The lead story of 2025 is the enactment of H.R. 1, which will dramatically alter the Medicaid coverage and financing landscape over at least the next three years. The primary target of the law’s Medicaid cuts were the 41 states (including DC) that have elected to cover the expansion adults; of these, 34 contract with MCOs to provide services to Medicaid enrollees. Six months into implementation, that story is only now starting to be written. There are, however, guidance documents, analyses, investigative reports, and research published in 2025 that are not related to H.R. 1 or its implementation but do relate to Medicaid managed care. Here are notable ones that have come to our attention. Undoubtedly, there are others that we have not found.
Congress and its Agencies
In July, Congress enacted H.R. 1, which by CBO estimates will cut federal Medicaid spending by $915 billion over the next 10 years and increase the number of uninsured by 7.5 million in 2034. There is only one provision in H.R. 1 that amends the current Medicaid statutory framework for managed care: section 71103, which requires that, as of January 1, 2027, MCOs promptly transmit to the state Medicaid agency address information that it has received from each enrollee. As explained by Edwin Park and Sabrina Corlette, however, H.R.1’s provisions relating to work reporting requirements, 6-month redeterminations, provider taxes, and state directed payments will significantly change the operating environment for MCOs in many states starting in 2027, if not before. The losses of coverage and the reductions in federal Medicaid funds they produce will vary from state to state, but in all states the effect will be to shift costs to states, placing greater demands on state budgets.
Congressional committees held no oversight hearings or announced any investigations into Medicaid managed care. Congress’s Government Accountability Office (GAO) did, however, issue two relevant reports. GAO reported on actions taken by four states—North Carolina, Ohio, Rhode Island, and Washington—and by MCOs in those states to improve the provision of EPSDT well-child screenings and treatment. GAO also issued a report on the methodology CMS uses to estimate improper payments in Medicaid managed care, finding that it does not account for all program integrity risks.
In its March 2025 Report to Congress on Medicaid and CHIP, MACPAC includes a detailed examination of the role of annual external quality review (EQR) in ensuring accountability of MCOs for enrollee access to needed services. MACPAC identified a number of areas for improvement, noting that the annual technical reports that EQR Organizations prepare for state Medicaid agencies are “often hard for most audiences to comprehend” and “can be hard to find on individual state websites.”
CMS and OIG
CMS did not propose to modify or withdraw the 2024 Managed Care Rule, although it has indicated that, at least with respect to requirements for state directed payments (SDPs) it is reviewing the rule for “potential revisions.” CMS did, however, issue three guidances relevant to MCOs.
In March, CMS rescinded two Informational Bulletins it had issued, one in November 2023 accompanied by an HRSN Framework and one December 2024 laying out options for state Medicaid programs to cover services and supports that address health-related social needs (HRSN). These options including the use of in lieu of services and settings (ILOS) to cover these services through MCOs. Instead of using the HRSN Framework to assess state requests to cover HRSN services CMS will review them “on a case-by-case basis.”
In September, CMS issued an Informational Bulletin setting forth new requirements relating to state directed payments (SDPs) made by MCOs to network providers. Under this guidance, CMS will not review an SDP preprint submitted by a state for approval unless the preprint has three specific elements, including a description of the quality goal or objective to which the SDP is linked and a plan for evaluating the SDP with specific measures and a performance target.
Also that month CMS issued a State Medicaid Director letter reinterpreting the emergency Medicaid provision in current law, which requires states to pay hospitals and other providers for the services necessary to treat emergency medical conditions furnished to undocumented immigrants. Under the new interpretation, capitation payments that state Medicaid agencies make to MCOs on behalf of undocumented immigrants eligible only for emergency services will no longer qualify for federal matching payments.
