 2027 | State/Program: Oregon | Event: RFP Release | Beneficiaries: 1,200,000 |
| Date: January 1, 2028 | State/Program: Wisconsin LTC GSR 4,6 | Event: Implementation | Beneficiaries: 56,000 (all GSR) |
| Date: 2028 | State/Program: North Carolina | Event: RFP Release | Beneficiaries: 2,200,000 |
| Date: 2029 | State/Program: California | Event: RFP Release | Beneficiaries: NA |