Providers HR1 Response Readiness: Turning Disruption into a Competitive Advantage or a Financial Survival Tactic
Helping Providers Prepare for Medicaid Changes and Protect Financial Performance
HR1 will bring significant changes to Medicaid, particularly in expansion states. To date, the attention has focused on how major insurers and state Medicaid programs are preparing, but providers face an equally important question: Are they ready for a significant change in the coverage status of their patients?
The potential shift is substantial. Recent Urban Institute modeling estimates that new community engagement requirements and six-month eligibility redeterminations could result in 4.9 million to 10.1 million fewer people enrolled in Medicaid expansion coverage in an average month in 2028, depending on how states implement the new requirements. That represents a 27% to 55% decline among the population subject to the work requirements.1
And the impact extends beyond Medicaid enrollment. CBO estimates that the Medicaid provisions of HR1 will ultimately increase the number of people without health insurance by 7.5 million by 2034.2
For providers, those numbers have real financial consequences. When coverage drops, most patients don’t stop needing care- they lose the ability to pay for it. Paid Medicaid and Marketplace encounters can become self-pay or charity care, collection rates fall, and uncompensated care increases while the cost of delivering that care remains.
The impact will be particularly significant for hospitals, health systems, FQHCs, behavioral health organizations, and other providers that care for large Medicaid populations. Some patients will no longer qualify for coverage, while others may lose it because they miss a deadline, do not understand the new requirements, or have difficulty completing the necessary documentation.
Providers also have an important role to play. They interact with Medicaid patients every day, creating opportunities to identify coverage issues earlier, help patients understand what they need to do, and connect them with health plans, states, and community resources before coverage is lost.
Organizations that prepare now will be in a much better position to protect patient access, anticipate changes in payer mix and uncompensated care, and manage the financial impact of the new Medicaid environment.
What Should Providers Be Thinking About Now?
How much financial exposure do we have?
The impact of HR1 will not be the same across every facility, service line, or patient population. Providers should understand where they have the greatest Medicaid exposure and model what different levels of coverage loss could mean for payer mix, uncompensated care, bad debt, and margin. There is an estimate of 30% decline in net operating income for high Medicaid population providers.
Which patients are most at risk?
Providers already have valuable information through eligibility checks, patient access, encounters, and claims. Bringing that data together can help identify patients who may be more likely to experience a coverage disruption and allow teams to intervene earlier.
How can we help patients stay covered?
Patient access and financial counseling teams will become even more important. Providers should look at how eligibility is verified, when patients are informed of coverage issues, how documentation is collected, and what happens when someone needs help navigating the new work requirements.
Are we working closely enough with Medicaid plans?
Providers do not need to solve this alone. Medicaid plans also have a strong incentive to keep eligible members covered. Providers and plans can work together on patient outreach, education, data sharing, and connecting patients with qualifying work, education, or community resources.
What are others doing?
Providers are not waiting, they are responding. We have seen major providers cut hundreds of staff members in preparation for the expected financial impact. Others are focused on trying to reduce the average length of stay. Others, regrettably, have filed bankruptcy.
Can our teams absorb the additional work?
HR1 could create more calls, eligibility questions, documentation needs, and financial counseling activity at a time when many organizations are already stretched. Providers should look for opportunities to simplify workflows and use automation, analytics, and digital outreach rather than simply adding more manual work.
How Should Providers Respond
The initial response has occurred, but now what? AArete has developed a robust playbook for ongoing financial optimization to protect your financials while maintaining delivery to your patients.
1. Understand the Impact – Know where you are exposed before making changes.
- Assess HR1 readiness across finance, patient access, revenue cycle, managed care, and technology
- Quantify Medicaid revenue and patient populations at risk
- Model potential coverage loss, payer mix shifts, uncompensated care, and bad debt
- Identify the facilities and service lines with the greatest exposure
2. Prepare the Organization – Put the right processes in place to protect patients and revenue.
- Identify patients at greater risk of losing coverage due to new work requirements
- Strengthen eligibility verification and financial counseling
- Design patient outreach and coverage-continuity strategies
- Improve coordination with Medicaid Managed Care Organizations and states
- Prepare revenue cycle and patient access teams for increased demand
3. Repricing Through Payer Recontracting
- Rebuild rate strategy on defensively, service line cost to serve models based on projected financial impact
- Understand uncompensated care expectations
- Scrutinize payment exposure by line of business
- Digitize payer contracts leveraging tools such as AArete Doczy.ai™ to ensure proactive strategy as more changes are likely to come
- Reset payer contracts based upon the current economics
4. Established a Structured Cost-Take Culture
- Organizations have hit labor, if you haven’t, it’s time for an organizational reset
- Target vendor spend across purchased services, IT, GPO, MedSurg, Clinical Vendors, and the long tail of low dollar vendors
- Ensure consistent ROI accountability across investment initiatives
- Implement automation where appropriate
5. Make the Response Sustainable – Use technology and better ways of working to manage the added complexity.
- Automate manual eligibility and administrative workflows
- Use analytics to prioritize patients who need help coordinating insurance coverage
- Build CRM and digital outreach capabilities
- Improve workforce productivity and operating processes
- Track coverage, financial, and operational results over time
HR1 Is More Than a Compliance Issue
The immediate challenge may be implementing new Medicaid work requirements, but the larger issue for providers is what happens when patients lose coverage and what are the financial implications for each individual provider. AArete understands the ecosystem from both the lens of a provider and payer understanding the potential impact to a provider’s patient and can giver robust details to the impact from HR1.
The window for a provider response is already open and is closing quickly. The first response has happened, but the time has come to ask what’s next. The most disruptive provisions hit at the end of 2026 and into 2028, and readiness demands coordinated execution across finance, patient access, operations, clinical, and technology teams. The providers that enter with strong liquidity, a defensible rate strategy, and a cost base already under management will have the flexibility to weather it and turn it into a competitive advantage.
Meet The Authors
Sources
- https://www.urban.org/research/publication/projected-reductions-medicaid-expansion-enrollment-under-obbbas-work ↩︎
- https://www.cbo.gov/publication/61837? ↩︎