OIG issued a Data Brief examining the adequacy of behavioral health provider networks in Medicaid managed care (as well as Medicare Advantage). OIG found the networks to be limited: among 20 Medicaid MCOs operating in 10 counties, on average less than a third of the behavioral health workforce was included in the MCO provider networks, and in seven MCOs at least one third of listed providers were inactive (i.e. did not provide a single service to the MCO’s enrollees). On the financial front, OIG found that CMS does not systematically track whether states collect the remittances they are owed by MCOs that do not meet the state’s minimum medical loss ratio (MLR) requirement. Finally, OIG also reviewed referrals by MCOs of potentially fraudulent providers to state Medicaid agencies or Medicaid Fraud Control Units and found that about ten percent of MCOs made no referrals at all in 2022 and another 8 percent were unable to report the number of referrals they made.
States
The California Health Care Foundation posted a report by researchers at Aurrera Health Group that examines the incentive programs used by the state’s Medicaid agency, including bonuses, withholds, and penalties, to improve the performance of MCOs. The report compares these with incentive programs used by Maryland, Minnesota, and Oregon, and makes recommendations for strengthening the California incentives. (The study in Health Services Research noted below found that MCO enrollees in states with financial incentives for improving consumer experience of care were more likely to report timely access to specialty care).
New Mexico’s Legislative Finance Committee produces a biennial Medicaid Accountability Report. This year’s report focused on the state’s managed care program, Turquoise Care, and included the results of a secret shopper survey conducted by Committee staff. The Committee concluded from its analysis of cost, outcomes, access, utilization, and administrative data that increased payments to MCOs “have failed to improve outcomes for managed care members.”
The Eastern Band of Cherokee Indians, whose tribal lands are located in western North Carolina, is operating the nation’s first Native American-controlled primary care case management program, the EBCI Tribal Option. The Center for Health Care Strategies profiles the design and operation of this program, which while not an MCO and does not take on financial risk, is potentially a Medicaid managed care option for tribes in other states.
Bailit Health produced an Oversight Toolkit for State Health & Value Strategies to help state Medicaid agencies monitor and improve the performance of the MCOs with which they contract.
Industry
The consultancy HMA posted two analytic papers that present methodologies for disaggregating Medicaid MCO spending by service and population. The first focuses on estimating the costs of health care services furnished by MCOs by provider type (inpatient and outpatient hospital care, physician services, prescription drugs, etc.). The second examines Medicaid spending by population (dual eligibles, adults with disabilities, children, etc.)
The Association of Community-Affiliated Plans (ACAP) published six reports on how the nonprofit Safety Net Health Plans it represents address health-related social needs (HRSN) of their enrollees, including one on program funding and medical loss ratio. The Medicaid Health Plans of America, which represents both for-profit and non-profit MCOs, posted a research brief on the Quality Improvement Projects (referred to in regulation as Performance Improvement Projects) that state Medicaid agencies required of their MCOs, including those related to maternal and perinatal health.
Researchers at Harvard and the University of Virginia studied the evolution of the Medicaid managed care market between 2006 and 2020. They found that, in part due to the large number of acquisitions over this period, the national market is now dominated by five firms that enroll nearly half of all beneficiaries in managed care. They also found that state Medicaid managed care markets are even more consolidated and call for further research to understand to implications for state finances and beneficiary health.
One of the national companies that has grown in part through acquisitions and mergers is the UnitedHealth Group. UHG’s vertical integration is the subject of a report by the Center for Health & Democracy.
Citing the experience of Connecticut, Physicians for a National Health Program issued a paper calling for states to shift from contracting with MCOs to paying Medicaid providers directly through “managed fee for service.” The paper argues that “managed fee for service” will generate savings for states by reducing costs of administrative overhead for MCOs—savings that could be reinvested in higher payments to primary care physicians and other providers. (A more formal version of this argument was published by analysts at the Roosevelt Institute in 2023).
Research
KFF continued its role as a leading source of policy information on Medicaid managed care. KFF analysts updated their foundational issue brief, 10 Things to Know about Medicaid Managed Care. KFF also published a research brief on prior authorization policies in Medicaid managed care. Last month, KFF released its annual Medicaid budget survey for SFYs 2025 and 2026, which includes a section on delivery systems that provides information about managed care models, medical loss ratio and remittance requirements, risk corridors, MCO capitation rates, and state oversight of MCO use in prior authorization.
