The Trump administration will terminate $9.8 billion in supplemental Medicaid funding to Texas hospitals effective September 1, 2026, resulting in $27 million in daily losses statewide. The funds currently help hospitals cover the gap between Medicaid reimbursement rates and actual service costs. Texas hospitals will face immediate financial pressure as the supplemental payments — which support uncompensated care and low Medicaid reimbursement — are eliminated. This action affects hospital margins, capacity to serve Medicaid beneficiaries, and potentially network adequacy for managed care organizations contracting with affected providers.
Why it mattersThe elimination of nearly $10 billion in supplemental payments will strain Texas hospital finances and could trigger provider network disruptions for Medicaid managed care plans if hospitals reduce Medicaid participation or capacity.
Finance · Managed Care
Texas' Medicaid application backlog grew by more than 209,000 cases between January and August 2026, reaching a total backlog exceeding 210,000, according to state data shared in stakeholder meetings. The SNAP backlog grew by over 146,000 during the same period. State officials and advocates attribute the delays to new SNAP accuracy requirements affecting eligibility processing capacity. The backlog directly delays coverage for eligible individuals and may affect states' federal performance metrics under Medicaid timeliness standards.
Why it mattersProcessing delays of this magnitude risk federal compliance violations under the 45-day application processing standard and leave eligible beneficiaries without coverage, creating potential liability for retroactive claims and network adequacy challenges for MCOs managing enrollment.
Managed Care · Finance
Developmental disability service providers report they are nearing financial insolvency due to payment delays and administrative dysfunction at state Medicaid agencies, following more than two years of erroneous disenrollments during unwinding. Providers cite slow agency responses, unresolved eligibility issues, and accumulating unpaid claims for HCBS and developmental disability services. The timeline spans the entire unwinding period from 2024 through present day. This threatens the stability of the DD service delivery system and access to long-term services and supports for one of Medicaid's most vulnerable populations.
Why it mattersProvider insolvency in the developmental disability sector would force beneficiaries into more costly institutional settings and create network adequacy failures for states and MCOs with LTSS contracts.
LTSS · Managed Care
New Mexico state officials estimate approximately 89,000 Medicaid enrollees — roughly 10% of total program enrollment — could lose coverage when federal work requirements in the "One Big Beautiful Bill Act" take effect. State agency leaders announced the projection during a Monday news conference. The work requirements represent a significant shift in Medicaid eligibility policy that would require certain adult enrollees to meet work or work-related activity thresholds to maintain coverage. The projected coverage losses would directly affect state budget planning, MCO enrollment, provider revenue, and uncompensated care levels.
Why it mattersA 10% enrollment reduction would materially affect MCO capitation revenue, network utilization patterns, and require state agencies to implement new eligibility verification and tracking systems for work requirements.
Managed Care · Finance
An Epic research analysis of over 550 million healthcare encounters found that restricting Medicaid coverage drives low-income patients to pay out-of-pocket for medical care. The study quantifies how Medicaid eligibility changes affect patient payment patterns and access to care. The findings are relevant to state policymakers considering Medicaid coverage restrictions and to providers managing increased bad debt and charity care. The research provides evidence of downstream financial impacts when states tighten Medicaid eligibility or benefits.
Why it mattersEpic's encounter-level data quantifies the direct financial impact of Medicaid coverage restrictions on patient payment patterns and provider uncompensated care, informing state decisions on eligibility policy and provider financial planning.
Finance · Managed Care
Multiple state ballot measures in the upcoming November midterm elections will determine Medicaid program direction, including potential coverage expansions, funding restrictions, or administrative changes. Specific proposals vary by state but could affect eligibility rules, state budget allocations for Medicaid, or program structure. Voters will decide these measures on Election Day, with implementation timelines depending on state law. The outcomes will directly shape Medicaid program scope and financing in affected states.
Why it mattersState ballot outcomes will determine Medicaid eligibility, funding levels, and program design in multiple states, forcing health plans and providers to adapt networks, contracts, and enrollment strategies based on voter decisions.
