On June 15, the Medicaid and CHIP Payment and Access Commission (MACPAC) released its June 2026 Report to Congress, which included the following chapters:
- Implementing Community Engagement Requirements in Medicaid,
- Automation in Medicaid Prior Authorization,
- State and Federal Tools for Ensuring Accountability of Medicaid Managed Care Plans,
- Exploring the Role of the State Medicaid Agency in the Program of All-Inclusive Care for the Elderly, and
- Provider Enrollment and Credentialing in Medicaid
The full report is available here.
MACPAC Discusses Implementing Community Engagement Requirements in Medicaid
In this chapter, MACPAC discusses the implementation of the Medicaid community engagement (CE) requirements established under the One Big Beautiful Bill Act (OBBBA). The chapter examines the new federal requirements, lessons learned from prior state implementation efforts, administration and operational challenges, and considerations for states as they prepare for implementation in early 2027.
The OBBBA requires states to implement CE requirements for certain adult Medicaid beneficiaries by January 1, 2027. Broadly, Medicaid beneficiaries must complete at least 80 hours per month of qualifying work, education, job training, community service, or approved activities to maintain Medicaid eligibility, unless they qualify for a statutory exemption. States are responsible for verifying compliance, determining exemptions, administering reporting requirements, and making eligibility determinations.
Context for Community Engagement Requirements
MACPAC notes that the OBBBA establishes a national framework for Medicaid requirements while allowing states flexibility in implementation. The law builds on prior experiences with proposed community engagement programs but differs by creating a permanent statutory requirement. Because implementation will occur nationwide within a relatively short timeframe, states will need to develop new administrative systems, communication strategies, and verification processes while maintaining continuity of coverage for eligible beneficiaries. This will be the first nationwide implementation of Medicaid CE requirements under federal law; therefore, careful implementation is critical to minimize administrative burden and avoid unnecessary coverage loss among eligible beneficiaries.
Implementation Principles
MACPAC outlines four key principles to guide implementation of CE requirements. MACPAC states that these principles aim to promote strategic implementation, minimize administrative burden, and support eligible beneficiaries:
- Principle 1: The Centers for Medicare & Medicaid Services (CMS) should provide timely federal guidance and technical assistance. MACPAC recommends that CMS provide clear guidance on implementation, reporting, exemptions, and program requirements, while offering technical assistance to support states.
- Principle 2: CMS and states should ensure that eligible individuals can gain and maintain coverage. MACPAC recommends simple reporting processes, clear communication with beneficiaries, easy access to exemptions, and, when possible, the use of available data to verify compliance.
- Principle 3: CMS and states should prioritize efficiency when procuring, updating, and operating Medicaid eligibility systems. MACPAC recommends leveraging existing eligibility systems, automating where possible, and improving data exchange to reduce administrative burden.
- Principle 4: CMS and states should use timely monitoring and evaluation data to inform policy. MACPAC recommends collecting standardized data to monitor implementation, evaluate outcomes, and identify opportunities for future improvement.
Implementation Challenges
MACPAC suggests that states will face significant operational and administrative challenges as they prepare to implement CE requirements. States will need to update their Medicaid eligibility systems, establish processes to verify qualifying activities and exemptions, coordinate data sharing, train eligibility staff, and conduct beneficiary outreach and education. To support implementation, the OBBBA provides $200 million in fiscal year (FY) 2026 for state grants and $200 million in FY 2026 for CMS to support oversight and administration. Despite this funding, implementation timelines, costs, and administrative burdens will vary by state, depending on each state’s existing infrastructure and capacity.
Potential Implications
Implementation of CE requirements may affect Medicaid eligibility, enrollment, and continuity of coverage as states begin to enforce the new requirements. MACPAC emphasizes that ongoing monitoring and evaluation will be important to identify implementation challenges, assess impact, and determine whether the policy achieves its intended goals while minimizing unnecessary coverage loss among eligible beneficiaries.
