States implementing new Medicaid work requirements must identify medically frail enrollees exempt from these rules, but traditional claims data in MMIS systems lag behind real-time clinical information—creating coverage continuity risks. This analysis explores how health information exchanges can supplement state data systems with more current diagnostic and utilization information to support timely ex parte exemption determinations. The approach is particularly critical for managed care plans where encounter data reporting delays compound identification challenges.

A federal court approved a class action settlement requiring New York to overhaul how it delivers intensive home- and community-based mental health services to Medicaid-enrolled children and youth, joining at least ten other states subject to similar consent decrees since the 2006 Rosie D. case. The settlement stems from allegations that New York failed to meet its EPSDT obligations, ADA requirements, and Section 504 compliance, resulting in unnecessary institutionalization of youth with behavioral health needs. For Medicaid managed care plans, this settlement will likely require significant operational changes to expand intensive home- and community-based service capacity, strengthen care coordination for high-need youth, and ensure compliance with EPSDT's broader amelioration standard compared to commercial coverage.

All 50 states received federal awards under the new Rural Health Transformation Program, with first-year allocations ranging from $147 million to $281 million to strengthen rural health systems through workforce expansion, health IT modernization, and new delivery models. States now face implementation challenges including reconciling budgets with CMS, building governance structures, finalizing procurement approaches, and balancing rapid spending timelines against thoughtful program design. While the program isn't Medicaid-specific, many states will likely leverage Medicaid managed care delivery systems and payment structures to execute rural health initiatives, creating indirect implications for MCO operations in rural markets.

Health plans receiving substance use disorder (SUD) patient data from specialized treatment programs must comply with updated 42 CFR Part 2 regulations by February 16, 2026, including revisions to privacy notices and operational procedures. The regulations now carry HIPAA-level enforcement penalties after being largely unenforced historically, creating new compliance risk for Medicaid managed care organizations that handle SUD data. Plans must update both Part 2 and HIPAA notices of privacy practices to reflect stricter protections for SUD information compared to other health data.

SAMHSA's designation of January as National SUD Treatment Month underscores ongoing challenges in substance use disorder treatment access and quality that directly affect Medicaid managed care plans. Despite evidence-based treatment guidelines and locator tools, significant treatment gaps persist, particularly for medication-assisted treatment for opioid and alcohol use disorders—conditions disproportionately affecting Medicaid populations. The commentary frames systemic barriers including inadequate provider networks and treatment system features that MCO compliance teams and behavioral health directors must address to improve recovery outcomes.

CMS Innovation Center has launched seven new alternative payment models focused primarily on Medicare beneficiaries, with three chronic care management models (ACCESS, MAHA-ELEVATE, and LEAD) explicitly offering opportunities for multi-payer integration including Medicaid. Four additional models target drug pricing with one (GENEROUS) specifically aimed at Medicaid, while the existing Integrated Behavioral Health model may expand to additional states. The models align with the administration's prevention-focused MAHA agenda but lack critical implementation details including payment structures.

Ten states have implemented and sixteen are considering the Family CNA model, which trains and reimburses family members to provide home care for medically complex children that would otherwise require RN, LPN, or non-family CNA services. Most states implement through mandatory home health or optional private duty nursing state plan benefits, though some use 1915(c) waivers or could use 1115 demonstrations. Oklahoma estimates the model could generate significant annual cost savings while expanding access to care for children with medical complexity.

Manatt Health analyzes the new GENEROUS Model announced by CMS, comparing its pricing metrics to previously used most-favored-nation (MFN) approaches and outlining key design elements and timeline. The piece examines participation opportunities and risks for both pharmaceutical manufacturers and state Medicaid programs, addressing outstanding design questions that affect drug pricing and reimbursement in Medicaid managed care.

CMS achieved an average 62% discount off list prices for 15 drugs in the second cohort of Medicare drug price negotiations, representing a 28% reduction below statutory ceiling prices—nearly double the discount margin achieved in year one. While the negotiation program is Medicare-focused, the outcomes have implications for Medicaid managed care organizations through potential manufacturer price adjustments, best price calculations, and rebate dynamics that could affect MCO pharmacy budgets and formulary strategies. The deeper discounts may also influence cross-program pricing pressure and state supplemental rebate negotiations.

Nineteen states have received federal approval to implement Medicaid reentry demonstrations that provide pre-release services and care coordination for incarcerated individuals transitioning back to communities. States are building new eligibility workflows, clinical service delivery systems, and data-sharing protocols across diverse correctional facilities, with early implementers like California, Montana, and Washington already serving populations. Despite fiscal pressures and new federal requirements under H.R. 1, states continue prioritizing these initiatives as critical to health outcomes for justice-involved populations.

CMS has introduced the ACCESS Model, a voluntary ten-year demonstration for Medicare Part B providers to receive outcome-based payments for technology-supported chronic condition management starting July 2026. While the model is Medicare-focused, it establishes payment and care delivery precedents that could influence how Medicaid managed care organizations approach chronic care management, value-based arrangements, and technology integration. Health tech companies will need to partner with enrolled Medicare providers or enroll directly to participate in the payment model.