Finance · Managed Care
A Florida legislative task force met September 1 to review applied behavioral analysis (ABA) services for children with autism and developmental disabilities, examining $2.7 billion in annual Medicaid spending across home, school, office, and community settings. The panel, established by the Legislature in FY 2026-27 budget negotiations, is in information-gathering mode and heard presentations on service delivery patterns, including data showing average ABA service duration of 32.5 months and about 10,000 recipients receiving services for five years or more. The task force is charged with recommending revisions to Florida's ABA delivery model to improve care continuity and program sustainability, with final recommendations due to the Legislature by December 31, 2026.
Why it mattersFlorida's $2.7 billion ABA spending makes it one of the largest state Medicaid behavioral health service categories, and any delivery model changes could significantly affect managed care plan contracts, provider networks, and care coordination requirements for children with autism and developmental disabilities.
Behavioral Health · Managed Care
Arkansas expanded its Maternal Life360 program to Mercy Hospital Northwest Arkansas on August 31, 2026, providing home visits for high-risk Medicaid and expansion enrollees through a child's second birthday. The program, operated through Family Network, offers pregnancy education, postpartum support, and resource navigation in English, Spanish, and Marshallese. Mercy Northwest Arkansas becomes the fourth active site; the state plans further expansion to address Arkansas's high maternal and infant mortality rates.
Why it mattersThe expansion increases access to Medicaid-funded maternal support services for high-risk pregnancies in a state with elevated maternal mortality, affecting care coordination requirements for Arkansas Medicaid MCOs and maternal health outcomes measurement.
Maternal · Managed Care
Kansas pharmacist Will Anderson reports his Lawrence pharmacy is losing revenue following implementation of Senate Bill 20, which took effect in April 2026 after passage in March. The law bans spread pricing by pharmacy benefit managers, sets a floor for pharmacy reimbursement, and requires transparent reimbursement formulas based on actual drug acquisition costs plus dispensing fees. Anderson, who advocated for the law, expects the revenue loss to reverse as the industry adapts and says similar reforms in other states generated significant Medicaid savings — Ohio eliminated spread pricing and saved over $224 million in one year.
Why it mattersStates considering PBM reform can expect disruption to pharmacy reimbursement during implementation, but Ohio's experience suggests substantial Medicaid savings from ending spread pricing once reforms take effect.
Pharmacy · Managed Care · Finance
State records show 21 confirmed cases of sexual, physical, or emotional abuse and 30 deaths occurred in New Hampshire's state-run intellectual and developmental disability care system from January through June 2026. The system, which contracts with private agencies to serve people with disabilities including autism and cerebral palsy, received 280 reports of abuse, neglect, or exploitation during this period; state investigators deemed 75 credible, with 88 investigations still incomplete. The data indicates continued systemic problems nine months after a media investigation documented widespread abuse and neglect in the program, which serves Medicaid-funded LTSS beneficiaries.
Why it mattersStates operate HCBS waiver programs serving people with intellectual and developmental disabilities under enhanced federal oversight following CMS's 2014 settings rule, making this pattern of abuse, neglect, and unexplained deaths a compliance and program integrity risk for New Hampshire's Medicaid agency.
LTSS
Doña Ana County's opioid settlement project manager responded to a New Mexico State Auditor report finding that nearly half of counties and municipalities reported no spending from the state's nearly $1 billion opioid settlement fund through June 2025. The county defended its approach, stating that it prioritized establishing governance structures, stakeholder engagement, and coordinated planning before deploying funds. The manager noted challenges including provider shortages in rural areas and the need to align settlement dollars with other funding sources including Medicaid and New Mexico's Behavioral Health Reform and Investment Act. The county created a joint advisory council with the City of Las Cruces to coordinate behavioral health investments across jurisdictions.
Why it mattersReflects broader implementation challenges states face in deploying opioid settlement funds to expand Medicaid-funded behavioral health services, particularly in rural areas with limited provider capacity.
Behavioral Health
North Carolina received two rounds of federal SAMHSA Project AWARE grants totaling $8.8 million (2018) and additional funding (2021) to embed mental health services in six school districts: Beaufort, Cleveland, Rockingham, Jackson, Nash, and Sampson counties. The program created a licensed clinical mental health counselor job classification for school districts, established training programs, and built infrastructure for mental health service delivery in schools. SAMHSA announced $55.7 million in new funding in July 2026, with North Carolina applying for a third cohort; the state expects to learn whether it received funding by September 1, 2026. The initiative replaced fragmented approaches to student mental health with coordinated school-based services.