MACPAC Reviews Automation in Medicaid Prior Authorization
In this chapter, MACPAC reviews how automation, including artificial intelligence (AI) and rules-based algorithms, is used in Medicaid prior authorization (PA). PA is used in both Medicaid managed care and fee-for-service (FFS) programs to require payer approval before certain items, services, or medications are provided. MACPAC reviewed state and federal policies, conducted a literature review, and completed stakeholder interviews to assess how automated tools are used in the Medicaid PA process. MACPAC identified two central concerns with automation: limited visibility into how automation is being used in Medicaid PA, and existing federal Medicaid statutes do not directly address the use of automation in PA.
Automation is being used across many areas of the PA workflow by providers, payers, states, and vendors. Providers may use automation to prefill forms, determine whether a PA is required, pull health information from records, and help prepare submissions. Payers may use automation to organize requests, convert information into a more efficient format, identify requests that may qualify for approval, route requests for human review, and flag potential fraud or errors. Interviewed states and plans reported that their automated tools are generally used to approve straightforward requests or route cases to human reviewers, rather than independently deny care based on medical necessity. However, one state reported automated denials for administrative reasons, such as incomplete requests or situations where PA was not required, but said providers are notified and directed to resubmit when appropriate. AI use remains more limited in FFS Medicaid and smaller or rural health systems due to resource and capacity barriers.
Key Concerns
- Stakeholders reported limited visibility into when automation is used, how tools make PA decisions, and whether automation affects approval or denial rates.
- AI tools may create risks for Medicaid beneficiaries if they are trained on data that do not reflect the Medicaid population, covered services, clinical complexity, or available health record information.
- Simpler rules-based algorithm tools can create access problems if programmed incorrectly. MACPAC cites an example in which a coding error in a state PA algorithm led to inappropriate denials for many beneficiaries.
- As of December 2025, seven states had passed laws regulating automation in PA, but those laws vary in how they define automation, whether they require human review, and what transparency or audit requirements they include.
Principles for Automation Oversight
MACPAC identifies three principles for automation oversight:
- Principle 1: Automation in Medicaid PA offers administrative efficiencies for both payers and providers. Automation may reduce administrative burden, shorten PA decision timelines, improve consistency, and support more cost-effective care. However, oversight should balance these potential benefits against risks such as bias, errors, reduced transparency, and inappropriate adverse determinations.
- Principle 2: Transparency and disclosure should be used as tools for documenting and assessing automation use. Transparency and disclosure are important for documenting how automation is used and for helping states and the federal government monitor risks, including data bias and faulty programming.
- Principle 3: The oversight policy framework for Medicaid PA should be continuously reevaluated. Because automation technology is evolving quickly, the oversight framework for Medicaid PAs should be revisited regularly.
Stakeholders generally support additional CMS action. However, some caution that overly prescriptive federal requirements could create administrative burden, require states to rework existing approaches, or limit useful innovation. Stakeholders also differed on how broadly automation should be defined, because a narrow AI-focused definition could miss risks from simpler rules-based algorithms.
MACPAC Recommendations
MACPAC issues four recommendations:
- Recommendation 2.1: CMS should clarify that Medicaid managed care plans may not rely on automation alone to make adverse medical-necessity determinations. Denials or partial approvals involving medical necessity should be reviewed and authorized by a qualified human reviewer.
- Recommendation 2.2: CMS should amend FFS Medicaid regulations to apply the same human-review standard to adverse medical necessity decisions in FFS programs.
- Recommendation 2.3: CMS should issue guidance on how states can use existing managed care oversight tools, including external quality review, readiness reviews, ongoing monitoring, and Managed Care Program Annual Reports (MCPARs), to oversee plan use of automation in PA.
- Recommendation 2.4: State Medicaid agencies should update managed care contracts, when practicable, to require plans to report how they use automation in authorization and coverage decisions, including testing, evaluation, and oversight.
All 17 MACPAC Commissioners voted in favor of each recommendation, with no opposition and no relevant conflicts of interest reported. Overall, MACPAC supports the use of automation to improve PA efficiency, while emphasizing the need for stronger human review, transparency, and oversight to protect Medicaid beneficiaries from inappropriate adverse determinations.
Macpac Shares Findings on Tools for Ensuring Accountability of Medicaid Managed Care Plans
Between 2010 and 2023, Medicaid managed care saw significant growth in both enrollment and spending. The share of Medicaid beneficiaries enrolled in comprehensive managed care organizations (MCOs) rose from 48.3 percent to nearly 78.1 percent, while capitation payments to managed care plans rose from 23.5 percent of total Medicaid benefit spending to 57.3 percent.
