On January 29 and 30, 2026, the Medicaid and Children’s Health Insurance Program (CHIP) Payment and Access Commission (MACPAC) held a public meeting, which included the following sessions:

• State and Federal Tools for Ensuring Accountability of Medicaid Managed Care Organizations: Policy Options,
• Considerations for Implementing Community Engagement Requirements: Principles and Policy Option,
• Medicaid Payment Policies to Support the Home- and Community-Based Services (HCBS) Workforce, and
• Automation in the Prior Authorization Process: Findings.

The full meeting agenda and session presentations are available here.

MACPAC EXAMINES STATE AND FEDERAL TOOLS FOR ENSURING ACCOUNTABILITY OF MEDICAID MANAGED CARE ORGANIZATIONS

In this session, MACPAC staff presented an analysis of state and federal tools for ensuring accountability of Medicaid managed care organizations (MCOs) and three draft policy options.

Managed care is the dominant delivery system in Medicaid. Forty-one states and the District of Columbia contract with comprehensive, risk-based MCOs, comprising 73 percent of Medicaid beneficiaries and 56 percent of Medicaid benefit spending. States are responsible for contracting and some oversight of MCOs, with the federal government requiring states to establish policies for discretionary sanctions to receive funding. CMS primarily conducts oversight through assessing conflicts of interest, verifying contractor eligibility, approving state-MCO contracts, and certifying actuarial rates. The agency also retains authority to deny federal match to states for non-compliance, can deny funds for new enrollees on the state Medicaid agency’s recommendation, and may refer cases to the Office of the Inspector General (OIG).

MACPAC staff analysis drew on stakeholder interviews and a review of Managed Care Program Annual Reports (MCPARs) for performance year 2023 (September 2023 – August 2024) from 34 states. Staff found that CMS lacks proportional enforcement authority in managed care comparable to fee-for-service (FFS) Medicaid. While CMS can withhold, defer, or disallow federal matching funds for specific services or claims in fee-for-service Medicaid, current law allows CMS to withhold federal matching funds in managed care only for the full amount of an MCO’s capitation payment. Staff noted this authority is rarely used because withholding the entire capitation payment could disrupt financing for all beneficiary care rather than address specific deficiencies.

Staff also identified significant limitations in MCPAR data. Although federal regulations require states to report sanctions, corrective action plans (CAPs), and other formal or informal interventions, reporting requirements lack clear definitions and standardized guidance. As a result, states report accountability actions inconsistently, and MCPARs are likely to understate the extent of state oversight activity. In particular, staff identified a lack of clarity about what constitutes “informal interventions” and how to report various accountability actions, including: verbal warnings during routine monitoring calls; requests for additional data or information about compliance issues before formal intervention; informal performance improvement discussions; and liquidated damages. In one example, a state did not report liquidated damages in its MCPAR because it did not classify them as a sanction, even though it imposed such penalties under its state system.

Staff further noted that MCO performance data is fragmented across multiple sources, including MCPARs, external quality reviews, and the Medicaid managed care Quality Rating System, and are not available in a user-friendly or easily comparable format. Differences in metrics across states and plans limit the usefulness of these data for oversight, procurement, and beneficiary decision-making.

Policy Options

Based on these findings, staff presented three policy options.

1. Congress should amend Section 1903(m) of the Social Security Act (the Act) to allow CMS to withhold, defer, or disallow federal match for all or part of managed care capitation payments.

Staff highlighted that this would allow CMS to apply proportional corrective action, as current authority only allows CMS to withhold the entire federal match. In addition, this would align enforcement tools more closely with FFS Medicaid while preserving states’ primary role in contracting and oversight.

2. CMS should provide clarification and guidance to support MCPAR data accessibility and completeness.

In particular, staff recommended that CMS clarify reporting requirements for liquidated damages, informal interventions, and other accountability actions in response to noncompliance. This would improve data completeness, comparability, and transparency.

3. CMS should issue guidance and/or toolkits on how to effectively use available data to assess plan performance.

This option would encourage CMS to issue guidance or toolkits to help states better use existing performance data across reporting systems, such as data-linkage tools, procurement evaluation frameworks, and performance assessment guidance. Interviews with states suggested they struggle to use this data effectively and could benefit from improved information for contracting and quality improvement. This recommendation also builds on MACPAC’s prior March 2025 recommendation on EQRs.

