MESC 2026 and the Next Phase of Medicaid Modernization

The next phase of Medicaid modernization will require flexibility, accountability, and partnership.

MESC 2026 provided a forum for examining both the current landscape and the future of the Medicaid enterprise, bringing together states, territories, innovators, and federal leaders around a shared reality: Medicaid is entering a more demanding era. H.R.1, rural health challenges, workforce pressures, data quality, compliance requirements, and the need to do more with less are accelerating the need for modernization.

CMS emphasized that modernization should be measured by outcomes, not implementation milestones. Systems and investments must improve program operations and beneficiary experiences while enabling states to adapt to changing policies and operational demands. At the same time, artificial intelligence (AI) is influencing conversations about eligibility, operations, and program integrity, making responsible governance and workforce readiness increasingly important.

The discussions at MESC reinforced a clear message: modernization is no longer a one-time technology initiative. It is an ongoing discipline requiring states, CMS, and technology partners to work together to build more adaptable, accountable, and resilient Medicaid enterprise systems.

The Cost of Standing Still is Rising

Medicaid agencies were already operating under significant fiscal and workforce pressure. New federal requirements will place additional demands on eligibility and enrollment operations, affecting how they verify information, process renewals, and communicate with beneficiaries.

States must be able to implement policy changes efficiently while minimizing administrative burden. When legacy systems and disconnected processes cannot keep pace, the impact shows up quickly in renewal backlogs, avoidable errors, increased call-center demand, and greater compliance risk.

At the same time, reduced federal funding and growing complexity require states to accomplish more with limited resources. Modernization is no longer simply a technology preference. It is essential for operational stability and effective policy implementation.

The CMS RFI Is Shaping the Next Phase of Medicaid Modernization

One of the most significant discussions at MESC centered on the CMS Medicaid Enterprise Systems IT Standards Program Request for Information (RFI). The RFI invites states, territories, vendors, and other Medicaid stakeholders to share perspectives on standards, interoperability, reuse, commercial off-the-shelf solutions, and modern technical approaches.

Rather than prescribing a single path forward, CMS is seeking feedback from the organizations that build, operate, and depend on Medicaid enterprise systems. The effort reflects an important principle that modernization requires both consistency and flexibility. Common standards can improve interoperability and reduce duplication, while states must retain the ability to address unique policy and operational needs.

The RFI represents an opportunity for the Medicaid community to help shape future standards that reduce implementation burden, encourage innovation, and improve outcomes across the enterprise.

Modularity is Maturing and Cohesion is the Next Challenge

The first major modernization wave focused on replacing monolithic systems with modular architecture. Modularity gave states greater flexibility, enabled phased transformation, and expanded opportunities to deploy specialized capabilities.

The challenge now is ensuring that a growing number of modules, vendors, and data sources operate as a cohesive enterprise. More modules create more integration points. More vendors require greater coordination. More data increases demand for governance, security, and accountability.

Without sufficient cohesion, flexibility can lead to fragmentation.

This is why the RFI’s focus on standards, interoperability, and reuse is so important. Future architecture should allow states to modernize individual components without recreating the rigidity of legacy systems. Standards-aligned, commercial off-the-shelf, and cloud-based approaches can improve interoperability while preserving the flexibility states need to respond to changing business requirements.

Modernization is not a project with a finish line. It is an ongoing discipline that requires technology, policy, and operations to evolve together.

Strengthening Data Governance to Enable Interoperability and AI

Meaningful interoperability depends on trusted data. Discussions at MESC reinforced that interoperability is not simply about exchanging information between systems. It is about ensuring that information is accurate, accessible, and usable for operational and policy decisions. Medicaid data moves across programs, agencies, providers, and community partners. States need the ability to connect and use that information while preserving context, integrity, and trust.

That requires clear ownership, shared definitions, and consistent governance practices. When governed effectively, data supports stronger oversight, better policy decisions, improved care coordination, and more meaningful outcomes measurement. Without that foundation, both interoperability and AI adoption become significantly more difficult.

Prepare for Responsible AI Adoption

Artificial intelligence was one of the most discussed topics at MESC. The conversation has moved beyond whether AI will enter Medicaid operations. AI is already beginning to influence eligibility, program integrity, workforce support, and operational efficiency.

The more important question is whether agencies have the data, governance, and oversight needed to implement it responsibly.

Eligibility and other public programs are high-consequence environments. Any use of AI must account for accuracy, explainability, privacy, security, and fairness. Human judgment must remain central whenever automated recommendations could affect coverage or access to care.

Responsible AI requires more than technology. It requires reliable data, clear governance, defined accountability, and a workforce capable of evaluating AI-generated recommendations.

As highlighted during Acentra Health’s SAMA panel, “From Federal and State AI Policy to Medicaid Practice,” successful AI adoption depends on trust, transparency, and measurable value for both programs and beneficiaries.

Invest in People and Partnerships to Sustain Modernization

Technology alone will not carry Medicaid through its next phase of modernization. Sustained success depends on workforce readiness, stakeholder engagement, and strong partnerships across the Medicaid ecosystem.

Throughout MESC, state leaders emphasized the value of community-driven transformation. Beneficiaries, eligibility staff, case managers, providers, advocates, community organizations, CMS teams, and technology partners all bring perspectives that can improve modernization efforts.

Early engagement helps strengthen communications, streamline workflows, identify barriers to adoption, and improve readiness. Collaboration also ensures that modernization remains connected to the people and communities Medicaid serves.

Build for Outcomes, Not Implementation Milestones

Ultimately, the strongest test of modernization is not whether a system goes live. It is whether the investment delivers better results over time.

States should evaluate modernization based on operational performance, beneficiary experience, program integrity, compliance, and health outcomes. Technology investments should help agencies respond more quickly to policy changes, reduce administrative burden, strengthen program integrity, and improve service delivery.

Wyoming’s PERM transformation provides a compelling example. Through modernization, governance, and operational discipline, the state reduced its payment error rate from 15% to 0.4%. Results like these demonstrate the value of aligning modernization with measurable business outcomes.

The goal is not change for its own sake. The goal is to create systems that help states operate more effectively while improving outcomes for the populations they serve.

The Work Ahead

The conversations at MESC point to five practical actions that can help advance Medicaid modernization:

Respond thoughtfully to the CMS RFI and help shape future standards.
Strengthen data governance and enterprise data ownership.
Invest in workforce readiness and change management.
Implement AI responsibly with strong governance and human oversight.
Measure success through operational performance and beneficiary outcomes.

Medicaid modernization is entering a more demanding phase. The organizations best positioned to succeed will be those that embrace continuous improvement, build trusted partnerships, manage change deliberately, and remain focused on outcomes rather than implementation milestones.

By combining innovation with accountability, flexibility with standards, and technology with partnership, the Medicaid community can build an enterprise that is better prepared for the challenges ahead and better equipped to serve the individuals and families who rely on it.