This growth makes effective program oversight essential for ensuring appropriate access to care. Yet, despite managed care’s role as the predominant Medicaid delivery system, there is a lack of publicly available information about how state Medicaid agencies use accountability tools to ensure plans meet contract requirements and performance expectations.
Continuing the examination of Medicaid managed care oversight and accountability, MACPAC conducted an environmental scan of federal rules and a review of contracts in 40 states with comprehensive managed care. The review identified the accountability tools available to states and CMS, which of those tools are used, and whether additional tools are needed to oversee plan performance.
Federal Requirements on Oversight
Over the past decade, CMS has modernized federal requirements related to Medicaid managed care and subsequently published a series of bulletins providing tools to support monitoring and oversight.
CMS establishes Medicaid managed care regulations but generally does not directly enforce plans’ compliance with federal and state requirements. Because federal rules for selecting Medicaid managed care plans are limited, states are primarily responsible for procurement. Federal regulations also require states to create intermediate sanctions for certain MCO actions or inactions, but states are responsible for applying those sanctions.
CMS maintains direct oversight by approving actuarial rate certifications for capitation payments and reviewing state Medicaid agency contracts with managed care plans. Additionally, CMS is authorized to deny federal match on state capitation payments for non-compliant managed care plans and to impose sanctions through payment denials for new enrollees.
Federal regulations require states to monitor and report detailed information to CMS, including accountability actions such as sanctions and corrective action plans (CAPs) imposed on Medicaid managed care plans. States submit this information annually using a standardized reporting template known as the MCPAR.
State Use of Accountability Tools
States have sufficient tools to oversee plan performance and typically begin assessing plan performance during the procurement stage, requesting information about past performance as part of their evaluation criteria. Once the contracting stage is complete, states most often cited financial sanctions and incentives as accountability tools.
All states impose sanctions in response to identified deficiencies in plan performance, service quality, and enrollee access. States generally use an incremental, relationship-based approach before escalating to formal sanctions and reported that incentives are often effective in influencing MCO behavior.
Challenges in Oversight and Accountability
MACPAC identifies several challenges and opportunities related to accountability and oversight.
- While CMS has broad authority to ensure state Medicaid managed care programs are structured to comply with federal requirements, it has fewer tools to address specific deficiencies because states—as the primary holder of the contractual relationship—are the ultimate managers of plan performance.
- Inconsistent and incomplete MCPAR reporting limits data usability. Although several performance measures are reported to CMS and made publicly available, the data are often inconsistent and appear to undercount the actual use of accountability actions, in part due to unclear definitions.
- Although CMS requires states to report performance data across a variety of sources, these data are not always available in a centralized location or provided in a format that is conducive to comprehensive analysis across plans and states.
MACPAC Recommendations
Based on their findings, MACPAC provided recommendations to improve the completeness and usability of managed care performance data and equip states with additional tools to strengthen oversight of plan performance.
- Recommendation 3.1: CMS should issue guidance clarifying how states should consistently report accountability actions in the sanction section of the MCPAR, including liquidated damages, informal interventions, and other actions taken in response to plan noncompliance under 42 CFR 438.66(e)(2)(viii).
- Recommendation 3.2: CMS should create a public database that integrates federally required managed care plan performance data to support analysis. CMS should also provide guidance and toolkits to help states use these data to evaluate plan performance, improve beneficiary experience, and strengthen managed care oversight.
Looking Ahead
These recommendations build on MACPAC’s ongoing work examining effective oversight of Medicaid managed care programs. MACPAC identifies the Quality Rating System (QRS) as a significant development in managed care accountability, recommending its inclusion in the public data resource in this chapter upon implementation.
MACPAC Shares Findings From State Oversight of PACE Examination
In this chapter, MAPAC presents findings from an examination of state oversight of the Program of All-Inclusive Care for the Elderly (PACE), focusing on the interactions between federal and state regulatory activities. The study analyzed three-way program agreements, optional state two-way agreements, and BIPA 903 waiver requests to identify gaps in program transparency and coordination. The findings point to three policy needs: improved coordination of oversight activities, greater transparency of program performance data, and a standardized approach to data collection and quality measurement.
