As Medicaid work requirements loom, eligibility will become more complex and less stable, giving health systems a narrow window to strengthen revenue cycle operations to mitigate margin risk.
The countdown to Medicaid work requirements has begun. The 2025 enactment of the One Big Beautiful Bill Act (OBBBA) set in motion federal work and reporting requirements scheduled to take effect on Jan. 1, 2027. Healthcare organizations now have a limited window to prepare for what could become a major revenue cycle test.
The new requirements are expected to increase administrative burden, eligibility churn, and reimbursement risk at a time when hospital operating margins are already under pressure. Earlier Congressional Budget Office (CBO) estimates found that Medicaid work requirements would reduce Medicaid enrollment by an estimated 5.2 million adults by 2034.
For revenue cycle management (RCM) teams, the challenge will be maintaining coverage continuity and limiting preventable denials as more frequent redeterminations, expanded work reporting requirements, and reduced retroactive coverage increase the likelihood of eligibility disruptions.
Most working-age Medicaid covered adults are employed
Fig.1 - Employment status of Medicaid-covered adults ages 19–64 who do not receive SSI or SSDI benefits and are not enrolled in Medicare (2023). Percentages may not sum to 100% due to rounding. Full-time employment is defined as working 35 or more hours per week and may include individuals working multiple jobs. Source: Adapted from KFF analysis of the March 2024 CPS ASEC Supplement.
The policy assumes large portions of enrollees are not working. In reality, most Medicaid-covered adults are already employed full- or part-time (64%) or qualify for exemptions. The impact is therefore less about workforce participation and more about consistently documenting eligibility or exemption under more frequent and complex administrative reporting rules.
Arkansas offers a glimpse of what that can look like. When the state implemented Medicaid work and reporting requirements between 2018 and 2019, roughly 18,000 otherwise eligible enrollees—about 25% of those subject to the requirement—lost coverage, primarily due to reporting and documentation failures.
Medicaid exposure will determine impact
Importantly, the impact will not be evenly distributed. Health systems in Medicaid expansion states, along with safety-net hospitals and rural providers, will experience disproportionate strain. For these organizations, even modest increases in eligibility churn can translate into meaningful revenue disruption. The question for leaders is where exposure is highest and which parts of the revenue cycle will absorb the pressure first.
What leaders should do now: Health system leaders should be looking closely at where Medicaid exposure is concentrated to understand where revenue cycle disruption is likely to show up first.
Eligibility volatility becomes a direct revenue risk
Work requirements are likely to increase fluctuations in Medicaid coverage as beneficiaries move through recurring reporting and eligibility verification cycles. As a result, coverage status may become less stable across the care episode, particularly for services that span multiple encounters or extended billing timelines.
For RCM teams, the implication is increased administrative rework, higher rates of eligibility-related denials, and greater exposure to revenue leakage, especially in high-volume Medicaid service lines and longer-cycle reimbursement scenarios.
What leaders should do now: Healthcare leaders should model Medicaid eligibility churn and revenue impacts under different scenarios and identify which facilities and service lines are most vulnerable to coverage interruptions and reimbursement losses.
Front-end registration becomes the primary control point
The front end of the revenue cycle will play an increasingly important role in protecting reimbursement. Registration and scheduling teams will need to place greater emphasis on eligibility verification and proactive identification of patients at risk for coverage interruptions.
For organizations with large Medicaid populations, that may require closer coordination between patient access teams, eligibility verification vendors, and state Medicaid systems, along with updated staff training and workflows that help spot potential coverage issues before services are rendered rather than after claims are submitted.
What leaders should do now: Organizations should map eligibility workflows end-to-end, including vendor handoffs, to identify where delays or timing gaps could increase coverage and reimbursement risk. Service level agreements with third-party RCM vendors should establish clear turnaround expectations for eligibility determinations.
Denial management shifts upstream into prevention
Denial management will increasingly depend on preventing coverage issues before claims are submitted rather than correcting them afterward. Coverage interruptions that occur between registration and billing could create a new source of eligibility-related denials and administrative rework, particularly as reduced retroactive coverage limits the ability to recover reimbursement after the fact.
For RCM teams, that raises the importance of ongoing eligibility monitoring throughout the care episode rather than relying solely on point-in-time verification at registration. More frequent eligibility checks and stronger coordination between teams may help spot potential reimbursement issues before they become denied claims or uncompensated care.
What leaders should do now: Revenue cycle teams should analyze eligibility-related denial trends to understand where coverage disruptions occur most often and establish earlier intervention points to reduce avoidable losses. Organizations that outsource eligibility verification or other front-end revenue cycle functions should also use regular performance reviews and dashboards to monitor turnaround times, escalation rates, and eligibility-related denial trends.
Patient financial engagement becomes critical
Patient communication will play a larger role in maintaining coverage continuity under Medicaid work requirements. In Arkansas, despite outreach efforts and administrative safeguards, many eligible enrollees still lost coverage due to confusion, digital access barriers, and difficulty completing recurring reporting requirements.
Patients may need clearer guidance on reporting obligations, documentation requirements, and timelines for maintaining eligibility. This elevates the importance of financial counseling and patient access teams as frontline navigators for Medicaid enrollees, not just to answer questions, but to help patients move through the steps required to keep coverage active.
Organizations that invest in proactive patient education and structured support pathways are more likely to reduce coverage lapses that lead to uncompensated care.
What leaders should do now: Health systems should assess whether patient access and financial counseling teams are equipped to support Medicaid-specific education and escalation workflows while ensuring potential Medicaid cases are transferred quickly to eligibility specialists or external verification partners to minimize delays that could jeopardize coverage confirmation.
Bottom line
Medicaid work requirements will introduce a new layer of administrative complexity that could impact revenue cycle performance, particularly for organizations with large Medicaid populations. Healthcare organizations can’t control policy shifts, but they can get ahead of their impact. In practical terms, preparation means:
- Speeding up eligibility verification
- Eliminating workflow handoff delays
- Strengthening oversight of outsourced revenue cycle partners
- Investing in patient navigation to minimize financial disruption
As 2027 approaches, the organizations that use market intelligence to understand risk exposure today will be better prepared to navigate tomorrow’s enrollment changes—and better poised to continue delivering care in a dynamic healthcare landscape.
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