CMS released detailed guidance outlining over 20 strategies for state Medicaid and CHIP agencies to strengthen child and youth behavioral health systems under EPSDT requirements, which mandate all medically necessary services for children under 21. The toolkit covers delivery system development, provider network adequacy, care coordination, and equity improvements, with concrete state examples of implementing services like coordinated specialty care and wraparound programs. For MCOs, this signals heightened federal expectations around pediatric behavioral health coverage, network capacity, and utilization management practices that comply with EPSDT's broad entitlement standards.

CMS's 10-year ACO LEAD demonstration will test Medicare-Medicaid integration in two states—one using managed care, one fee-for-service—with enhanced payment models designed to support complex, high-need dual-eligible populations. Milliman's analysis outlines participation scenarios and strategic considerations for state Medicaid agencies, managed care plans, ACOs, and providers as they evaluate partnership opportunities under the new model. The piece examines how different stakeholder approaches could shape member outcomes, financial performance, and care coordination for dually eligible beneficiaries.

Federal oversight of state Medicaid program integrity is intensifying, with CMS now investigating New York's claiming patterns and spending levels following similar inquiries in Minnesota, California, and Maine. Minnesota has filed suit challenging CMS's decision to defer $260 million in federal payments for already-reimbursed services, marking the first legal challenge to the agency's expanded enforcement efforts. The piece outlines CMS's two enforcement mechanisms—payment deferrals without prior hearings and prospective withholding requiring hearings—giving MCOs and state officials insight into how federal program integrity actions may affect cash flow and compliance expectations.

Medicaid programs are increasingly moving away from bundled payment methodologies for cell and gene therapies in order to separately identify these drugs and collect manufacturer rebates under the Medicaid Drug Rebate Program. This shift provides more predictable reimbursement for providers but increases rebate exposure for manufacturers. The piece also explores the expansion of CAR-T administration into community outpatient settings and implications for access and reimbursement across payer types.

This white paper examines how state Medicaid agencies can strengthen their oversight of MCOs through improved performance management systems, particularly in light of the 2024 CMS final rule requiring quality rating systems by 2028. The analysis outlines common challenges states face in monitoring managed care programs and proposes strategies for using data and performance measures more effectively to drive improvements in access, quality, and equity. The piece is directly aimed at helping state Medicaid directors and MCO oversight teams adapt to heightened federal accountability requirements while building stronger partnerships with health plans.

Since 2014 regulatory changes removed IEP/IFSP documentation requirements, 25 states now allow Medicaid reimbursement for school-based mental health services provided to any enrolled student with medical necessity. With nearly 20% of students using school-based mental health services and youth suicide rates climbing, this represents a significant care delivery and financing opportunity for Medicaid managed care plans to improve behavioral health access while helping schools leverage federal matching funds. The piece frames school settings as prevention-focused venues that reduce access barriers for families and address rising adolescent mental health needs.

Avalere examines how state Medicaid programs are responding to budget pressure from the One Big Beautiful Bill Act, new provider tax restrictions, and rising utilization. States are adjusting managed care rates, benefits packages, and procurement timelines to navigate tighter fiscal conditions while managing administrative constraints. The analysis outlines decision-making factors that will shape state actions affecting MCO contracts and payment structures in the current budget cycle.

The new Rural Health Transformation Program is distributing $50 billion to states over five years to strengthen rural healthcare through cooperative agreements. States are now transitioning from planning to implementation, with CMS finalizing agreements and establishing spending timelines that require budget period funds to be used within roughly 18 months. While the program addresses broad rural health priorities including technology, behavioral health, and value-based care, its structure and state-level implementation may intersect with Medicaid managed care operations in rural markets.

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.

The federal Rural Health Transformation Program allocates $50 billion over five years through state cooperative agreements to strengthen rural healthcare delivery, with significant implications for how FQHCs serve Medicaid beneficiaries in underserved areas. While funding flows through states rather than directly to providers, the program's focus on access expansion, workforce retention, and care model innovation could reshape FQHC participation in Medicaid managed care networks and delivery system reform. States are designing tailored rural health transformation plans that will determine how safety-net providers integrate behavioral health, dental, and other services for Medicaid populations.

Gene therapies for rare diseases create structural tension between one-time treatments with multi-decade outcomes and payer systems built on annual budgets and short-term evidence cycles. With 26 FDA-approved gene therapies now in use and more coming, the piece argues healthcare delivery infrastructure and financing models—not just clinical science—will determine patient access and long-term sustainability. For Medicaid MCOs, this raises questions about payment structures, coverage decisions, and evidence generation obligations for high-cost, one-time interventions.

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.

Life sciences companies seeking to understand Medicaid managed care purchasing behavior need to grasp how risk adjustment models translate member acuity into plan payments and profitability. The piece explains that Medicaid capitation rates are risk-adjusted based on enrollee health conditions and demographics, directly affecting plan revenue and financial performance. Because risk scores influence plan margins, they also shape formulary design and coverage decisions—meaning pharmaceutical manufacturers must account for how their products affect plan risk profiles and reimbursement.

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.

The U.S. Pharmacopeia's 2026 Drug Classification update revises how drugs are grouped for non-Part D health plan formularies, including Medicaid managed care plans. While primarily focused on Medicare Part D guidance, these classifications influence how all health plans structure formularies and could affect drug eligibility for upcoming Medicare international reference pricing demonstrations. The annual update cycle for non-Part D classifications offers Medicaid plans more frequent opportunities to engage on drug categorization than the three-year Medicare cycle.

CMS's extension of the Acute Hospital Care at Home waiver through 2030 expands opportunities for provider-based acute care delivery in home settings, with potential implications for Medicaid managed care organizations seeking to reduce inpatient costs and improve member experience. While the piece focuses primarily on Medicare fee-for-service hospital waivers, the care model's demonstrated 30% cost reduction and improved outcomes could inform Medicaid MCO network strategies and value-based arrangements with hospital partners. The analysis is hospital-centric but touches on delivery system innovations relevant to managed care populations broadly.

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.

CMS has updated its guidance on State Directed Payments in Medicaid managed care, revising how states can grandfather existing arrangements under new statutory payment caps enacted by Congress. The February 2026 guidance modifies CMS's interpretation of the grandfathering window and affects SDPs for hospital, nursing facility, and academic medical center practitioner services—critical payment mechanisms MCOs use to distribute supplemental payments to providers. This represents a significant shift in federal oversight that will require MCOs and state Medicaid agencies to reassess their SDP arrangements and compliance strategies.

A new CMS final rule restricts how states can structure healthcare-related taxes—especially those targeting managed care organizations—by closing a loophole that allowed higher tax rates on Medicaid-heavy providers. The regulation prohibits states from using utilization tiers or proxy classifications that effectively isolate high-Medicaid-volume entities, affecting nine tax waivers across seven states. For MCO executives and state Medicaid directors, this changes the financing landscape by limiting a common strategy for generating state match dollars tied to managed care arrangements.

California's 58 counties serve as critical administrators and providers within the state's Medi-Cal managed care system, which now covers approximately 15 million members with 95% enrolled in managed care plans. Recent state reforms including CalAIM and BH-CONNECT have significantly expanded county obligations around Enhanced Care Management, Community Supports, behavioral health coordination, and cross-system data reporting. These evolving responsibilities require counties to balance state mandates with local delivery needs while managing both Medi-Cal specialty behavioral health services and safety net programs for vulnerable populations.