Key Concerns
MACPAC raises concerns about the lack of transparency in state-level oversight and the difficulty of comparing PACE performance across states. They note that current oversight often emphasizes basic compliance over program quality, particularly in states where program growth has outpaced administrative resources. Some MACPAC Commissioners request follow-up on how to balance standardized national reporting with the need for state-specific flexibility, particularly regarding encounter data.
National Quality Measure Set
MACPAC discusses that a national quality measure set is necessary to evaluate the PACE model’s effectiveness relative to other managed care programs. They emphasize that performance data, such as enrollee satisfaction and emergency department utilization, should be aggregated and released to the public.
MACPAC Recommendations
All 17 MACPAC Commissioners voted in favor of each recommendation, with no opposition and no relevant conflicts of interest reported. The three recommendations aim to facilitate joint audits, release performance data, and establish a national quality measure set.
- Recommendation 6.1: CMS should update audit protocols and three-way program agreements to enable joint audits with state Medicaid agencies, including shared planning, documentation requests, and concurrent evidence review.
- Recommendation 6.2: CMS should aggregate and publicly release PACE performance data in a user-friendly format on its website.
- Recommendation 6.3: CMS should amend regulations at 42 CFR 460 Subpart H to establish a national, standardized quality measure set for PACE organizations, focused on the most meaningful measures and designed to enable cross-program comparability.
MACPAC will continue to examine oversight and transparency across all integrated care models for dually eligible beneficiaries in future analytic cycles.
MACPAC Discusses the Interaction Between Federal Requirements and State Implementation of Medicaid Provider Enrollment and Managed Care Credentialing
In this chapter, MACPAC discusses the interaction between federal requirements and state implementation of Medicaid provider enrollment and managed care credentialing. These processes are designed to ensure enrolled individuals receive care from qualified providers while protecting the program from fraud, waste, and abuse. MACPAC outlines federal screening mandates, including checks of federal databases and criminal background screenings that scale based on a provider’s assigned risk level. MACPAC also examines state flexibilities, noting that while federal law sets a baseline, states vary significantly in how they structure their credentialing systems and may impose additional screening requirements beyond federal minimums.
Key Concerns
MACPAC expresses concerns about the administrative burden that provider enrollment and managed care credentialing processes place on providers. They note that complex, duplicative, and state-specific requirements can discourage provider participation in Medicaid, particularly when providers must submit similar information multiple times to state Medicaid agencies and managed care plans. These burdens are especially significant for small practices and for providers who are newer to Medicaid, such as doulas, community health workers, and other non-traditional providers, who may not have dedicated administrative staff or established systems to navigate enrollment and credentialing requirements. MACPAC also highlights challenges for providers serving beneficiaries across state lines, as out-of-state enrollment rules often require additional applications, screenings, and documentation even when a provider is already enrolled in Medicare or another state Medicaid program. MACPAC emphasizes the need to reduce unnecessary duplication while preserving appropriate safeguards against fraud, waste, and abuse.
Program Integrity and Beneficiary Access
MACPAC emphasizes the need to balance program integrity with beneficiary access. Enrollment and credentialing requirements help protect Medicaid from fraud, waste, and abuse, but overly rigorous or duplicative barriers can discourage provider participation and contribute to provider shortages. The current patchwork of state-specific rules creates unnecessary friction, particularly for providers already vetted by Medicare or another state Medicaid program who must complete additional applications, screenings, and documentation to serve Medicaid beneficiaries in a different state. These requirements can have a disproportionate effect on non-traditional providers, rural providers, and smaller practices that may not have the administrative capacity to navigate multiple enrollment and credentialing processes. The MACPAC Chair identifies the enrollment experience of non-traditional and rural providers as a priority for further study, with a focus on understanding how administrative requirements affect provider participation and beneficiary access.
MACPAC is not making formal recommendations on this topic in the June 2026 report but intends to focus future research on identifying specific policy levers to mitigate these administrative barriers and improve provider participation.
This Applied Policy® Summary was prepared by Lexi Hartranft with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at lhartranft@appliedpolicy.com or at 202-558-5272.
