SEPTEMBER 2025 Medicaid & Medicare Newsletter: Compliance and Policy Updates
- HiQuity Solutions
- Sep 11, 2025
- 4 min read
Mental Health • Substance Use • Social Services
September 2025 – Inaugural Issue
Summary
This issue provides an in-depth overview of Medicaid and Medicare changes affecting mental health, SUD, and social services sectors. At the federal level, the controversial One Big Beautiful Bill implemented sweeping reforms: work requirements, semiannual eligibility checks, funding caps, and increased administrative burdens for Medicaid—resulting in an estimated $326 billion in Medicaid savings and potentially millions losing coverage (KFF, Business Insider, The Washington Post).
On the Medicare side, the Part D redesign introduces a $2,000 annual out-of-pocket limit, a three-phase benefit structure, and the elimination of the five-percent coinsurance in catastrophic coverage (Centers for Medicare & Medicaid Services, PAN Foundation). State-level developments include Florida’s SMMC 3.0 with expanded behavioral health carve-ins, NJ’s Phase 1 BH integration into managed care, and Pennsylvania’s OMHSAS form updates pending. Providers must now brace for increased churn, revenue cycle pressures, and technology adjustments while also positioning strategically for grant opportunities.
Federal Policy & Legislation
One Big Beautiful Bill (Reconciliation Law) Highlights:
Work Requirements: Adults aged 19–64 must work ≥80 hours/month or meet an exemption. States will verify compliance at application and renewal, with increased frequency allowed (Wikipedia, KFF).
Coverage Churn & Uninsurance: The Congressional Budget Office estimates $326 billion in Medicaid savings over the decade, primarily from coverage losses—not cost reductions.(KFF Business Insider)
More Frequent Redeterminations: Expansion group redeterminations shift from annual to semiannual (effective December 31, 2026) (Center for Children and Families, Medicare Rights Center.
Provider Tax Restrictions & Fee Limits: Limiting how states can tax providers to fund Medicaid restricts financing flexibility. The Washington Post .
Additional Cuts: House projections estimate up to $1 trillion in Medicaid/SNAP cuts, and potential Medicare reductions totaling hundreds of billions under PAYGO rules (MarketWatch, Barron's)
Policy Impact
Significant increase in administrative efforts for eligibility tracking, exemptions, and appeals.
Coverage volatility jeopardizes clients with ongoing mental health or SUD needs.
States will rely more heavily on providers and community partners to ensure continuity of care.
Medicare Part D Redesign (IRA Implementation)
Three-phase structure: Deductible → Initial Coverage → Catastrophic, with an annual OOP cap of $2,000. (Centers for Medicare & Medicaid Services, PAN Foundation).
Countable Costs: IRA expanded components included toward True Out-of-Pocket (TrOOP), affecting when beneficiaries reach the catastrophic threshold, according to the Centers for Medicare & Medicaid Services.
New Prescription Payment Plan: An optional plan allows beneficiaries to spread out prescription drug costs over the year (does not reduce the total cost) (PAN Foundation).
Policy Impact
Easier access to pharmacy services for behavioral health prescriptions.
Providers must track beneficiary copay patterns and plan benefit designs closely.
State-Level Changes – Strategic Spotlight
Florida – SMMC 3.0 & Behavioral Health Integration
SMMC 3.0 Launched Feb 1, 2025, through eight MCOs, covering ~3 million enrollees, (HCAF, My Florida Families).
Enhanced Care Coordination: Includes behavioral health modules for youth in child welfare, high-utilizing crisis stabilization cases, and developmental disabilities populations. (My Florida Families, faba.memberclicks.net).
Behavior Analysis Carve-in: Shifted BA therapies into MCO plans starting 2025, (floridahealthjustice.org, FBHA).
Supportive Housing Pilot Expansion: Provides integrated BH and housing supports in more regions (FBHA).
New Jersey – Behavioral Health Integration, Phase 1
Effective Jan 1, 2025, outpatient BH and SUD services will transition to managed care (Phase 1), covering MLTSS, DDD, and FIDE SNPs on (NJ.gov, WellPoint Provider Portal).
Providers now must contract with MCOs, use their care managers, follow network authorization, and submit encounters—not FFS claims (NJ.gov, Foothold Technology.
Further phases will extend into residential services, dual eligibles, and waiver populations. (Advancing States, njamhaa.org).
Practical Updates for Providers – Tactical Recommendations
Rebuild Eligibility Workflows: Anticipate semiannual redeterminations—allow buffer, monitor churn triggers, and automate exemption tracking.
Expand Care Coordination and Network Strategy: For FL and NJ, MCO contract readiness, credentialing, billing alignment, and encounter reporting become mission-critical.
Track Denials and Claims Delays: Focus on reject rates tied to eligibility lapses, authorization gaps, and filing errors. Create dashboards segmented by payer, service type, and region.
Telehealth Streamlining: Maintain remote service policies, ensure audio-only compliance, and document authorization per payer guidance.
Engage in Waiver/SPAs Strategy: Florida housing integration pilot and NJ carve-in are opportunities to align grant-funded projects with managed care reimbursement models, potentially unlocking new billing tracks.
Funding & Grant Opportunities – Tactical Insights
Medicaid Waivers and State Plan Opportunities: FL’s housing pilot and BA carve-in can serve as foundations for PFS or value-based funding proposals. NJ might offer similar opportunities in the upcoming phases of integration.
Medicare Integration-Benefit Grants: With Part D redesign lowering pharmacy costs, organizations serving dually eligible individuals may save small amounts of money, consider reinvesting into expanded BH services or community engagement efforts.
Leadership Action Checklist
Action | Target Due Date |
Educate board on Medicaid reform timeline & enrollment implications | September 15 |
Florida: Confirm BA billing process, MCO contracts, and care coordination plans | September 30 |
New Jersey: Ensure outpatient BH encounter reporting and authorization readiness | September 30 |
Establish tracking for churn, denials, and reimbursement gaps across states | October 2025 |
Prepare credible grant proposals that align Medicaid carve-ins with funding opportunities | Q1 2026 |
Analyze Part D redesign impact on pharmacy costs and patient access | October 2025 |
Executive Call to Action: From Policy Brief to Strategic Mandate
The sweeping reforms outlined in the One Big Beautiful Bill and the state-level behavioral health integration (ex. FL’s SMMC 3.0, NJ’s Phase 1) are not merely policy updates—they are opportunities for administrative preparedness and strategic alignment that can help prevent lost revenue, jeopardized service delivery, and missed opportunities for strategic expansion. Decisive C-Suite action requires a transition from information consumption to execution, making proactive policy integration a core strategic pillar going forward.
For a custom executive foresight briefing or to benchmark your readiness across interoperability, resilience, and equity metrics, contact us at ask@hiquitysolutions.com.
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