States and hospitals prepare for new administrative tasks as Medicaid work requirements loom

Efforts by states to implement the Medicaid work requirement are intensifying, with hospitals likely to play a supporting administrative role when the requirement begins nationwide Jan. 1, 2027, based on findings in a new report.

As legislated in the One Big Beautiful Bill Act (OBBBA), adults in the Medicaid expansion population must demonstrate that they are meeting work or community engagement requirements for at least 80 hours a month to maintain coverage. Work requirements apply in the 41 expansion states, plus two states (Georgia and Wisconsin) that implemented a partial expansion, along with Washington, D.C.

The 18-month window between enactment and implementation has sparked accelerated plans at state healthcare agencies, which are aiming to incorporate the infrastructure they’ll need to manage the work requirement and minimize the chances that residents lose Medicaid eligibility due to administrative errors. State approaches to implementation were described in a newly released survey by KFF.

In two states, the work requirement is already underway. As announced last December, Nebraska began enforcing its requirement May 1 for new Medicaid enrollees, while current beneficiaries have until Aug. 1 to comply. In addition, Georgia has had a work requirement in place since 2023.

Elsewhere, Montana’s work requirement is set to begin July 1 and Iowa’s on Dec. 1, a month before the federal deadline. States also can request a later start date if they demonstrate good-faith efforts to comply.

According to the Congressional Budget Office, the work requirement is projected to lead to a Medicaid enrollment decrease of 5.2 million through 2034, part of an estimated health insurance loss for 15 million people under the OBBBA.

Key steps to mitigate Medicaid coverage loss

In another report, the left-of-center Urban Institute and the Robert Wood Johnson Foundation projected that the work requirement would trigger Medicaid coverage loss of anywhere between 3 million and 7 million in 2028. The variance is based in part on how well states implement steps such as automated verification and data matching to stop people from falling through the cracks.

Numerous states are taking steps in that direction, according to the KFF survey.

“States are using many data sources to verify compliance with work requirements, and nearly all states said they will use or are exploring using new data sources to further automate the verification process,” according to the survey. “States cited adding data sources to verify school attendance, community service and exemptions for veterans and individuals recently released from incarceration.”

Per the survey, a few states are taking the prerogative to set stricter standards for their work requirement than mandated by the OBBBA.

For example, most states plan to check on a beneficiary’s compliance with the work requirement every six months, with a one-month lookback period. However, Arkansas, Idaho and Indiana will look back over three months, and as mandated by state legislation, Indiana and New Hampshire will conduct checks quarterly and at renewal.

Indiana, Iowa and Oklahoma will eschew hardship exceptions available for people living in counties that have been hit by a natural disaster, while those three states and Missouri will not use an exception for counties where the unemployment rate is over a certain threshold.

Hospital role in exemptions and medical frailty verification

Of 31 states that had set applicable policies at the time of KFF’s survey, 29 (all but Indiana and Iowa) were planning to allow for a hardship exception when a Medicaid beneficiary is hospitalized or admitted to a skilled nursing facility. States must operationalize tracking of hospital stays and discharges.

Broader exemptions from the work requirement relate to medical conditions, and in many states, hospitals could be called on to attest that a Medicaid beneficiary meets the medically frail exemption. If Nebraska’s released list of codes is an indication, the process of determining eligibility for the exemption could be significant.

According to KFF’s survey, 30 states plan to loop in hospitals to verify medical frailty when needed. In most of those states, however, such a process would serve as a backup to verification through Medicaid claims data. In addition, 29 states are looking to incorporate self-attestation in some circumstances, if permitted by CMS.

Providers also may be asked to help track people with disabilities and their at-home caregivers, both categories that can qualify for exemptions.

“This is one of the areas that we do worry about a bit in terms of states being able to clearly identify who those people are,” Tricia Brooks, research professor at Georgetown University’s Center for Children and Families, said during a KFF webinar. “We don’t know the extent to which they’re going to determine if that person is disabled.”

Role of plans and providers in getting the word out

Medicaid managed care plans and community-based providers will be asked to help with outreach regarding the work requirement.

The hope is to build off a model that appeared to work well during the unwinding of continuous Medicaid eligibility at the end of the COVID-19 public health emergency. An estimated 27 million were pared from the rolls over a roughly 18-month period starting in mid-2023.

“Engagement with community organizations around outreach during unwinding was actually one of the success stories,” Jennifer Tolbert deputy director of KFF’s Program on Medicaid and the Uninsured, said during the webinar.

One way that the work requirement figures to be more challenging than the unwinding is in the need to tailor communications.

“During unwinding, the message went out to everyone in the Medicaid program,” Tolbert said. “Everyone in the program had to be redetermined. But in this case, only certain individuals are going to be subject to the work requirements.”

What hospitals can do to get ready

Hospitals in the states subject to the work requirement continue to prepare their operations.

According to insights from consultants and hospital advocates, efforts include generating lists of Medicaid beneficiaries who likely will be subject to the work requirement, putting the hospital in position to conduct prioritized outreach and actively help patients verify their coverage. Hospitals also are preparing to increase eligibility checks as part of front-end registration processes.

Other considerations include developing contingency plans for coverage loss via increased availability of same-day financial counseling, charity care screening and flexible payment plans.