Summary
Congress is in recess until after Labor Day and will resume on September 2. During this period, Impact Health Policy Partners will provide 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 and the Trump Administration’s Make American Health Again (MAHA) efforts.
Medicaid
The recent budget reconciliation package is arguably one of the most influential pieces of legislation to impact the Medicaid program. The One Big Beautiful Bill (H.R. 1) includes significant changes to Medicaid heavily impacting both state financing, through limitations to provider taxes and state directed payments, as well as eligibility and enrollment through the establishment of new Medicaid work requirements and a doubling of the frequency of Medicaid redeterminations for the Medicaid expansion population. The more than $900 billion in Medicaid cuts are the largest cuts experienced by the program since it was created almost 60 years ago. Implementation of this legislation will touch many policy areas including state legislation and special sessions, state and federal regulatory policy, and likely several pieces of guidance and state Medicaid official letters issued by CMS. Impact Health will be closely tracking all developments related to the implementation of this legislation. Please do not hesitate to contact a member of our team to discuss how we can support you in achieving your organization’s goals related to the implementation of H.R. 1.
In addition to H.R. 1, there are a range of other areas that are expected to shape Medicaid during the remainder of the year. We outline a number of them below including a potential second budget reconciliation package, forthcoming regulations, recent state plan amendment approvals, implementation of CMS’ altered guidance on continuous coverage, and litigation.
Reconciliation Part Two
There are currently rumblings of a potential second budget reconciliation bill this fall. For procedural reasons, Congress cannot pursue a package before October 1. Speaker Johnson is reported to be considering a one largely focused on tax provisions but he may not have the political buy-in necessary to pass another package. The Republican Study Committee is holding a Reconciliation 2.0 workgroup and is also hosting staff briefings throughout the August recess to solicit recommendations for proposals to include in the package. Last week, Paragon Health Institute President Brian Blase was invited to speak to the Republican Study Committee about additional cuts to the Medicaid program. According to reports from Politico, the briefing covered a range of topics including the percentage of Medicaid costs covered by the federal government (i.e. the FMAP).
Specific Medicaid cuts that might re-emerge from the first reconciliation discussion could include a second attempt to penalize states for covering immigrant groups by reducing their FMAP or other federal funding. The House version of H.R. 1 included a penalty that would have reduced the 90% enhanced FMAP rate that states receive to cover the cost of Medicaid expansion to 80% if they provided health coverage to or helped immigrants afford health coverage plans utilizing state-only dollars. That provision was ultimately removed in the Senate and not included in the final bill. Similarly, the House version of H.R. 1 would have prohibited Medicaid dollars from covering gender affirming care for Medicaid enrollees including both adults and minors. That too was removed in the Senate but the Administration continues to be interested in it and we could see it re-arise in a new way if there is a second budget reconciliation bill. A third potential Medicaid provision could be a longer ban on Medicaid funding flowing to entities such as Planned Parenthood that provide abortions with non-governmental funds. House Budget Chair Jodey Arrington (R-TX) has urged lawmakers to revise policies that were removed from H.R. 1 due to the Byrd Rule so that they comply with the Senate rules.
In addition to considering a second Budget Reconciliation package, members of Congress have also proposed legislation that would alter Medicaid policy including in the first budget reconciliation bill. Senator Hawley (R-MO) introduced the Protect Medicaid and Rural Hospitals Act (S. 2279) to repeal H.R. 1’s caps on Medicaid state provider taxes and to increase funding for the Rural Health Transformation Program. Rep Steube (R-FL) and Senator Paul (R-KY) introduced the Excluding Illegal Aliens from Medicaid Act (H.R. 4384; S. 2244) to accelerate the timeline for implementing H.R. 1’s provision that renders certain legal immigrant ineligible for Medicaid effective immediately. This includes refugees, asylees, victims of domestic violence, and survivors of sex trafficking, all who are in the country legally and currently eligible for full Medicaid. The provision is otherwise scheduled to take effect October 1, 2026. Neither of these bills have seen additional action.
Regulatory Actions – Forthcoming Regulations
There are currently three Medicaid-related rules are under review at the Office of Management and Budget (OMB): a final rule in support of the Trump administration’s efforts to increase federal oversight on states using Federal Medicaid funding for the health care of undocumented immigrants; a proposed rule likely related to the presidential memorandum released on June 6 and H.R. 1’s provision to tie state directed payments to Medicare rates; and a proposed rule to prohibit the use of Medicaid funding for gender affirming care for minors, something the administration tried to do through budget reconciliation but did not ultimately include in H.R. 1. As OMB reviews each of these regulations in the coming weeks or months, we will see them finalized and/or published for public comment.
Trends in SPA Approvals
CMS has approved 327 State Plan Amendments (SPAs) since the second Trump Administration began. These range from establishing coverage for Certified Community Behavioral Health Clinics in Georgia to new home and community based services (HCBS) in Kentucky. In particular, an array of maternal and child health related SPAs have been approved, including a recent expansion of nurse home visiting Targeted Case Management in Oregon, presumptive eligibility for pregnant women in Mississippi, payment changes in Arkansas including unbundling and increasing rates for prenatal, delivery and postpartum professional services by 70%, expanding the categories of providers who can offer prenatal and postnatal psychosocial counseling services in Utah, and updated payment methodology for long-acting reversible contraception provided immediately postpartum at acute care hospitals in Washington.
