Part III of a Series: Community and Communication
Under the 2025 Act, formerly the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, federal law now requires certain adults enrolled in the Medicaid program to demonstrate compliance with work and community engagement requirements.[1] Beginning January 1, 2027, the federal government will no longer provide states with matching funds (currently 90%) for any adults who do not comply with federal rules. The Congressional Budget Office (CBO) estimates that Section 71119 will reduce federal spending by $325.6 billion over the next 10 years. However, due to the “multiplier affect” and the state share of spending, the economic impact on states and families could reach nearly $1 trillion.
States have a choice in the design of their community programs and may choose to preserve coverage (and federal funds) as they help individuals bridge the Medicaid “benefit cliff.” The keys to helping Americans move out of poverty and become full-time, full year around workers and taxpayers are community and communication. Successful states will need to deploy both technology and human interaction. Knowledge alone is not sufficient to change behavior.
Challenges and Opportunities
The new law provides states with other challenges and opportunities that are related to the work requirements:
Eligibility must be redetermined at least every six months; however, states have the option to verify compliance more frequently (saves $62.5 billion)
States must act to reduce duplicate enrollment in Medicaid, the state Children’s Health Insurance Program (CHIP), and multiple state plans (saves $17.4 billion)
States will become subject to sanctions for erroneous excess payments (saves $7.6 billion)
In determining compliance with work requirements, states are prohibited from utilizing entities that have a financial conflict of interest
Each state will receive a share of $200 million through a “Government Efficiency Grant” to establish systems to conduct eligibility determinations or redeterminations
Each state is eligible to receive at least $500 million ($100 million each year for five years) and potentially some could receive more than as $1 billion to administer a Rural Health Transformation Program
States should view these provisions not as separate, individual provisions to be solved one at a time, but rather as an interrelated, dynamic system built around communities and continuous communication.
Community
The U.S. Gross Domestic Product (GDP) is the confluence of hundreds of millions of daily decisions made by individuals, employers, investors, etc. Our national economy is like the incalculable individual drops of rain that flow together through hundreds of ditches, creeks, and rivers to feed the mighty Mississippi River as it flows into the Gulf of Mexico.
Altogether, the drops are creative and change the world around them.
Our communities are like the individual sources of water we depend upon. There are 3,007 counties in the United States. There are 14 million adults are currently enrolled in Medicaid and subject to work and community engagement requirements. The ACA adult group (ages 19-64) spans years.
In our uniquely American health insurance system, no national market offers a singular solution. Health care is personal and local. States will be held financially responsible for implementing the new law. Success will depend upon mobilizing resources at the local level.
The Medicaid provisions offer hospitals an opportunity to regain and strengthen their identities and cultures as anchors in their communities.
Rural hospitals, in particular, provide more than medical care; they are the lifeblood of their communities. They serve as economic anchors, major employers, and trusted hubs for social connection, public health, and emergency response.
Communication
In every major piece of health care legislation spanning the past four decades beginning with the creation of the state CHIP, through the Medicare Modernization Act (MMA), and the Affordable Care Act (ACA), the federal government and states learned hard lessons about the critical nature of communicating with their audiences.
In each example, chaos initially erupted from poor planning, lack of resources, and over-reliance on single modes of communication. The federal government and states ultimately changed plans and added resources for sufficient education and outreach. Successful implementation occurred only after communication became more deliberate, continuous, and took on multiple forms with the involvement of multiple community partners. The work and community engagement provisions will require a similar level of effort.
There are lessons from Arkansas, Georgia, and Kentucky, which have implemented Medicaid work requirements in whole or in part. Moreover, Medicaid enrollees themselves have expressed what is most important to them and how best to engage them.
Technology is very important, but it is not enough. There is no database that can provide all of the information necessary to determine compliance with the 80-hour per- month requirements.
To be successful in becoming full-time workers and taxpayers, many individuals still require a human touch.
In a September 2020 Health Affairs article, “Medicaid Work Requirements in Arkansas: Two-Year Impacts on Coverage, Employment, and Affordability of Care,” surveys with Medicaid enrollees provide practical and actionable information:[2]
The most popular option for reporting work activities was a website using a smartphone or a smartphone app (32.6%)
27.8% preferred a telephone
14.5% preferred using mail
13.9% preferred to provide information in person
Only 11.3% preferred an internet website using a computer
More than one-third of enrollees reported a change of contact information in the past year, which underlines the difficulties of simply finding people
The lack of access to computers or the lack of computer skills should signal to states what skills may be needed to be developed in today’s economy.
For those who were not working or did not meet an exemption, 28.1% reported they would like to start working if a job were available.
When asked about services that would help them find a job, 80.6% reported they would like specified job training or more education, and 72.2% reported needing transportation help.
These responses point to a clear mandate for states to invest not only in eligibility systems, but also in job training, digital literacy, and transportation infrastructure as core components of their Medicaid work and community engagement strategies.
Rural Health Transformation Grants
These grants arrive at a critical moment. Rural communities are aging faster than urban counterparts, and Medicaid is the primary payer for long-term services and supports (LTSS) in these areas—covering roughly 60% of LTSS spending. [3]
With the work and community engagement requirements affecting millions of adults, rural hospitals and clinics will be on the front lines of implementation. But instead of viewing this solely as a compliance burden, states can use these grants to modernize systems, reduce closures, and connect Medicaid enrollees to employment pathways through local health systems.
States are required to use the funds for at least three purposes, including:
Strengthening provider networks and hospital solvency
Expanding workforce capacity and recruitment pipelines
Investing in chronic disease management, behavioral health, and technology-enabled care (e.g., remote monitoring, cybersecurity, VBC infrastructure)
Crucially, these investments align directly with the new Medicaid requirements. For example, improving transportation access, expanding job training, and integrating behavioral health services into community clinics can all count toward both compliance with work engagement rules and strategic use of grant funds.
With no finalized federal reporting requirements yet in place, states have flexibility, which also means responsibility. Success will depend on thoughtful planning, interagency coordination, and an eye toward long-term sustainability. States that treat this funding as an integrated part of their Medicaid strategy—not a siloed initiative—will be best positioned to preserve coverage, reduce churn, and uplift rural communities.
Conclusion
Helping individuals By investing in local efforts to match potential workers with prospective employers, training, education, and social supports, states will greatly benefit by preserving nearly $1 trillion in economic impact over the next ten years.
The path forward is not just about compliance; it’s about connection, coordination, and unlocking the full potential of every individual and every community.
Partnering with HORNE
At HORNE, we specialize in helping states navigate the complex intersection of Medicaid policy, rural health delivery, and federal funding opportunities.
As trusted advisors to state health and human services agencies across the country, we bring deep expertise in:
- Medicaid policy and financing, including CMS waivers and state plan design
- Grant management, subrecipient monitoring, and federal compliance
- Program integrity, eligibility modernization, and reporting infrastructure
- Rural health strategy, including value-based care models and workforce development
Our team has supported states in managing federal funding streams under ARPA, ARRA, and other CMS-directed initiatives, giving us a proven track record in maximizing impact while minimizing risk. We understand the stakes: implementing OBBBA’s work and community engagement requirements will require coordinated, scalable, and community-focused solutions. That’s where HORNE excels.
Whether you’re developing a Rural Health Transformation Plan, building out eligibility and reporting systems, or aligning your Medicaid strategy with new federal mandates, HORNE is ready to partner.
Let’s build a future where compliance, coverage, and community health go hand in hand.
