Industry insights & thought leadership

Five Key Issues Shaping Medicaid in 2026 and Beyond

A forward-looking view at the policy, funding, and oversight priorities shaping Medicaid.

14 minutes

Executive Summary

As 2026 approaches, Medicaid programs across the United States are facing a transformative period marked by fiscal constraints, federal policy shifts, evolving care delivery models, and new funding and technology requirements. State agencies are tasked with maximizing resources to sustain critical services and drive innovation. This post highlights five key issues that should be on every Medicaid director’s radar:

  • H.R. 1 Implementation: The budget reconciliation bill H.R. 1, signed by President Trump on July 4, 2025, significantly impacts Medicaid financing and eligibility. Key areas include provider taxes, state-directed payments, community engagement/work requirements, and the Rural Health Transformation Program.
  • Financial Management & Cost Containment: Strong financial management is crucial for Medicaid programs. Key areas include Medicaid Managed Care Medical Loss Ratio (MLR), capitation rates, managed care pharmacy benefit analysis, Medicaid drug rebate performance, and reimbursement methodology review.
  • Payment Rate Transparency: CMS issued final rule CMS-2442-F, requiring states to report and disclose fee-for-service (FFS) rates by July 1, 2026. Key areas include payment rate transparency, comparative payment rate analysis, rate reduction or restructuring analysis, advisory group establishment, and direct-care worker wage review.
  • Access to Care and Network Adequacy: Ensuring timely access to quality care is critical. Key areas include network adequacy standards, secret shopper and enrollee surveys, and transparency of state-directed payment (SDP) arrangements.
  • Program Integrity (PI), Oversight, and Compliance: Safeguarding Medicaid and CHIP is essential. Key areas include managed care fraud, waste, and abuse (FWA) detection and prevention, and oversight of high-risk services like Applied Behavior Analysis (ABA) and Personal Care Services (PCS).

As 2026 approaches, Medicaid programs across the country are entering a pivotal period of transformation amid growing fiscal constraints. Emerging federal policy shifts, evolving care delivery models, and new funding and technology requirements are reshaping how states manage eligibility, quality, and access.

At the same time, agencies are being asked to do more with limited resources — maximizing every dollar to sustain critical services and drive innovation. From the continued unwinding of pandemic flexibilities to growing pressures around behavioral health integration, workforce sustainability, and health equity, state leaders will need to navigate an increasingly complex landscape. This overview highlights several key issues that should be on every Medicaid director’s radar as they prepare for the year ahead.

With various teams and a range of disciplines represented, the leadership teams of Myers and Stauffer and Optumas assessed the current landscape and emergent issues state Medicaid programs are facing. Each group viewed the dominant issues through the lenses of their respective expertise. Both teams bring to the table specialized knowledge- and skill-based competencies that shaped our views and drove the selection of the most important items for your consideration. Here are the key issues that stood out to us as having the most importance and urgency.

Key Issue #1: H.R. 1 Implementation

On July 4, 2025, President Trump signed the House of Representatives budget reconciliation bill H.R. 1 Titled, “An Act to provide for reconciliation pursuant to title II of H. Con. Res.14,” formerly known as the One Big Beautiful Bill. H.R. 1 including significant impacts to Medicaid financing and eligibility.

In our client alert, we discussed how H.R. 1 presents both significant opportunities and complex challenges for state Medicaid programs. From rural health transformation planning to new eligibility, tax requirements and SDPs, and work requirement provisions, the Act requires careful navigation to maintain provider participation, protect budgets, and ensure access to care.