Commissioner Discussion

Commissioners broadly supported efforts to strengthen accountability in Medicaid managed care while emphasizing the importance of preserving Medicaid’s joint federal and state structure. Many members expressed strong support for policy options to improve data quality, reporting consistency, and the effective use of existing performance information. Commissioners noted that clearer definitions, standardized MCPAR reporting, and better tools for linking data across reporting systems could enhance transparency, support state oversight, and improve public understanding of plan performance without expanding federal enforcement authority.

Commissioners highlighted the routine and important role of informal state oversight activities, such as performance discussions and corrective guidance provided outside of formal sanctions. Several members cautioned that federal reporting requirements should be carefully designed to avoid discouraging states from using these informal tools or creating misleading impressions of plan performance. Commissioners also emphasized the need for context in accountability data, noting that differences in state contracts, performance standards, and enforcement thresholds can make cross-state comparisons difficult without clear definitions and explanatory information.

Commissioners expressed mixed views and significant caution regarding policy option one, which would expand CMS’s authority to withhold or disallow federal matching funds at the plan level. Some members raised concerns that this approach could weaken state authority as the primary contracting entity, disrupt collaborative state–plan relationships, or contribute to greater federalization of the program. Others noted that CMS already has oversight tools through contract approval and state compliance reviews and questioned whether additional authority was necessary. Several Commissioners emphasized the need for clear guardrails, proportional application, and incremental enforcement steps if such authority were to be considered, particularly given the broad scope of federal managed care requirements. A smaller number of Commissioners agreed with the recommendation; however, there was recognition that further clarification would be needed regarding triggers for CMS intervention, how withheld amounts would be calculated, and how federal action would interact with state enforcement efforts.

Members encouraged staff to refine the policy options, particularly those related to reporting and data usability, and to consider the potential for unintended consequences for state authority as the work advances towards future recommendations.

MACPAC CONSIDERS PRINCIPLES AND POLICY OPTIONS FOR IMPLEMENTING COMMUNITY ENGAGEMENT REQUIREMENTS IN MEDICAID

In this session, MACPAC staff presented draft principles and a policy option to support the implementation of Medicaid community engagement (CE) requirements authorized under the recently passed One Big Beautiful Bill Act (OBBBA). The presentation built on prior Commission work, including stakeholder interviews, recent public meetings, and earlier discussions, and focused on federal and state roles in implementing CE requirements, operational considerations, and approaches to monitoring and evaluation. Staff emphasized the need to balance accountability with administrative feasibility while minimizing inappropriate coverage loss among eligible individuals.

As defined in statute, CE requirements primarily apply to nonpregnant, non–dually eligible individuals ages 19-64 who qualify through the adult expansion group or a Section 1115 waiver that provides minimum essential coverage. To maintain Medicaid eligibility, affected individuals must work or volunteer for at least 80 hours per month, attend school at least half-time, or meet a combination of these requirements. States must establish CE requirements by January 2027 unless granted a good-faith effort exemption by CMS, and the agency is required to issue an interim final rule by June 1, 2026.

Draft Principles

Staff presented four draft principles intended to reflect Commission priorities and synthesize findings from stakeholder interviews and prior Commission input.

1. CMS should provide timely federal guidance and technical assistance.

Interviews with stakeholders stressed that early and frequent engagement from CMS – including before publication of the interim final rule – is critical due to the compressed timeline. Uncertainty about federal expectations is expected to complicate state efforts, while scenario-based technical assistance and opportunities to share knowledge across states would support implementation.

2. CMS and states should ensure that eligible individuals can gain and maintain coverage.

Stakeholders stressed the need for clear, frequent communication with all stakeholders, state-level interventions to help beneficiaries navigate new requirements, and designing systems to reduce beneficiary burden as priority areas for action.

3. CMS and states should prioritize efficiency when procuring, updating, and operating state information technology (IT) systems.

Recognizing that required changes to Medicaid IT systems are expected to be costly and time-intensive, stakeholders recommended CMS support states throughout the procurement process. This includes streamlining the advanced planning document (APD) process, where states develop action plans for their Medicaid IT projects to request federal financial participation.

4. CMS and states should use timely monitoring and evaluation data to inform policy and operations.

This principle recognizes the importance of monitoring to identify effective practices, emerging trends, and areas where systems may need adjustment. This data can also be used to evaluate the impact of the new CE requirements.

