Medicaid administrative burden hits providers

Administrative burden is one of the strongest predictors of whether providers remain in Medicaid, according to a recent provider survey.

Overall, 28% of providers report dissatisfaction with Medicaid administrative processes, and only 51% say they are satisfied, according to the survey from Gainwell Technologies, a Medicaid program consulting firm.

The findings point to a growing risk to network adequacy as states work to maintain access to care, particularly in behavioral health, according to the company. It also found that a quarter of skilled nursing facilities, physician groups and labs are poised to limit their acceptance of Medicaid patients.

“What is clear is that provider participation is lessening for those providers that are frustrated with their experience or dissatisfied with their experience with the Medicaid program, the systems, the processes, the policies that they need to work with,” Mason Mabry, senior vice president and general manager for provider solutions at Gainwell Technologies, said in an interview.

The 28% of providers dissatisfied with administrative process are:

• 3.9 times more likely to consider leaving Medicaid within three years
• 2.4 times more likely to limit the number of Medicaid patients they accept
• 1.7 times more likely to delay reenrollment in the program

Hospitals and health systems have long raised concerns that Medicaid payment rates are usually the lowest of any payer. For instance, the Medicaid shortfall — or the difference between the hospital’s cost of serving Medicaid patients and the payments it receives for services — was $27.5 billion in 2023, according to a recent American Hospital Association analysis of CMS data.

But a range of administrative challenges in Medicaid — from both state agencies and managed care organizations — often add costs and delay the already-low payment.

Survey focus

The Gainwell survey of 309 facility‑based providers, individual practitioners and large health systems focused on enrollment and credentialling frustrations.

Across surveyed providers:

• 85% value streamlined credentialing
• 90% of multistate providers prefer unified credentialing across states
• 72% want unified enrollment across Medicaid MCOs and state programs
• 68% want faster enrollment approvals and 24/7 claim status visibility

Providers in states with modernized, streamlined solutions that include these capabilities report 50% higher satisfaction.

Mabry said six of the 27 states to which Gainwell provides such services have the latest capabilities that give providers the most automation, self-service and transparency capabilities.

Inefficient Medicaid systems impact health systems the most, Mabry said, because they are managing provider populations at scale.

“And so, the efficiencies of being able to bulk updates to information, having an ability to enroll many providers at once versus one at a time, having an ability to update provider information across many providers at once across the health system, having an ability to update your affiliations in a bulkwise fashion, those are significant time savers for health systems,” he said.

OBBBA impacts

There is a critical need for states to modernize the Medicaid systems as the requirements of the One Big Beautiful Bill Act (OBBBA) rollout and CMS increases its crackdown on Medicaid fraud.

On April 21, Mehmet Oz, administrator of CMS, said he was sending a letter to all 50 states giving them 10 business days to tell CMS whether they will commit to conducting a swift “revalidation” of high-risk Medicaid providers. They will have 30 days to submit a broader, comprehensive revalidation strategy.

“So, in order to meet the expectations of CMS, new technologies, new operational processes that support those technologies are a necessity to ensure that they are complying with the direction” from the agency, Mabry said. He said most states have not upgraded their Medicaid administrative systems enough to meet such expectations.

The need to upgrade various Medicaid systems will come as OBBBA cuts are expected to remove $880 billion in federal funding from Medicaid programs over 10 years. States still will rely partly on the ordinary Medicaid match for eligible administrative and systems costs, according to an analysis from Kroll Bond Rating Agency (KBRA). Although OBBBA provides some funding to support implementation of new redetermination and work requirement provisions, KBRA described those as “relatively modest.”

OBBBA provisions also were cited as one of the factors driving states’ FY27 Medicaid budget cost increases. For instance, the Illinois governor’s office noted that it needed new FY27 funding to bring on an additional 450 staff to comply with OBBBA changes in enrollee eligibility and more frequent eligibility redeterminations.

Prior authorization

Other concerns with Medicaid raised by providers include the increasing use of prior authorization to deny services and payment for Medicaid patients.

A Modern Healthcare analysis of insurer prior authorization rates in publicly funded programs, which they were required to begin reporting March 31, found their Medicaid plans rejected prior authorization requests at similar or greater rates than their Medicare Advantage plans.

Payment delays

Also costly to Medicaid providers are unilateral decisions by states and the federal government to delay Medicaid payments to providers due to budget pressures or regulatory wrangling.

Maine Medicaid officials recently said they are delaying some provider claims payments more than two months until the next fiscal year starts July 1.

Additionally, multiple states — and their hospitals — have faced extended waits for CMS approval of state-directed payments (SDPs), which boost base Medicaid rates. A $7.8 billion Florida SDP application has faced an 11-month wait for approval. Similarly, California is still waiting on CMS approval of an $11 billion SDP submitted in March 2025 and funded by a one‑year hospital tax, according to a recent state budget document.