As always, Medicaid policy is shifting in ways that will profoundly impact state programs over the next few years. These mandates fall into four primary areas of focus: Justice-Involved Youth Services, Prior Authorization (PA) Modernization, Critical Incident Reporting, and Health Equity initiatives. Each mandate can significantly shape state Medicaid programs, and it is essential for Medicaid directors and state agencies to be vigilant and proactive in their preparations. 

Justice-Involved Youth Services and Reentry Care 

Federal mandates are placing new emphasis on ensuring care for justice-involved youth, particularly as they transition back into society. By January 2025, Medicaid programs must have processes in place for providing pre-release assessments, developing care management plans, and supporting the reentry process. 

State agencies should focus on creating robust assessment systems that prevent recidivism and ensure continuity of care. States should prioritize building systems that encompass both pre-carceral (before incarceration) and post-carceral (after incarceration) assessments and care plans. Oregon, for instance, is taking an active approach to implementing these services, focusing on reducing recidivism by maintaining continuous support. 

Prior Authorization (PA) Modernization 

The prior authorization process has long been a point of friction between healthcare providers and state Medicaid programs. The upcoming PA modernization mandate will focus on reducing provider abrasion and improving patient access to timely care. By January 2026, new business and technology standards will be required for the PA process, including the use of API integrations for provider access and peer-to-peer communications. 

State Medicaid agencies must invest in modernizing their IT systems to meet these regulatory requirements. CMS aims to streamline processes that previously caused delays, ensuring that care decisions are made faster and with fewer administrative hurdles. This is particularly important in reducing the burden on healthcare providers, a challenge exacerbated by workforce shortages since the COVID-19 pandemic. 

Consolidated Critical Incident Reporting 

New regulations are emerging that require states to consolidate critical incident reporting systems across various vulnerable populations. These include children in foster care, individuals with disabilities, and those receiving mental health or substance use treatment. States have historically used fragmented systems, which creates a gap in providing whole-person care. 

West Virginia is leading the charge with the implementation of a unified critical incident reporting system. This novel approach will allow agencies to better track incidents across services and improve outcomes by seeing the full picture of each beneficiary’s needs. State Medicaid directors should prioritize integrating their systems to ensure compliance and improved service delivery for these populations. 

Health Equity and Fee-for-Service Medicaid Populations 

Addressing health disparities is at the heart of many of these policy changes, and Medicaid directors are increasingly focused on improving care for populations at higher risk of adverse outcomes. While most states have moved to managed care, there is a sizable portion of the Medicaid population that remains in fee-for-service programs. These populations, including dual-eligible beneficiaries and undocumented residents, often experience higher rates of health disparities and are not receiving the same level of care coordination available in managed care. 

Oregon and Washington have taken proactive steps to provide care management for their fee-for-service populations to address health equity. By offering case management and care planning services, these states are leading by example in reducing healthcare disparities and improving overall outcomes for these high-risk groups. 

Key Actions for State Medicaid Agencies 

To prepare for these upcoming mandates, state agencies should take the following steps: 

  • Invest in IT modernization to meet the new PA and interoperability requirements. 
  • Build partnerships with community-based organizations (and work with vendors that have a proven track record of connecting with community health workers) to support justice-involved youth and other vulnerable populations. 
  • Consolidate reporting systems where possible and appropriate across vulnerable populations to provide better whole-person care. 
  • Focus on health equity by expanding care management to fee-for-service populations and tracking social determinants of health. 

In addition to providing an opportunity for Medicaid agencies to comply with federal requirements, these mandates also offer an important chance to improve care delivery and outcomes for their most vulnerable populations.