H.R.1 Medicaid Implementation: An Administrative Cost Monitoring Guide for States (SHVS Cross-Post)

The following is cross-posted from State Health & Value Strategies. 

Authors: Emily Zylla and Elizabeth Lukanen, SHADAC

Original posting date July 6, 2026. Find the full post here on the SHVS website.

Passed in July 2025, H.R. 1 dictates several large-scale structural changes to the Medicaid program to be implemented over the next months and years. Some of the major changes include:

• Mandatory work requirements for certain enrollees
• New limits on retroactive coverage
• Eligibility redeterminations shifted from annual to every 6 months for Medicaid expansion population
• Cost-sharing requirements for certain services and populations

Implementing and operationalizing these changes will require intensive coordination and resources,  and is projected to drive up administrative costs across state operations. 

States also must comply with the Medicaid Work Reporting Requirements Interim Final Rule (IFR), which introduces stringent requirements that limit state-level flexibility in operations and implementation. Because the IFR departs from the preliminary guidance states relied upon to prepare for January 2027, states now must revisit and revise implementation plans and system updates developed under that previous guidance. This means more resources and time must be spent on administrative rework.

While H.R. 1 did appropriate $200 million to support state-level implementation of new rules and guidelines nationwide, recent projections and historical data suggest this could fall short of states’ actual needs, putting strain on already tight state budgets.

Establishing robust internal cost-tracking mechanisms will allow states to anticipate resource needs, justify budget adjustments, and document an accurate account of the full fiscal impact of policy shifts. 

In State Health & Value Strategies’ latest Expert Perspective, SHADAC authors Emily Zylla and Elizabeth Lukanen review considerations and options that states can use to proactively track administrative costs related to H.R. 1 Medicaid implementation. This review includes considerations for designing or developing a cost-tracking framework as well as numerous examples of what states could consider tracking, including both high-level and granular cost-tracking categories.

SHVS has also created a customizable Excel tool to help states operationalize the guidance provided in the full EP, giving them a framework that is ready to tailor to their needs. 

Proactively tracking state administrative costs now can help to save states significant administrative strain later—learn the details and access the customizable Excel tool in the full Expert Perspective here.

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