Hot Button Issues

  • Provider Taxes and SDPs: H.R. 1 and the CMS proposed provider tax loophole rule (CMS-2448-P) could significantly impact state Medicaid provider tax and SDP programs, potentially causing budget deficits, decreased provider participation, and reduced access to care. States should assess risks and compliance of current provider taxes, evaluate public policy rationales, ensure tax levels do not exceed limits, analyze budget impacts, and consider alternative financing options, while also monitoring changes to the Managed Care Final Rule (separate payment terms, reporting, etc).
  • Community Engagement/Work Requirement: The H.R. 1 eligibility standard based on the community engagement/work requirement poses another challenge and lays out specific parameters states must follow to meet this requirement. States should be implementing community engagement, assessing system issues, assessing verification mechanisms, and considering the actuarial impacts of work requirements and retroactive coverage.
  • The Rural Health Transformation Program: This was established under Section 71401, is a $50 billion federal relief initiative allowing states to apply for $10 billion allotments each year from 2026 to 2030. All 50 states have applied, and award decisions were made on December 29, 2025. States should focus on implementation activities such as effective program management, tool development, and data frameworks.

Key Issue #2: Financial Management & Cost Containment

As states face growing fiscal pressures and rising expectations for accountability, strong financial management has never been more important to the success and sustainability of Medicaid programs. Cost containment is no longer just about reducing expenses—it’s about making strategic choices that align spending with outcomes, ensure compliance, and position programs for long-term stability. From cost reporting and provider payments to managed care performance, pharmacy spending, and federally qualified health center reimbursement, each level offers opportunities to strengthen efficiency and protect limited resources. Proactive attention to these areas will help states stay ahead of federal scrutiny while maximizing the impact of every Medicaid dollar.

Hot Button Issues

  • The Medicaid Managed Care MLR ensures Managed Care Organizations (MCOs) allocate at least 85% of premium revenue to patient care, but increased reliance on MLR assessments may lead to MCO manipulation, raising costs and risks. States should understand MCO structures and relationships, conduct regular risk assessments, audits, and consider remittance or risk corridor requirements to ensure compliance and address potential issues from horizontal and vertical integration.
  • Containment Capitation Rates. Even slight changes to MCO payment policies can drive savings, but they require actuarially sound rates and effective engagement with states and MCOs for CMS approval. Optumas can support these adjustments with actuarial and clinical expertise through their Care Improvement Opportunity Tool (CIOT), which uses analytics to identify cost containment opportunities and can be used for quality outcome review for payment reform and value-based purchasing.
  • Managed Care Pharmacy Benefit Analysis. Prescription drugs pose significant costs, with MCOs managing up to 66% of Medicaid pharmacy benefits nationally, potentially increasing costs and under-reimbursing providers when using a Pharmacy Benefit Manager (PBM). States should ensure managed care contracts include appropriate PBM requirements, perform routine oversight, and consider alternative models like a single PBM to improve efficiency and control.
  • Medicaid Drug Rebate Performance. Rebates can reduce prescription drug costs by over half, but states often struggle with managing vendors responsible for identifying rebate-eligible claims and handling disputes. To maximize available rebates and prepare for federal oversight, states need comprehensive rebate audit programs.
  • Reimbursement Methodology Review. State cost containment significantly depends on the design of reimbursement methodologies, which should be evaluated to ensure they meet state goals and promote effective care. States should assess whether these methodologies support efficient administrative activities, incentivize better patient outcomes, and adjust rates based on available state appropriations.

Key Issue #3: Payment Rate Transparency

On May 10, 2024, CMS issued final rule (CMS-2442-F): Ensuring Access to Medicaid Services and Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting Rule (CMS-3442-F). As federal requirements around payment rate transparency expand, Medicaid agencies face growing expectations to report, analyze, and disclose FFS rates accurately and strategically. Beyond meeting the compliance deadline of July 1, 2026, (July 2028 for direct-care worker wage review), transparent payment practices are critical for supporting equitable access, guiding policy decisions, and strengthening provider engagement. As trusted partners, we help states navigate these complex requirements—assessing rate structures, evaluating potential restructuring, and preparing for publication, completing comparative analyses and disclosures—so agencies can direct scarce internal resources elsewhere.