Policy Recommendation

Staff presented the following policy option:

The Secretary of the U.S. Department of Health and Human Services should direct the Centers for Medicare & Medicaid Services (CMS) to develop a transparent plan for monitoring and evaluating community engagement requirements in Medicaid that provides insight into how such policies affect eligibility and enrollment, health status, employment, and the attainment of other identified policy goals. CMS should identify new metrics for state reporting, as needed, and build upon existing data collection activities to minimize administrative burden. Additionally, CMS should ensure the timely publication of monitoring and evaluation results to inform policy and operational decision-making.

Staff highlighted that this recommendation would improve monitoring and evaluation of CEs, and reflects interviews with stakeholders. With CMS yet to publish monitoring and evaluation plans, and a lack of clarity on whether this data will be public, this policy recommendation supports greater transparency. Additionally, MACPAC staff produced a list of metrics identified during interviews for consideration and highlighted that CMS could utilize existing reporting mechanisms and timely federal data to support monitoring and evaluation.

Commissioner Discussion

Commissioners expressed broad support for the draft principles and policy option, emphasizing the importance of balancing accountability with administrative feasibility and coverage stability. Many members highlighted the critical role of monitoring and evaluation, noting that CE requirements represent a significant policy change with potential implications for eligibility, enrollment, employment, and health outcomes. Commissioners stressed the need for timely, transparent data to detect coverage losses, identify unintended consequences, and inform course corrections during implementation.

Several Commissioners questioned whether the proposed monitoring and evaluation framework should be supported by statutory requirements, noting that CMS may lack sufficient authority or resources to conduct large-scale evaluations without explicit congressional direction. Others emphasized the importance of stakeholder input and public engagement in developing monitoring metrics and raised questions about how health status and employment outcomes would be defined and measured. Commissioners cautioned that transparency should extend beyond public reporting to include meaningful engagement with states, beneficiaries, and other stakeholders.

Commissioners also raised concerns related to state readiness and implementation risk. Members emphasized the value of CMS-developed readiness assessments, implementation checklists, and early identification of areas where states may face challenges meeting statutory timelines. Several Commissioners underscored the importance of automating and modernizing eligibility and verification systems, including electronic signatures, self-attestation options, interoperable data systems, and user-friendly tools, to reduce beneficiary burden and support effective implementation.

Commissioners discussed broader system impacts, including potential shifts in the Medicaid risk pool if healthier individuals lose coverage and the resulting implications for provider payment rates, managed care capitation rates, and overall program costs. Members also raised concerns about privacy protections and the safeguarding of sensitive beneficiary data, including disability status information, and emphasized the need for clear limitations on data access and use.

Overall, the Commission expressed strong support for the draft principles and the policy option, while identifying areas for refinement in evaluation design, data transparency, implementation readiness, beneficiary protections, and potential statutory considerations. Staff plans to incorporate Commission feedback and return with a refined draft chapter for consideration in advance of the June report.

COMMISSION RECOMMENDS HOME AND COMMUNITY-BASED SERVICES WAGE REPORTING

In this session, staff continued their analysis of Medicaid Home and Community-Based Services (HCBS) rate setting, including presenting a revised draft recommendation that incorporated feedback from the September 2025 meeting.

States currently have wide latitude in setting HCBS rates with limited federal intervention. Though payment rate models and delivery systems vary significantly by state, wages comprise the largest component of payment rates. Staff identified that states often lack appropriate, timely, or granular wage data to build payment rates. Most states only have access to national-level, annual data from the Bureau of Labor Statistics, which lacks specificity. Some states also collect their own data, which is often higher quality, but is administratively burdensome. Adjusting rates is also difficult given the effects on workforce participation, implementation costs, and calculation burden.

Building on this research, staff identified the need for robust wage data as the foundation for effective payment rates. Though new payment adequacy data reporting is required under the April 2024 Ensuring Access to Medicaid Services Final Rule (see 42 CFR 441.311), including the compensation-to-payment ratio, staff identified worker wages and broad job definitions limit its utility.