Manatt Health uses National Recovery Month as a framework to outline evidence-based recovery principles that should guide Medicaid policies addressing substance use disorders and mental illness. The piece emphasizes SAMHSA's four recovery dimensions—health, home, purpose, and community—and presents recovery data showing that over 74% of adults who perceived alcohol or drug problems consider themselves in recovery or recovered. The analysis offers a public health roadmap relevant to Medicaid MCOs designing behavioral health benefits and state agencies setting policy standards for recovery-oriented care.

The One Big Beautiful Bill Act signed in July 2025 makes substantial changes to Medicaid and ACA Marketplace programs, with CBO projecting over $1 trillion in federal Medicaid spending reductions by 2034 and 15 million people losing coverage when combined with expiring ACA subsidies. The legislation also expands orphan drug exemptions from Medicare drug price negotiation and affects 340B covered entity status, creating implications for how life sciences companies engage with state Medicaid programs. Manatt's analysis emphasizes that impacts will vary significantly by state based on their individual Medicaid policies and current coverage distribution.

Seventeen states enacted 27 laws in 2025 regulating artificial intelligence use in healthcare, with multiple states prohibiting health plans from relying solely on AI for prior authorization and coverage denials without physician review. The legislation directly affects how Medicaid managed care organizations can deploy AI tools for utilization management, requiring human clinician oversight of AI-generated decisions. While the tracker covers broader healthcare AI policy, the payor-focused provisions have immediate compliance implications for MCO operations.

A new executive order directs federal agencies to defund states and jurisdictions that support harm reduction programs and housing-first policies, while incentivizing involuntary institutionalization of homeless individuals with mental illness or substance use disorders. The policy shift has direct implications for Medicaid managed care organizations that serve behavioral health populations, particularly regarding coverage for institutional versus community-based services and compliance with evolving federal funding priorities. MCOs may face pressure to realign programs away from harm reduction and housing-first models that have been Medicaid reimbursable approaches to addressing homelessness and behavioral health comorbidities.

Manatt identifies best practices from high-performing states on increasing competitive integrated employment access for individuals with intellectual and developmental disabilities served through Medicaid HCBS programs. The brief covers strategies including early career planning, robust employment support services, cross-agency coordination, and rate structures that incentivize employment outcomes—all areas where Medicaid MCOs and state agencies play direct operational and policy roles. With fewer than 25% of people with I/DD currently in competitive integrated employment despite HCBS settings rule requirements, the strategies offer actionable guidance for state Medicaid programs and their managed LTSS contractors.

Manatt analyzes how the One Big Beautiful Bill's Marketplace changes and the lapse of enhanced ACA subsidies will disproportionately harm the ten states that haven't expanded Medicaid, where over half of Marketplace enrollees earn under 138% FPL compared to just 9% in expansion states. The piece argues these states face dual exposure: while somewhat insulated from Medicaid work requirement losses, they depend heavily on subsidized Marketplace coverage for low-income populations excluded from their narrower Medicaid programs, meaning January 2026 implementation will drive major uncompensated care increases and provider financial strain. This matters for Medicaid MCO professionals because coverage dynamics in non-expansion states directly affect the populations at the Medicaid-Marketplace boundary and the safety net infrastructure that serves dual-eligible and Medicaid populations.

The Senate Finance Committee's reconciliation draft mirrors core House provisions but introduces significantly deeper Medicaid funding cuts, particularly affecting expansion states. Key changes include reducing the provider tax cap from 6% to 3.5% for expansion states over time and requiring expansion states to phase down state-directed payments by ten percentage points annually until they reach 100% of Medicare rates. These provisions would fundamentally reshape Medicaid financing mechanisms that MCOs and states currently rely on, with major implications for rate adequacy and plan sustainability.

A new Manatt Health analysis examines state Medicaid programs that are training and reimbursing family members to provide in-home nursing care for medically complex children, addressing workforce shortages while keeping children out of institutional settings. The Family CNA model allows parents and relatives to become certified to perform tasks like medication administration and G-tube care that would otherwise require licensed nurses. The approach targets a small patient population that accounts for one-third of pediatric costs and aims to prevent costly ER visits and hospitalizations while supporting family financial security.

The FDA has announced a new approval framework restricting routine COVID-19 booster recommendations to adults over 65 and individuals with risk factors, while requiring large clinical trials for approval in healthy populations. HHS Secretary Kennedy subsequently announced CDC will no longer recommend COVID vaccines for healthy children and pregnant women, though CDC's formal guidance allows vaccines for healthy children through shared decision-making and does not explicitly exclude pregnant women. These policy shifts create uncertainty for Medicaid managed care organizations around coverage obligations, particularly for CHIP enrollees and pregnant beneficiaries who represent mandatory coverage populations under federal Medicaid law.