After President Trump signed HR1 into law in July, MedZed, which specializes in reaching the hardest-to-reach, highest-cost Medicaid members that health insurers struggle to find, wanted to know how to best help their clients in the new environment.
With that in mind, we went to a select group of leaders of managed health plans that represent urban, rural, and underserved communities in California and Maryland to get an unfiltered view of how the Medicaid changes will unfold on the frontlines, what’s at risk if action lags, and solutions to consider in order to mitigate potential fallout. We promised survey participants anonymity in exchange for candor, and they told us their truth – unvarnished.
Five threats few are talking about
While there has been plenty of discussion about some of the expected fallout from Medicaid changes, including loss of coverage, member churn, and uncompensated care, our interviews uncovered five under-the-radar threats that could shake up the Medicaid system and threaten health plans over the next two years:
The quality-metrics math problem – Plans are penalized for HEDIS (Healthcare Effectiveness Data and Information Set) goals they can’t ever meet when up to 40% of their members never engage with care — despite millions spent on outreach. This is a common problem that carries monetary penalties and will likely worsen under the new rules.
“We spend millions trying to engage the unengaged and we gain very little. And then we get penalized because we can’t meet our quality measures.”
Redeterminations’ “double hit” – Six-month eligibility cycles not only trigger immediate coverage loss, but then they result in higher costs when members return sicker and care plans reset.
“Every time someone falls off and comes back, their care is disrupted, and costs go up.”
Financial fallout spreads fast – Shrinking revenue drives hospitals, doctors and health centers out of networks, slashing access overnight.
“If we can’t sustain rates, providers will walk away — and members will lose access overnight.”
Mandates that often outlast members – Some states are requiring expensive new programs (e.g., universal Social Determinants of Health screenings) even though many members will likely churn and fall out of the system within months.
“We’re being asked to build systems for requirements that may outlast members’ enrollment by only weeks.”
Trust is the hidden currency of care – It’s been shown repeatedly that long-term outcomes hinge on human relationships, not just covered benefits — but the new changes in Medicaid overlook this.
“People do things for people and organizations they trust. If they don’t trust you, they won’t do what you ask.”
Top five anticipated issues
In each of our conversations, the interviewees underscored these five under-the-radar threats by describing at least one of the anticipated issues below as an impediment to their respective plan’s operations and its ability to function efficiently and effectively:
Eligibility redetermination & administrative overload – Survey participants expect the shift to six-month redetermination cycles to destabilize member coverage and overwhelm administrative systems.
“We lost over 50,000 members already during the unwinding post Covid… many simply didn’t respond to mail or calls…We’re preparing for this to be worse.”
Loss of coverage for undocumented & expansion populations – Plans foresee an immediate drop in enrollment among undocumented individuals and the ACA expansion group, with ripple effects on funding and care continuity.
“Our first hit is losing the undocumented for the health plan, for sure.”
Increased uncompensated care & provider strain. As members drop off rolls, more will return for care uninsured, placing pressure on providers and reducing financial stability.
“We’re going to have to provide care to the uninsured and then bill later—it won’t be pretty.”
Work requirements without workforce infrastructure – Leaders fear members will be disqualified for noncompliance — despite actively caretaking or lacking access to education, broadband, or jobs.
“Where are all these jobs? What’s the process? There’s no workforce development.”
Disruption to care & diminished outcomes – Frequent eligibility loss and reinstatement interrupts care plans, worsens conditions, and increases downstream costs.
“They come back when their conditions have worsened. It’s hard to coordinate care that way.”
Five strategies for solutions
The interviews highlighted the urgent need for more human-centered policies that balance cost containment with continuity, access, and trust. We learned plans are responding with a range of proactive strategies, including internal planning, staff training, infrastructure adaptation, and outreach to members. Several participants also mentioned engagement with boards and state-level advocacy. Their solutions fall into five categories:
1. Keep people covered & reduce churn
Proactive enrollment help: send redetermination lists 45–60 days ahead; staff/ECM–CS partners assist with renewals via text, email, letters, and in-person help (iPads/kiosks).
Onboarding & accountability: require orientation at enrollment and timely first PCP visits; consider small ER copays for ambulatory-sensitive conditions to encourage visits to PCP/urgent care.
Coverage safeguards: coordinate with states on clear work-requirement processes and immigration policies that avoid fraud exposure while protecting access.
2. Expand access & capacity where members live
Extended hours & two-shift staffing (e.g., 7–3 and 2–8) so working members can attend without losing wages.
Transportation & dental capacity: expand ride supports and target dental network growth to address persistent deserts.
Provider network stabilization: offer recruitment incentives and locums; protect cash flow/reserves to maintain rates and prevent provider exits.
3. Update operations & data flow
Administrative simplification: standardize prior authorization and billing across plans; align rules to cut provider friction.
Interoperability: design overlapping systems so plans/providers can see where a member is receiving care in real time to maintain continuity.
4. Establish payment & financial resilience
Site-neutral payments and targeted pricing oversight to rein in high-cost hospital settings without harming access.
Dual-eligible Special Needs Plan readiness (D-SNPs): prepare for a multi-year break-even, sequence hiring, and preserve reserves during rollout.
5. Advocate for prevention, social determinants of health & trust
Rebalance spend toward prevention: use validated Health-Related Social Needs (HRSN) tools with triage workflows matched to realistic referral capacity.
Community partnerships with warm handoffs so members actually use services.
Trust at the front line: invest in Community Health Navigators (CHNs)/field teams and training; track relationship-based engagement as a core outcome driver.
The bottomline
The coming changes in Medicaid will place health plans squarely between a rock and a hard place. Many expect to lose members because of new eligibility rules (work requirements, exclusion of undocumented, and expansion population cuts), while more frequent redeterminations accelerate churn. The upshot? Plans expect shrinking revenue just as care disruptions drive up costs and quality penalties.
These issues are not abstract policy debates — they are operational and financial shocks already forming. Health plans are preparing for change, but, from where I sit, without smarter guardrails, I believe the strain will cascade — members will lose coverage, providers will lose stability, and local economies will lose their anchors.Leaders of managed health plans are clear: without thoughtful implementation, the new rules could create challenges that ripple across Medicaid systems, consumers, and local economies. HR1 is not just a health policy change; it carries financial and operational implications that markets, communities, and policymakers will need to navigate carefully.
Photo: marchmeena29, Getty Images
Scott H. Schnell is co-founder and chief executive officer of MedZed, a for-profit provider of community-based services to address the Health-Related Social Needs of high-risk, high-need Medicaid and dual-eligible Medicare members who are hard to reach and disengaged from primary healthcare. Since starting the company in 2014 with the mission to inspire and enable better health, Schnell has developed MedZed’s business model, technology platform and member acquisition plan to partner with managed health plans to improve member health outcomes, lower utilization rates and reduce costs. An entrepreneur for several decades, Schnell has started, grown, led and sold several companies.
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