By Chip Moore, Managing Director of Sales – Healthcare Banking RCM & Digital, and Jeff Palmieri, Head of Healthcare Digital, at Huntington Bank.
Key takeaways
- Work requirements and more frequent redeterminations could result in more Medicaid eligibility changes and uncertainty around cash flow tied to claims.
- Waiting for guidance on how states will implement new Medicaid eligibility rules could put providers at risk.
- Eligibility status monitoring tools and other measures to improve visibility offer proactive opportunities for providers to adapt to new rules.
- With the changes introduced by the OBBB, healthcare providers should consider treating Medicaid eligibility as a financial variable.
The passage of the One Big Beautiful Bill (OBBB) marks one of the most significant shifts in Medicaid eligibility in over a decade. With new work requirements and tighter limits on retroactive coverage, the changes outlined in this act mean Medicaid might not be a reliable source of reimbursement for providers going forward. Additionally, forecasts, audits, and margin protection strategies must now account for more frequent coverage gaps and a growing pool of patients who appear ineligible at the time of service but qualify later. This creates new vulnerabilities with implications for audit readiness and managed care contract performance.
Healthcare providers have little insight into how some of these changes will be implemented. Guidance from the Department of Health and Human Services (HHS) isn’t expected until late 2025, and implementation of work requirements and conditional coverage isn’t required until December 2026. Despite the long timeline, providers that begin preparing now can help mitigate the risk of non-compliance or increased write-offs.
New rules could increase eligibility churn
Eligibility volatility has long existed on the margins of Medicaid operations. The OBBB introduced two significant changes designed to strengthen program integrity and reduce costs1 that could complicate providers’ processes for confirming eligibility and coverage.
- States must verify Medicaid eligibility every six months. More frequent reviews could result in enrollees with regular income changes shifting from Medicaid eligible to ineligible more often. Seasonal and contract workers could also be impacted.
- Eligibility now includes community engagement requirements for qualifying adults. Adults between the ages of 19 and 64 years old that do not qualify for an exemption must provide documentation that they worked, volunteered, or received job training for at least 80 hours in the month prior to enrollment. Enrollees must meet this requirement for at least one month prior to the eligibility review.
More eligibility churn could mean more upfront denials, more downstream reclassification, and greater uncertainty around cash flow tied to Medicaid claims. An estimated 7.8 million Americans could lose Medicaid coverage by 2034, according to the Congressional Budget Office (CBO)2. Revenue cycle teams must now account for status changes that can shift claims from reimbursable to nonbillable within a single quarter. Compounding this issue is that timely filing limits for reimbursement remain unchanged, but retroactive coverage is restricted to just two months for Medicaid beneficiaries.
Providers will see more patients with intermittent and delayed eligibility, as well as a rise in those without any insurance coverage. In addition to those losing Medicaid coverage, CBO estimates an additional 4.2 million would lose insurance if the ACA expanded premium tax credit expires at the end of 20252. As a result, one analysis estimated increases in uncompensated care of $63 billion for hospitals and $24 billion for physicians over the next 10 years3.
In this environment, Medicaid can no longer be a guaranteed payer class. It becomes a moving variable with direct revenue cycle implications. Finance teams must evaluate whether their internal controls and financial reporting systems can absorb and explain the variability at the speed it will now occur.
State ambiguity leading to provider exposure
Although these requirements are now law, the infrastructure to verify work participation, manage exemptions, and coordinate redeterminations is still under development. HHS has until mid-2026 to issue detailed guidance on community engagement requirements, leaving states with about a year to make changes necessary to comply with new requirements by January 1, 20274. Providers will have even less time to adjust once the policies become operational.
This delay creates two new problems: First, state-level variation is likely. Eligibility determinations may differ in timing, process, and accuracy, complicating billing workflows especially for multi-site organizations. Second, providers face real financial and compliance risk without clear protocols.
Waiting for clarity might feel like the right choice. But doing so increases the likelihood of having to respond reactively, after coverage losses and write-offs have already begun.
Proactive opportunities for healthcare providers
Many providers are not waiting for final guidance to prepare. Even before the bill passed, some healthcare organizations have deployed autonomous eligibility monitoring tools that flag retroactive status changes during the filing window, recovering Medicaid payments that would otherwise go unclaimed. These tools, operating independently of EMR platforms and billing systems, can continuously monitor self-pay and sliding fee encounters for the full length of its filing period. Organizations implementing this technology have been able to collect on average an additional 2% to 8% from self-pay and charity care balances5. With this technology already in place, healthcare providers stand to capture increased revenue as eligibility churn rises.
Other opportunities lie in improving coordination and monitoring processes. Finance and compliance teams can compare eligibility data against write-offs to identify patterns and adjust workflows to reduce misclassification. Providers can also review managed care reporting to align eligibility tracking with contract performance standards, particularly when PMPM rates and utilization thresholds depend on accurate enrollment data.
Aligning revenue strategies to fit Medicaid eligibility changes
With Medicaid coverage now conditional on employment or volunteer activity and subject to more frequent redeterminations, eligibility must now be tracked continuously. This shift elevates eligibility from a front-desk task to a core financial variable.
Healthcare providers that act now will have more options once the rules take effect. Below are considerations for staying ahead of the situation:
- Determine how often you’re identifying post-visit eligibility changes, and how many are missed on a quarterly/annual basis.
- Understand how eligibility-related churn is influencing write-off rates and net revenue forecasts by payer segments.
- Based on the tools, reports, or teams in place currently to monitor post-visit status, what additional investments could help lower costs and streamline processes?
- Review financial models for Medicaid contracts and consider whether they account for frequent eligibility loss and recovery, and how the scenarios are reflected in accrual assumptions.
These answers can help shape how effectively a provider adapts. Healthcare providers can be better prepared for changes by adjusting practices before guidelines are released and changes have been implemented.
Addressing challenges through proactive strategies
The Huntington Corporate Healthcare Banking group is committed to connecting healthcare organizations with the solutions and resources they need to thrive in this evolving landscape. Learn more about how Huntington meets the needs of its healthcare clients and their stakeholders by reaching out to our team.
