As the sweeping HR1 reforms take shape, much of the national conversation has focused on churn and coverage loss. But according to Enrique Balaguer, Chief Growth Officer at MedZed, that’s only the tip of the iceberg.
MedZed, a provider of health-related social need (HRSN)services that partners with health plans to reach high-risk Medicaid members, recently released a report capturing what health plan leaders see coming in 2025 and beyond.
Based on interviews with executives across the country, the report, called Inside the Medicaid Shake-Up: What Health Plan Leaders See Coming, warns of underreported threats: a “quality metrics math problem,” six-month eligibility “double hits,” rising provider exits, and widespread erosion of trust.
“This isn’t just about losing members,” says Balaguer. “It’s about losing stability, continuity, and the financial backbone of Medicaid managed care.”
The Hidden Math Problem Destabilizing Medicaid Plans
At the heart of the crisis is what Balaguer calls the “quality-metrics math problem.” Medicaid managed care plans operate under performance-based contracts with state agencies. These contracts often include quality metrics, from blood pressure control to childhood immunizations, tied to financial bonuses or penalties.
“If a plan has $1 billion in premium revenue, they could have $30 to $35 million at risk just based on whether members are meeting those health metrics,” Balaguer explains. “But here’s the catch: the metrics apply to all members, including the 40% who are disengaged and not showing up for care.”
Plans are being penalized for outcomes they cannot mathematically achieve, even after spending millions on outreach. And it gets worse. The same disengaged members often default to emergency departments for care, driving up high-cost claims that further strain the plan’s finances. “It’s a double hit; missed incentives and major payouts,” Balaguer says.
The Six-Month Requalification Cycle: A Churn Crisis in Motion
Adding to the complexity is the shift to six-month eligibility redetermination cycles. Previously, Medicaid members were requalified annually. Under HR1, that will now happen twice a year, a move Balaguer calls “a massive administrative burden with devastating ripple effects.”
“Medicaid applications are already as complex as doing your taxes,” he says. “Now, people will have to go through this process every six months. And the data shows that 85% of people who lose coverage do so for administrative reasons, not because they’re actually ineligible.”
This frequent requalification doesn’t just destabilize coverage for individuals. It destabilizes entire plans. When a member drops off mid-year, plans lose premium revenue, and if that person was healthy, it worsens the risk pool. If they come back later, the plan has to re-onboard them at a cost, while also managing worsened conditions and disrupted care.
“In practice, it’s a four-way hit,” Balaguer notes. “The member loses coverage. The plan loses revenue. The hospital may be forced to provide uncompensated care. And when the member returns, it starts all over again.”
Provider Exits Are Already Happening
As eligibility churn intensifies, providers, especially those in rural areas and safety-net clinics, are facing a perfect storm: fewer covered visits, more uncompensated care, and a mandate to meet rising quality requirements.
Balaguer warns that operating margins are collapsing. “We’re hearing from FQHC partners and rural clinics that they’re closing locations, cutting staff, and reducing hours,” he says. “The Commonwealth Fund estimated this could reduce operating margins by up to 13%. For many, that’s just not sustainable.”
If those providers walk away, patients lose access virtually overnight, and health plans are left scrambling to fill the gaps.
Trust Is the Real Currency of Care
Amid all these structural pressures, MedZed’s report points to something less tangible, but arguably more important: trust.
“The truth is, most disengaged Medicaid members have had negative experiences with the healthcare system, public assistance, or both,” Balaguer says. “Many are dealing with chronic conditions, mental health challenges, or substance use disorders. Their lives are complicated. And when a field navigator shows up, their first question is usually: ‘Why are you here? What do you want from me?’”
For MedZed, trust-building isn’t just a nice-to-have. It’s foundational. Their field teams prioritize relationships first, care delivery second. “We’ve found that without trust, even the best system fails,” Balaguer says.
Creative Solutions Already in Play
Despite the daunting landscape, Balaguer is quick to point out that some health plans are already taking bold steps to mitigate risk and strengthen connections. Among the most promising strategies:
- Two-shift staffing models that accommodate members who work hourly jobs and can’t afford to miss work during standard business hours.
- Proactive redetermination outreach through email, texting, and in-person assistance, sometimes using iPads and kiosks, to help members complete paperwork before deadlines.
- Digital outreach for young adults, particularly via SMS, where they’re more likely to engage.
- Community partnerships that create “warm handoffs” to help members access services beyond clinical care, such as housing or food assistance, and actually use them.
“We’re also seeing plans get creative with onboarding,” Balaguer adds. “Some are requiring orientation sessions at enrollment and small copays for avoidable emergency visits to encourage PCP engagement.”
Urban vs. Rural: Different Geography, Same Disruption
MedZed’s interviews spanned both urban and rural markets, and while the challenges differ, the disruption is universal.
“In rural areas, access is the issue. Distance, transportation, and provider shortages are crushing,” Balaguer says. “In cities, it might not be distance but the time it takes to get across town on a bus still creates major care barriers.”
And in both settings, the policy shifts ahead could push struggling providers and patients past their breaking points.
Policymakers Need a Reality Check
Asked what he wishes policymakers better understood, Balaguer doesn’t mince words.
“Medicaid has always been hard to use. It’s administratively complex, confusing, and burdensome for members, providers, and plans alike,” he says. “The idea that cutting funding or layering on new requirements will improve it? That’s not realistic.”
Instead, he urges simplification. “Make it easier for members to understand their benefits. Make it easier for providers to participate. And make it easier for plans to meet their mandates without having to reinvent the wheel every six months.”
And don’t forget the scale. “One in five Americans is covered by Medicaid,” he emphasizes. “That’s nearly 70 million people; not a niche program. It’s essential, from birth through end-of-life care.”
A Warning and a Roadmap
Balaguer concludes with a cautionary note and a call to action.
“We’ve been wrestling with some of these issues for decades,” he says. “But the HR1 changes are going to make them exponentially worse unless we act quickly, collectively, and smartly.”
That means investing in trust-building teams. Reimagining engagement. Streamlining redeterminations. Supporting providers. And most of all, aligning policy with on-the-ground realities.
“Without that,” Balaguer says, “we’re going to see higher costs, worse outcomes, and more suffering. But if we get it right, this could be the moment we make Medicaid work better for everyone.”
For more information, visit mymedzed.com.
Daniel Casciato is a seasoned healthcare writer, publisher, and product reviewer with two decades of experience. He founded Healthcare Business Today to deliver timely insights on healthcare trends, technology, and innovation. His bylines have appeared in outlets such as Cleveland Clinic’s Health Essentials, MedEsthetics Magazine, EMS World, Pittsburgh Business Times, Post-Gazette, Providence Journal, Western PA Healthcare News, and he has written for clients like the American Heart Association, Google Earth, and Southwest Airlines. Through Healthcare Business Today, Daniel continues to inform and inspire professionals across the healthcare landscape.