Hot Button Issues

  • Payment Rate Transparency in FFS. States must publish all Medicaid FFS rates on their website by July 1, 2026, with updates posted within one month. To comply, states should inventory current fee schedules, identify data gaps, and collaborate with internal and external partners to ensure timely publication.
  • Comparative Payment Rate Analysis and Payment Rate Disclosure Requirements. States must publish a comparative payment rate analysis for certain providers, comparing Medicaid rates to Medicare rates, and a payment rate disclosure for personal care and similar services as average hourly rates. To comply, states must evaluate payment structures, gather information, and develop a reporting template for publication.
  • Rate Reduction or Restructuring Analysis Requirements. For any state plan amendment reducing or restructuring payment rates, states must assure that access to services is not disrupted and that Medicaid payments meet specific criteria. States should review CMS guidance and templates to ensure they meet requirements, including maintaining Medicaid payments at least 80% of Medicare rates and ensuring no significant access concerns arise from public feedback.
  • Interested Parties Advisory Group. States must establish an advisory group to recommend FFS rates for direct-care workers in personal care, home health aide, and homemaker services. They should review membership requirements, consider viable members, and determine if the current Medicaid Advisory Committee suffices, while also preparing to publish the group’s recommendations within one month of receipt.
  • Direct-Care Worker Wage Review. By July 2028, states must report the percentage of total payments spent on direct-care workers and additional information for certain services. States should evaluate current data collection templates, review rate methodologies, and consider future oversight and audit activities for validating direct-care worker wages.
  • CMS-3442-F Minimum Staffing and Payment Transparency mandated minimum staffing requirements and payment transparency reporting for long-term care facilities. With staffing requirements vacated and pending an interim final rule, states should monitor implications for rate transparency, evaluate current data collection templates, and consider future oversight and audit activities for wage validation in preparation for 2028 reporting requirements.

Key Issue #4: Access to Care and Network Adequacy

Both the Managed Care Access, Finance, and Quality rule and the Ensuring Access to Medicaid Services rule (CMS-2439-F and CMS-2442-F) address impending deadlines and requirements for which states need to prepare. Ensuring timely access to quality care remains one of the most critical—and complex—priorities for state Medicaid programs. As new federal access and payment adequacy rules take effect, states face heightened expectations to demonstrate that networks are sufficient, rates are fair, and providers are supported in delivering essential services.

From network adequacy standards and claims and prior authorization denials (which are concerningly high) to rate analyses and direct-care workforce compensation, these requirements demand both strategic planning and data-driven execution. Strengthening oversight in these areas will be key to maintaining compliance, improving equity, and ensuring beneficiaries receive the care they need when they need it.

Hot Button Issues

  • CMS-2439-F: Access to Care/Network Adequacy. Under this rule, CMS requires states establish and monitor MCOs’ provider network adequacy. States need awareness of several notable provisions related to additional provider directory requirements, inclusion of requirements for evaluating provider network exceptions based on service type, and enhanced assurances of adequate capacity of services including payment and reimbursement analyses requirements and timing of states’ submissions of network adequacy assurances to evaluate contract requirements and increased MCO monitoring. 
  • CMS-2439-F and CMS-2442-F: Secret Shopper and Enrollee Surveys. Both final rules from CMS require shopper surveys and appointment wait time standards as part of monitoring activities, using independent entities, as well as annual enrollee experience surveys and remedy plans to improve access. States should begin developing an approach for fulfilling these requirements for rating periods beginning in 2027 and 2028 as they will require contractual changes, stakeholder engagement and increased resources and budget.  
  • CMS-2439-F: SDPs. This rule mandates transparency of SDP arrangements including establishing evaluation plan metrics and monitoring results which may include goals to improve access to care. States need to ensure the SDP metrics they select in the evaluation plan are specific to the SDP, establish baseline statistics for the metrics and implement processes to gather evaluation results for submission with subsequent preprint requests. States should be on the lookout for additional technical assistance from CMS on the evaluation reporting expectations.

Key Issue #5: PI, Oversight, and Compliance

Safeguarding Medicaid and the Children’s Health Insurance Program (CHIP) is central to sustaining the Medicaid and CHIP missions and maintaining public trust. As trusted partners to state agencies, we understand the growing complexity of oversight in an environment shaped by managed care expansion, complex delegated vendor relationships, and evolving provider models. Ensuring effective FWA prevention; validating encounter data; and strengthening provider oversight are not just compliance requirements—they are strategic levers for improving accountability and operational performance. By taking a proactive, data-driven approach, states can mitigate financial and reputational risk, enhance transparency, and ensure Medicaid and CHIP dollars are directed where they matter most—toward high-quality care for the individuals and families they serve.

