On July 4, 2025, the president signed H.R. 1 into law. Buried inside a sweeping budget reconciliation bill were two provisions that will change how tens of millions of Americans interact with Medicaid: a first-ever federal work requirement and a mandatory shift to six-month recertification cycles. States have until January 1, 2027 to implement both. The clock is already running.
What the Law Actually Does
H.R. 1 (formally, the “One Big Beautiful Bill Act”) is the most significant structural change to Medicaid since the Affordable Care Act’s expansion. It does not change who is eligible for Medicaid. It changes the administrative requirements that determine whether already-eligible people remain covered.
Work requirements (Sec. 4401)
Medicaid expansion adults aged 19 to 64 must now document 80 hours per month of qualifying activity — employment, job training, education, or volunteering — or prove an approved exemption. Failure to document disqualifies the enrollee, regardless of whether they actually worked.
The law carves out exemptions for individuals who are medically frail; diagnosed with serious mental illness (SMI) or substance use disorder (SUD); pregnant or within 60 days postpartum; primary caregivers of a child under 14 or a dependent adult; enrolled in an educational or job training program; or receiving unemployment compensation. Qualifying for an exemption, however, requires its own documentation — one that many eligible individuals will not know to submit.
Six-month recertification (Sec. 4402)
Coverage must now be renewed every six months, down from annually. The practical effect: twice as many renewal deadlines per enrollee per year, twice the volume of notices and paperwork for eligibility offices, and twice the exposure to the procedural failure modes the 2023 Medicaid unwinding made visible.
Work requirements and accelerated recertification do not merely add complexity — they compound it. An enrollee who meets the work requirement still loses coverage if they miss a recertification deadline. An enrollee who timely renews still loses coverage if their work documentation is incomplete. Organizations serving large Medicaid populations face both pressures simultaneously, starting January 1, 2027.
What the Evidence Shows
We do not have to speculate about what H.R. 1 will produce. We have two data sources: the 2023 Medicaid unwinding and the 2018 Arkansas work requirement pilot. Both tell the same story.
In every prior test of these policies, people lost coverage not because they were ineligible — but because the paperwork was too hard to clear.
The 2023 unwinding
When the COVID-era continuous enrollment provision ended, states had to process renewals for roughly 95 million enrolled individuals. Approximately 25 million people lost coverage (KFF, 2024). The striking finding was not the scale of loss but its cause. CMS data from Q1 2025 shows that 72% of disenrollments were procedural: enrollees lost coverage not because they were ineligible, but because they missed a notice, failed to return paperwork within a deadline, or could not navigate documentation requirements. The coverage was legitimately theirs. The administrative process removed it.
The Arkansas precedent
Arkansas implemented Medicaid work requirements in 2018 before a federal court struck them down. In that brief window, approximately 18,000 people lost coverage. A subsequent analysis published in the New England Journal of Medicine found that over 95% of those who lost coverage already met the work requirements. They lost it not because they were non-compliant, but because the documentation burden was too high to clear.
Most people who lose Medicaid coverage under work requirements are already working. They lose it because they can’t prove it in time.
The revenue reality
For health systems and FQHCs, procedural disenrollment does not mean those patients stop needing care. It means care continues as uncompensated. The Urban Institute estimates the average annual revenue impact of a single Medicaid disenrollment at approximately $608 per patient for FQHCs (3.2 visits at roughly $190 per visit). For hospitals, the figure is approximately $455 per patient per year in additional uncompensated care (0.7 ED visits at roughly $650 per visit). These are conservative floor estimates based on visit-based revenue only.
H.R. 1 encodes the Arkansas dynamic as permanent federal policy, applied simultaneously to every state, beginning January 1, 2027.
Who Is Most at Risk
The populations most likely to lose coverage are not the ones most likely to be ineligible. They are the ones least equipped to navigate a complex administrative process every six months.
People who qualify for exemptions but don’t know it
The law’s exemption list is substantive: medically frail individuals, those with SMI or SUD diagnoses, pregnant individuals and those within 60 days postpartum, caregivers, students, and those receiving unemployment compensation are all exempt. But exemptions must be documented and submitted. Patients who are exempt on clinical grounds often do not know they qualify — and clinicians who see them regularly often have no mechanism to flag it proactively.
Patients with limited digital access
State Medicaid portals vary in usability, and nearly all require two-factor authentication, which is a documented barrier for elderly patients and those with limited digital literacy. The 2023 unwinding showed clearly that paper notices go unanswered not because patients are disengaged but because the renewal process is difficult to complete without assistance.
Populations with language barriers or housing instability
Patients who are not English-proficient, who lack a stable mailing address, or who frequently change contact information are systematically disadvantaged by notice-based renewal systems. Every point at which the process requires a patient to independently receive and act on written communication is a point at which these patients are most likely to fall through.
Six-month recertification doubles the frequency at which every patient must successfully navigate this process. Each renewal cycle is an independent failure point. Organizations that relied on annual renewal workflows — already stretched during the 2023 unwinding — will need to run the same process twice as often, at scale, starting January 2027.
What Health Systems and FQHCs Should Do Now
Implementation takes time. Organizations that wait until late 2026 will not have adequate runway to build the infrastructure H.R. 1 requires. MediKey implementations typically take 6 to 8 weeks — but building the internal workflows, data visibility, and staff capacity to use them takes longer. The organizations best positioned for January 2027 are the ones starting now.
Build eligibility visibility across the system
Screen and document your Medicaid patient panel across programs now, before the deadline. Understanding each patient's eligibility status, exemption likelihood, and recertification schedule is the foundation for every other operational step.
Use your EMR to identify exempt patients proactively
ICD-10 F-codes for serious mental illness (SMI), substance use disorder (SUD), and medical frailty are your exemption map. Query your EMR now to surface patients already clinically documented as exempt, before they receive a work requirement notice they cannot respond to.
Identify your highest-risk patients before they are lost
Patients with low digital access, language barriers, housing instability, or prior coverage gaps are most likely to experience procedural disenrollment. Stratify your panel by risk and prioritize outreach to patients least able to navigate administrative processes on their own.
Replace paper and phone workflows with text- and voice-enabled pathways
The 2023 unwinding showed that paper notices are the single biggest point of failure. Patients miss them, misunderstand them, or cannot respond in time. Shift to text-based outreach and mobile-first renewal flows that meet patients where they are.
Track applications through benefit determination
Starting an application is not the same as completing one. Build tracking infrastructure that follows each patient from initial outreach through eligibility determination and enrollment confirmation. Without closed-loop tracking, patients fall through gaps you cannot see.
None of these steps requires H.R. 1 to be fully implemented to begin. Every one of them makes your organization more resilient regardless of how individual states choose to operationalize the law’s requirements. The underlying problem — fragmented eligibility visibility, paper-dependent workflows, insufficient proactive outreach — predates H.R. 1 and will persist after it.