Draft Recommendation

To address these limitations, staff presented the following draft recommendation:

The Secretary of the Department of Health and Human Services (HHS) should direct the Centers for Medicare & Medicaid Services (CMS) to amend 42 CFR 441.311(e)(2) to require states to report hourly wages paid to home- and community-based services (HCBS) workers who provide the following services: personal care, home health aide, homemaker, and habilitation.

States should report descriptive statistics on hourly wages for each service as determined by HHS. For each service, these data should be disaggregated by worker characteristics determined by HHS, including but not limited to: by licensed nurses and all other direct care workers, and by rural versus urban settings. CMS should build upon planned or existing data collection activities or tools, and publish data on the CMS website.

Staff also discussed the potential benefits of amending 42 CFR 441, which include permitting states and CMS to build on related data collection and reporting efforts, while allowing them flexibility in their rate-setting approaches and the option to reduce or eliminate state-specific collection activities.

The implications of this draft recommendation were also assessed, with staff projecting that it would have a minimal direct impact on most stakeholders while providing states with improved data to support rate development. The Congressional Budget Office (CBO) estimated that the policy would have no impact on federal spending, while, over time, improved payment rates could attract more HCBS workers, improve access, and marginally affect the rates that managed care providers pay workers.

Commissioner Discussion

During the discussion, Commissioners expressed general support for the recommendation, though some members expressed concern about the specificity of the language for service categories and the classification system. While staff reinforced the design of the HCBS classification system, emphasizing its intention to align services with different names but similar services from state to state, Commissioners encouraged broader language to encompass more categories.

Commissioners voted 15-2 to adopt the recommendation.

The final chapter will be included in the March 2026 Report to Congress.

MACPAC Explores Automation and AI Use in Prior Authorization for Medicaid

During this session, the Commission reviewed findings on how automation and AI tools are being used in prior authorization (PA)—the process by which providers must obtain payer approval before providing services to be reimbursed—and its impact on the Medicaid program. Specifically, the project examined how automation is applied across both managed care and fee-for-service (FFS) systems, drawing on literature and federal policy reviews, stakeholder interviews with states, federal officials, Managed Care Organizations (MCOs), Information Technology (IT) vendors, provider representatives, and beneficiary advocates.

Based on literature and federal policy reviews, staff provided background on PA, its use in Medicaid, and the current state of automation and AI in federal programs. In Medicaid, PA is intended to promote cost-effective care, but is often time-consuming and raises concerns about delayed or denied care and increased administrative burden for providers. Research highlighted that automation and AI are helping address these challenges. Providers are starting to use AI to prefill forms and check compliance, while payers are using it to standardize data, make real-time decisions, and speed up processing. Currently, most efforts focus on using AI to either replace or supplement existing processes. Benefits include minimizing administrative burden, reducing delays in care, and promoting cost-effective care; however, drawbacks include limited transparency, increased bias, and poor decision-making. Currently, federal oversight of automation and AI is limited, especially in Medicaid.

The Commission engaged stakeholders to further examine these issues. Overall, both states and MCOs are using automation and AI in PA processes, with MCOs doing so more extensively. However, there is limited insight and few requirements for PA use or data sharing. Currently, no state contracts mandate data sharing, though some MCOs voluntarily share data. At the federal level, regulation and guidance on automation are minimal, though staff identified the January 2024 CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F) as a step in the right direction. At the state level, seven states have passed legislation regulating automation, with common themes including denial review, requiring human-in-the-loop approaches, and transparency requirements. Stakeholders also raised concerns about automation, including higher denial rates, bias, use of data to train models, lack of transparency, and equity impacts. These issues, combined with varying state regulations and limited federal guidance, contribute to strong hesitancy about implementing automation in PA processes.

Commissioner Discussion

Commissioners largely raised concerns about PA automation, though acknowledged potential benefits. They noted the lack of information available on how AI is currently used, particularly its “black box” nature. Many emphasized the importance of a human-in-the-loop approach, especially with denials, to ensure fairness, transparency, and confidence in decisions. Commissioners suggested potentially aligning Medicaid requirements with Medicare guidance on AI and automation to simplify implementation for vendors and providers. They also highlighted the need for clear distinctions between basic algorithms and AI, caution around rapidly evolving AI technologies, and guardrails such as third-party audits and CMS certification of AI systems. Commissioners also recognized the potential benefits of automation, such as speeding approvals for routine requests, but stressed that any use of AI should include meaningful oversight and equity considerations.