Hot Button Issues

  • Managed Care FWA Detection and Prevention. Our ongoing blog series, “The Case for Program Integrity in Medicaid Managed Care,” discusses addressing FWA within managed care, including updating MCO contracts, enhancing oversight, and ensuring data accuracy. States should consider updating MCO contracts to include additional responsibilities, penalties for non-compliance, and enhance oversight of delegated vendors, including PBMs. States should also oversee MCO special investigation units, ensuring proper staffing and coordination, and verify encounter data accuracy through comprehensive validation efforts.
  • Fraud Risk in ABA and PCS. ABA and PCS providers require more oversight due to higher FWA risks such as lack of supporting documentation and billing non-medical services. States should review provider enrollment processes, perform ongoing oversight, require provider training, provide policy resources, develop comprehensive documentation requirements, integrate electronic visit verification with billing, conduct regular audits, monitor complaints, and coordinate with Medicaid fraud control units.

Myers and Stauffer

Established in 1977, Myers and Stauffer is a nationally based consulting and certified public accounting (CPA) firm. For nearly 50 years, we have worked exclusively with local, state, and federal government health and human-services agencies as a trusted partner to help them accomplish their most critical goals for the nation’s most vulnerable people.

We approach our engagements as purpose-driven missions underpinned by integrity, compassion, and vision. We want to give our clients the confidence they need in our work and assure them of the quality they expect in our processes. And we work alongside our clients to arrive at the best solutions.

Our exposure to state Medicaid programs around the nation enables us to draw upon a range of compliance, PI, auditing, and other experiences, as well as best practices, to address the requirements of important initiatives for clients with varying needs. Our experience affords us an uncommon perspective and granular understanding of the challenges related to designing, developing, and implementing the solutions our clients need most for their health and human-service programs.

CBIZ Optumas

CBIZ Optumas, (Myers and Stauffer’s actuarial partner) is a specialized actuarial and consulting firm with national reach and a strong market presence. Founded in 2006, our quest is to reform health care for the right reasons—to address inequities in the health care system and to serve the nation’s most vulnerable populations. Since then, we have focused on improving the way Medicaid programs provide services to their members by designing, developing, and implementing innovative, actuarially sound rate-development methodologies and helping states with their health care policy and strategy.

Our goal since 2006 has been and will always be to ensure all people have equal access to the timely, cost-effective, quality health care they need to be productive members of our society. It’s our guiding principle, our passion, and our defining mission.

Beyond our actuarial expertise, we are a full-service consulting firm that brings together actuarial methodologies with risk-management practices on every project we complete, all with a dedicated focus on government health care programs. We back our actuarial skill with our Medicaid policy and operations knowledge to deliver the custom and comprehensive solutions our clients need for the challenges they face every day. Just as important, because we are independent, we conduct our work in ways that are free of the conflicts of interest often inherent in larger organizations.

Related Insights

Work With a Team of Trusted Experts in Medicaid

Myers and Stauffer, along with their actuarial partner CBIZ Optumas, offer specialized knowledge and expertise to help state Medicaid programs navigate these complex issues and achieve their goals.

Explore Related Services
Get in Touch

Partner With Our Experienced Team

Whether you have questions about our services or are looking for a customized solution, our team is here to help.

Bob Hicks, CPA
Member

Email: bhicks@mslc.com
Phone Number: 816-957-6220

Amy Perry, CPA
Member

Email: aperry@mslc.com
Phone Number: 816-945-5342

Charles T. Smith III, CPA
Member

Email: ctsmith@mslc.com
Phone Number: 804-418-8123

Mike Johnson, CPA, CFE
Member

Email: mjohnson@mslc.com
Phone Number: 404-524-0775

Andy Ranck, CPA
Member

Email: aranck@mslc.com
Phone Number: 410-581-4555