Summary
Health Policy to Watch. The House returns today and is likely to take up the Senate’s continuing resolution (CR) for fiscal year (FY) 2027 appropriations before recessing next week. The full Congress will then be back in session on September 14.
During this August period, Impact Health Policy Partners is providing a series of brief policy outlooks examining key priority areas likely to shape the health policy landscape this fall. This week, we are examining Medicaid, including notable upcoming H.R. 1 developments, congressional and regulatory program integrity efforts, actionable open comment periods, and litigation. Key dates are flagged throughout.
Medicaid Update & Outlook
One Big Beautiful Bill Act (OBBBA / H.R. 1)
States are preparing for H.R. 1 implementation, including vast changes to Medicaid eligibility, eligibility systems, financing and more. As a reminder, the bill includes the largest cuts in Medicaid’s history: > $900 billion. CBO estimates that 10 million individuals will become uninsured as a result of the law. Key forthcoming dates include the following, plus our H.R. 1 implementation timeline outlines all provisions through 2032:
- 1: H.R. 1 immigration restrictions take effect, rendering lawfully present individuals such as refugees, asylum seekers, individuals with Temporary Protective Status (TPS), and victims of domestic violence or sex trafficking ineligible for full Medicaid coverage. They will remain eligible for more limited emergency Medicaid, and some states such as CA are utilizing state dollars to continue making coverage available
- 1: Federal funding for emergency Medicaid decreases
- 31: Medicaid work requirements take effect
- 31: Medicaid expansion enrollees required to renew coverage every 6 months
- 31: Medicaid retroactive eligibility will be shortened from 3 months to 2 months for traditional Medicaid enrollees and 1 month for Medicaid expansion enrollees.
- 1: State’s section 1115 waivers must meet CMS’ new budget neutrality requirements
- 1: New Medicaid eligibility verification requirements take effect, requiring states to share enrollee SSN with federal database and check multiple databases
Additionally, as state legislatures plan to reconvene following the midterms and early in 2027, they will need to address significant changes to how Medicaid is funded, including H.R. 1’s changes to provider taxes, which the majority of states utilize to fund their programs.
Waste, Fraud, and Abuse
Following the passage of H.R.1, Congress has largely focused its continued discussion of changes to the Medicaid program around making improvements to address waste, fraud, and abuse. The House Energy and Commerce (E&C) Subcommittee on Oversight and Investigations convened a hearing examining state Medicaid program integrity where Republican members emphasized provider-level vulnerabilities and state system weaknesses, including fraud prevention controls and accountability measures. The Senate Budget Committee convened a similar hearing this month, examining spending growth and fraud in the Medicaid program. Republican Senators, including Chair Ron Johnson (R-WI), went so far as to argue that many states are complicit actors in fraudulently increasing federal payments to the Medicaid program, largely due to the increased federal match for the Medicaid expansion population.
Numerous Republican House Members have recently expressed frustration that Congress’ attention to this matter has not yet resulted in new laws tackling fraud, and many will be looking for leadership to make good on their assertions that this topic will be revisited following the midterms, potentially in a fourth reconciliation package. Relatedly, the Washington Post published Vice President JD Vance’s call to Congress to codify the Administration’s anti-fraud efforts by passing legislation to increase penalties for those guilty of committing fraud, increasing funding for staff and technology to assist in fraud detection, and improving data sharing between states and the federal government.
Regulations
Administratively, CMS intends to issue a new proposed rule related to the administration’s efforts to strengthen Medicaid and CHIP program integrity. The rule will revise or rescind certain Biden administration regulations and enhance oversight of provider enrollment. The agency will also continue implementing H.R. 1 and is likely to continue its pattern of using its authority to advance Medicaid policy changes beyond what is explicitly written in the statute, with final rules expected on provider taxes and state directed payments. By early 2027, we also expect to see official guidance on CMS’ implementation of H.R. 1’s budget neutrality requirements. The agency previously indicated in a letter to states that it will require states to comply with these changes beginning January 1, 2027, even if a final rule has not yet been issued. Of note, CMS denied Arkansas’ request to renew the Section 1115 waiver through which the state expanded Medicaid using a hybrid approach.
Open Comment Opportunities
There are currently several open comment opportunities that will impact Medicaid:
- Sept 21: Comments due on H.R. 1 Medicaid provider tax rule (see IHPP summary).
- Sept 25: Comments are due on the Request for Information (RFI) regarding Medicaid technology (see IHPP summary)
Litigation
Medicaid-related litigation remains active in multiple areas, including litigation brought by states and D.C. regarding CMS’ proposed implementation of H.R 1 Medicaid work requirements and medical frailty exemptions. The next notable hearing in that case is Oct. 20 (see IHPP summary). Litigation also continues regarding DHS’ attempt to require states to share Medicaid data with DHS and ICE for immigration-enforcement related efforts. Components of that data sharing have been blocked, but the federal government’s compliance with those legal orders has been called into question. Litigation also continues over allegations of fraud, waste, and abuse in Medicaid in NY, as well as challenges to CMS’ expanded use of funding deferrals and withholding authorities in response to alleged Medicaid program-integrity concerns.