Why it mattersNorth Carolina's approach demonstrates how federal grant funding can build Medicaid-eligible behavioral health infrastructure in schools, creating pathways for Medicaid managed care organizations to coordinate with school-based providers and expand access to covered behavioral health services for Medicaid-enrolled students.
Behavioral Health · Managed Care
Hawaii has been awarded $58 million through the federal Rural Health Transformation Program to expand emergency medical services and healthcare workforce capacity. The University of Hawaii John A. Burns School of Medicine will receive $45 million for workforce development programs, while the Hawaii Department of Health will use the remaining $13 million to purchase ambulances and upgrade emergency communications systems. The funding addresses rural healthcare infrastructure gaps and provider shortages affecting access to care statewide.
Why it mattersThis federal investment in Hawaii's rural health infrastructure may expand Medicaid beneficiary access to emergency services and provider availability in underserved areas where Medicaid enrollees are disproportionately concentrated.
Oregon Health Authority removed Oregon State Hospital Superintendent Sean Murphy after a one-month trial period, following the August 1 resignation of OHA Director Sejal Hathi who appointed him in June. Jim Diegel, former interim superintendent and hospital operations strategist, will return to lead the facility while OHA searches for a permanent replacement. The facility faces ongoing compliance issues including a July federal lawsuit over patient care and nearly $5 million in fines for failing to place patients within court-ordered seven-day timelines, though it returned to compliance in June 2026.
Why it mattersOregon State Hospital provides inpatient psychiatric services for Medicaid beneficiaries and individuals in custody, and leadership instability affects continuity of care, federal compliance, and state budget exposure to ongoing penalties.
Behavioral Health
Health insurers on Georgia's ACA marketplace have proposed premium increases ranging from 10% to 29% for 2027 coverage, with open enrollment beginning November 1, 2026. Two insurers—Cigna and UnitedHealthcare—are exiting the market, while Antidote is entering. These increases follow 2026 rate hikes after Congress allowed pandemic-era enhanced ACA subsidies to expire, which led approximately 350,000 Georgians to drop coverage. The proposed rates are not final and remain subject to state review and federal subsidy calculations.
Why it mattersPremium volatility in state-based ACA exchanges directly affects Medicaid policy because coverage gaps created by unaffordable commercial plans drive uncompensated care costs and may increase pressure on states to expand Medicaid eligibility or provide supplemental premium assistance programs.
Kentucky's Cabinet for Health and Family Services has begun implementing SB 151, a 2024 law providing financial support to relatives raising children who would otherwise be in state foster care. The implementation follows a two-year standoff between Governor Beshear and the legislature over funding, resolved when lawmakers allocated $12 million over the 2026-2027 biennium—below the $30 million Beshear requested. The cabinet issued guidance in July establishing procedures for kinship care placements, allowing eligible relative and fictive kin caregivers to receive foster care per diem payments ranging from $27 to $81 depending on the child's age and medical complexity. Advocates express concern about potential barriers in the application process and lack of public input on implementation procedures.
Why it mattersThe policy shift affects Medicaid-eligible children in kinship placements and establishes how Kentucky will draw down federal foster care funding—kinship care advocates and Medicaid MCOs managing foster care populations need clarity on eligibility pathways and federal match optimization.
CHIP · Maternal
A new statewide food landscape assessment in South Dakota found 30% of residents at risk of food insecurity skip meals to stay within budget. The report recommends introducing produce prescription programs — which allow healthcare providers to prescribe fruits and vegetables redeemable at stores or markets — potentially funded through a Medicaid waiver, similar to approaches used in other states. The South Dakota Healthy Nutrition Collaborative plans to discuss the recommendation with state lawmakers during the 2027 legislative session. The assessment was produced by the state Department of Health, Avera Research Institute, University of South Dakota, and the collaborative, which includes state agencies responsible for Medicaid and social services.
Why it mattersSouth Dakota may pursue a Medicaid waiver to fund produce prescriptions, adding a potential new covered benefit and administrative requirements for the state Medicaid agency and participating providers.
Maternal