Treatment of substance use disorder was a prominent topic of interest. A study published in JAMA Open Network examined how Medicaid MCOs cover and manage medications for alcohol use disorder. A research letter in JAMA Open Network looked at coverage of naloxone, which prevents fatal opioid overdoes, in MCOs; it concluded that almost all MCOs cover at least one formulation. Another research letter in JAMA Health Forum reviewed MCO coverage of medications for opioid use disorder, finding “inconsistencies” between the coverage reported by MCOs and SUPPORT Act requirements for coverage of all three available medications.
Another focus was behavioral health. Researchers conducted a study published in Health Affairs Scholar of MCOs on the local, regional, and national levels to assess their experiences of network adequacy in behavioral health care. The National Academy for State Health Policy published results from a scan of Medicaid managed care contracts on how states are leveraging contracts to better integrate behavioral health through care coordination and payment incentive structures. The Center for Health Care Strategies issued a brief on specialty plan models in five different states (AZ, AR, FL, NY, and NC) for addressing behavioral health needs in Medicaid managed care.
In a study published in Health Services Research, Boston University School of Public Health researchers analyzed enrollee experience survey data for 94,000 adults enrolled in 172 MCOs in 38 states on five experience of care measures. The study found that reported access to care was lowest among Black, Hispanic, Asian, and American Indian and Alaska Native enrollees. The study also looked at the relationship between MCO size and MCO for-profit status and reported access to care.
The Elevance Health Public Policy Institute published a report by KNG Health Consulting on health care quality and access for children and youth in foster care. Researchers found that specialized Medicaid MCOs—those enrolling only this population—outperformed fee-for-service arrangements as well as comprehensive MCOs on well-child visits and other measures.
State Directed Payments (SDPs) were also an area of interest. Before the enactment of H.R. 1, Manatt issued this white paper explaining how SDPs support safety net providers. In a Health Affairs Forefront article, researchers from the Duke-Margolis Center analyzed recent regulatory changes to SDPs and how they can be used to increase transparency and accountability. A research letter in JAMA Health Forum studied how states could use SDPs towards value-based payments and quality improvements.
Investigative Reporting
The Wall Street Journal published two detailed articles on Medicaid managed care. The first documented duplicative payments received by MCOs for enrollees who have moved from one state to another with the origin state continuing to make capitation payments on their behalf. The second examines the consequences of outdated and inaccurate provider directories, and the inadequate provider networks they obscure, for Medicaid enrollees.
The Miami Herald reported on the diversion of $10 million from a $67 million settlement between the State of Florida and Centene relating to overbilling the state’s Medicaid program for prescription drugs. Under the terms of the settlement, Centene donated the $10 million directly to the Hope Florida Foundation, with which the state’s First Lady is associated.
Advocates
Children Now developed a comparison of the performance of 22 MCOs operating in California during contract year 2023-2024 with respect to preventive health services for children and youth. The detailed comparison includes an interactive data dashboard with outcomes for immunizations and screenings by MCO by county along with Children Now’s rankings.
Families USA issued a policy agenda for the federal government and states to improve the performance of Medicaid MCOs. The proposals focus on public transparency, accountability for delivering high-quality care, and improving the quality of care and reducing costs.
The National Health Law Program published an issue brief on the use of monetary sanctions and corrective action plans by ten state Medicaid programs (AZ, CA, FL, HI, MO, NH, NC, OH, OR, and TN) to hold MCOs accountable for poor performance. This brief updates research on managed care sanctions that NHeLP first published in 2022 by incorporating data from each state’s Managed Care Program Annual Report (MCPAR) for CMS.
Looking Ahead
The lead Medicaid managed care story next year will be implementation of H.R. 1 in the context of state revenue challenges (and a potential economic downturn) that will shape state budget decisions for SFY 2027. CEOs of some of the “Big Five” national insurers are telling financial analysts that they expect 2026 will be a “trough” year for margins but anticipate gradual margin recovery in 2027 and 2028. That implies less severe coverage losses among both adults and children than many of us expect. Let’s hope the CEOs are right.