Implementation of CMS Guidance Altering Continuous Eligibility
A notable change in Medicaid waiver policy occurred when CMS announced that the agency does not plan to approve any new state waivers or extend existing state waivers that that provide continuous eligibility for periods or populations beyond what is required under Medicaid or CHIP statute. CMS explained at the time that it believes that providing continuous eligibility could potentially impact fiscal and program integrity, and as a result the agency will work with states that have existing approved waivers for continuous eligibility and provide technical assistance to help states unwind their continuous eligibility plans. According to data from Kaiser Family Foundation, 12 states have received waiver approval to implement different continuous eligibility policies. How CMS supports states to minimize Medicaid disenrollment and churn as they unwind continuous eligibility waiver programs will provide valuable insights into the numerous provisions of H.R. 1 that will pose similar challenges to eligibility and enrollment of qualified Medicaid beneficiaries.
Litigation
Litigation filed by the Planned Parenthood Federation of America is pending against the provision of H.R. 1 that prohibits federal Medicaid funding from flowing to organizations that provide abortions. Medicaid funding has long been banned from being used for abortions. This provision takes restrictions to a new level by banning Medicaid funding from organizations such as Planned Parenthood members that provide abortions with non-federal funds. As of August 18th, a preliminary injunction issued in late July remains in place and is currently blocking the Trump Administration from implementing the provision against Planned Parenthood Federation of America members nationwide. As this case continues in the courts, time will show whether the provision can stand and set a new precedent, or if the courts rule it unlawful. A coalition of 22 state Attorney Generals and D.C. also filed suit against the Defund Provision alleging that the provision forces them to either defund critical health care centers or cover the costs themselves, thus undermining Medicaid’s federal-state financing framework. A third case arguing that the provision violates the Equal Protection Clause was also filed in Maine. The outcome of these cases – and whether the preliminary injunction remains in effect – will shape Medicaid enrollee’s access to the broad range of health services provided by Planned Parenthood ranging from contraception to cancer screenings.
Of note, these legal challenges come following the Supreme Court ruling in June in Medina v Planned Parenthood that states are allowed to exclude certain providers – including Planned Parenthood clinics – from their Medicaid programs. As the year proceeds, we could see additional states alter their Medicaid provider lists and remove Planned Parenthood or other providers whose broadscale services they disagree with.
CMS Publishes Guidance for Medicaid Managed Care Rate Development
The Centers for Medicare & Medicaid Services (CMS) has released the 2025–2026 Medicaid Managed Care Rate Development Guide, a resource for states to use when setting capitation rates with managed care plans for Medicaid beneficiaries. The guide specifies the information that must be included in states’ actuarial rate certifications for CMS review and approval for rating periods between July 1, 2025, and June 30, 2026.
The guide is organized into three main sections:
- Section I covers requirements that apply to all Medicaid managed care capitation rates.
- Section II addresses considerations for developing rates that include long-term services and supports (LTSS).
- Section III focuses on issues specific to capitation rates for the new adult group.
Two appendices provide additional details: Appendix A outlines procedures for the accelerated rate review process, and Appendix B describes the documentation required when states use in-lieu-of services and settings.
Make America Healthy Again
Secretary of the Department of Health and Human Services (HHS) Robert F. Kennedy Jr. is spearheading the Administration’s actions related to the Make America Healthy Again (MAHA) movement, a broad initiative focused on chronic disease prevention and rooted in skepticism about the U.S. government and food and pharmaceutical industries. Included here is a high-level summary of recent MAHA-related actions on nutrition, vaccines, and chronic disease. Below, we provide an update on the work of the MAHA Commission.
MAHA Report
While Secretary Kennedy is leading the MAHA movement, President Trump established the MAHA Commission through Executive Order 14212 to include a variety of cabinet members from relevant federal agencies such as the Department of Agriculture (USDA), Centers for Disease Control and Prevention (CDC), Food and Drug Administration (FDA), National Institutes of Health (NIH), Department of Education, and Environmental Protection Agency (EPA). The Commission’s first charge is to issue an assessment on drivers of childhood chronic disease by May 22nd and an action plan based on the assessment by August 12th.
The first report identified poor diet, aggregation of environmental chemicals, lack of physical activity and chronic stress, and overmedicalization as the root of chronic disease (Impact summary). HHS and USDA received significant pushback from various industry groups implicated in the report, especially the historically conservative agriculture industry. Stakeholders and congressional Democrats also questioned the Secretary about inaccuracies, unsubstantiated claims, and false citations in the first MAHA report. In a hearing, Secretary Kennedy said he did not personally review citations, but claimed that the errors were corrected and the conclusions are unchanged. Democrats countered that changing the sources without modifying the conclusions in the report indicates that the Administration cherry-picked evidence to support existing beliefs in the MAHA movement.
The controversy surrounding the first report is expected to influence the subsequent action plan. Farm groups reportedly received promises that USDA will not ban widely used pesticides mentioned in the first report. There is also pressure on the Administration to ensure that the citation issues in the first report are not repeated. HHS stated that the strategy report was delivered to the President on August 12th, but is not yet public as the Administration coordinates relevant officials. Draft materials leaked by Politico list plans to address the issues identified in the first report, including enhanced research, food and drug marketing and review reforms, deregulation, agency restructuring, public education, and private sector collaboration.