The American Hospital Association submitted comments July 21, 2026, opposing portions of a CMS proposed rule implementing reconciliation-mandated changes to Medicaid state-directed payments. The rule proposes new limits on targeted fee-for-service payments and SDP design that exceed statutory requirements. CMS projects the rule would reduce Medicaid payments by $510.1 billion over 10 years—more than triple the Congressional Budget Office estimate of $149.4 billion. AHA argues the cuts would reduce care access, worsen workforce shortages, and threaten hospital financial viability, urging CMS to rescind provisions beyond what Congress required and mitigate SDP reductions.
Why it mattersManaged care organizations should anticipate significant downward pressure on provider contracting rates and network stability if CMS finalizes SDP limits stricter than Congress intended, potentially forcing MCOs to renegotiate capitation rates or increase direct provider payments to maintain network adequacy.
Managed Care · Finance
CMS released a proposed rule updating Medicaid provider tax policies following the July 2025 reconciliation law. The rule replaces the current 6% indirect hold harmless threshold with state- and provider class-specific thresholds based on taxes enacted as of July 4, 2025, and implements phased reductions for Medicaid expansion states starting in fiscal year 2028. CMS proposes to sunset the current 75/75 compliance test and establishes a new "Services of Health Insurers" provider tax class, bringing existing state taxes on health insurers under federal oversight. Comments are due 60 days after Federal Register publication.
Why it mattersThe new health insurer tax class and state-specific thresholds will directly affect MCO premium tax obligations and could alter state financing arrangements that underpin capitation rates and payment adequacy.
Managed Care · Finance
President Trump announced Tuesday via social media that imported generic drugs will face a 100 percent tariff beginning in August 2028 unless manufacturers relocate production to the United States. The tariff is described as a penalty designed to reshore generic pharmaceutical manufacturing. Generic drugs constitute the majority of Medicaid pharmacy spending, and most generics dispensed in the U.S. are manufactured overseas or contain active pharmaceutical ingredients from foreign suppliers. The two-year implementation timeline provides MCOs and state programs time to assess potential pharmacy cost impacts and supply chain disruptions.
Why it mattersMedicaid managed care organizations face potential pharmacy cost increases and drug supply disruptions if generic manufacturers do not reshore production or pass tariff costs through rebates and pricing, requiring pharmacy benefit strategy adjustments and state contract renegotiations.
Pharmacy · Managed Care · Finance
A webinar titled 'Medicaid Connections: Maternal and Infant Health and Justice' addresses how H.R.1 legislation affects Medicaid-funded maternity care. The session focuses on reproductive justice and optimizing Medicaid to fund holistic, culturally centered care including midwifery and doula services. As the nation's largest payer for maternity care, Medicaid plays a central role in addressing systemic health inequities for maternal and infant populations. The webinar provides guidance for policymakers on funding structures that support comprehensive perinatal services.
Why it mattersMCOs with maternal health contracts must understand how H.R.1 provisions may reshape benefit design, provider network requirements, and reimbursement for non-traditional perinatal services like doula care.
Maternal · Managed Care
CMS has issued a proposed rule that would prohibit Medicare payment for remote patient monitoring services delivered by third-party vendors. Health systems, physician groups, and telehealth trade associations are opposing the proposal, citing concerns about disrupted RPM programs and unclear reimbursement alternatives. The proposal has prompted some organizations to pause RPM expansion plans and appears to conflict with congressional support for broader telehealth access. If finalized, the policy would require Medicare providers to deliver RPM services directly rather than through vendor arrangements.
Why it mattersMedicaid MCOs that have adopted Medicare-aligned remote patient monitoring programs or vendor partnerships may face operational changes if states follow CMS policy direction, particularly for dual-eligible and managed LTSS populations relying on RPM for chronic disease management.
LTSS · Managed Care
A rural hospital CEO has publicly criticized the $50 billion Rural Health Transformation Program, which launched last year following Medicaid cuts under HR-1. Rural health executives are questioning the program's design, citing concerns that states control funding distribution, eligible uses are narrowly defined, and the structure may not adequately address care access challenges in communities affected by Medicaid reductions. The criticism reflects broader implementation concerns among rural providers about whether federal support will effectively reach facilities serving Medicaid populations.
Why it mattersMedicaid MCOs with rural networks need to monitor whether participating hospitals can sustain operations under current program constraints, as closures would trigger network adequacy and access issues.
Managed Care · Finance
CMS published a proposed rule on July 16, 2026, that would tighten requirements for remote patient monitoring (RPM) services in the Calendar Year 2027 Medicare Physician Fee Schedule. The changes respond to Office of Inspector General reports flagging program integrity concerns about RPM billing. The proposed rule affects how providers document and bill for remote monitoring services under Medicare. Comments on the proposed rule are typically due 60 days after publication in the Federal Register.
Why it mattersMedicaid managed care organizations that offer RPM or telehealth benefits should monitor this rule, as state Medicaid programs often adopt Medicare billing standards and program integrity measures for remote monitoring services.
Managed Care