Regulatory change is no longer episodic. It is cumulative, layered, and increasingly operational.
Legislative and regulatory shifts are moving quickly from Capitol Hill and state capitols into day-to-day operations. For health plans, third-party administrators (TPAs), and pharmacy benefit managers (PBMs), changes that once allowed long-range planning now demand near-term decisions across eligibility, utilization management (UM), and clinical staffing. Compliance depends as much on execution as on policy.
How H.R.1 Reframes Medicaid & Operations
The One Big Beautiful Bill Act (H.R.1) resets Medicaid. After years of leveraging Medicaid to expand access to coverage and care, the program is repositioned as a narrower safety net with greater emphasis on program integrity.
For health plans and PBMs, the operational impact is immediate. Tighter verification and documentation increases coverage churn and gap periods. Clinical reviews may hinge on coverage timing as well as clinical appropriateness, driving more continuity-of-care determinations, retroactive eligibility reviews, and appeals tied to administrative documentation.
While H.R.1 is federal policy, implementation is state-driven. Timelines, requirements, and enforcement will vary by state, increasing operational complexity for organizations in multiple states. Eligibility can no longer be treated as a front-end administrative step; it must be integrated into UM and appeals.
Operational priorities include:
- Embed eligibility verification into UM and appeal workflows
- Refresh medical necessity criteria to reflect state-by-state changes
- Prepare for increased appeal volume tied to eligibility and documentation disputes
State-Level Regulation Is Driving Day-to-Day Change
Alongside federal shifts, states continue to regulate the mechanics of UM, especially prior authorization (PA). Reforms increasingly targeted the use of artificial intelligence (AI), turnaround times, standardized definitions, reporting and transparency, and clinical oversight.
States are also beginning to regulate the use of AI in utilization management. Plans using algorithmic tools must be able to explain decision logic, show clinician involvement, and document consistent application criteria.
Common state trends include:
- Streamlined prior authorization models and service exemptions
- Shorter turnaround time requirements
- Expanded expectations for specialty-matched clinical review
- Increased reporting and transparency
- Electronic prior authorization with guardrails for AI use
These reforms reduce administrative burden if intake, routing, review logic, and documentation are redesigned to meet the new standards.
Impacts on Health Plan Clinical Operations
PA reform compresses timelines while raising documentation expectations. Added scrutiny of AI-supported reviews introduces requirements for audit trails, clinical accountability, and defensible application of criteria. All of this occurs amid ongoing staffing constraints.
Clinical operations cannot respond by simply adding headcount. The sustainable approach is to standardize routine reviews while directing complex cases and appeals to experienced clinicians. Operational workflows are as important as clinical accuracy.
Impacts on Pharmacy Operations
Pharmacy operations face a distinct set of pressures, driven by drug pricing policy and coverage expansion.
Beginning in 2026, changes affecting GLP-1 pricing, Medicare negotiation, and reimbursement models are expected to reshape cost and utilization patterns. PA criteria, step therapy requirements, and exception processes will need to evolve accordingly.
At the same time, coverage signals for select weight-loss indications are expanding. Broader access paired with tighter cost controls increases operational strain. When criteria are unclear, inconsistently applied, or poorly communicated — appeal volume rises quickly, followed by provider confusion and member dissatisfaction.
State-level PA reform increasingly applies to pharmacy as well. Turnaround time standards, reporting requirements, and transparency expectations increasingly mirror those on the medical side. Pharmacy workflows must meet these standards consistently with clear documentation, appropriate clinical oversight, and auditable decision paths. Data is essential as an operating tool to identify where criteria are working, where appeals overturn decisions, and where operational friction occurs.
Adapting Review Operations Without Adding Headcount
Regulatory change is colliding with workforce constraints. Budget pressure, clinical staffing shortages, and rising utilization make it unrealistic to “add more reviewers” for every new requirement.
The practical response is deliberate allocation of clinical effort. Routine, low-variability cases are increasingly handled through standardized, tech-enabled workflows. Complex cases, exceptions, and appeals are directed to experienced clinicians who can apply judgment where it matters most. Clear escalation paths and consistent documentation reduce rework while supporting compliance.
Prioritizing Compliance for 2026, 2027, and Beyond
As regulatory volume increases, prioritization is critical. Near-term focus should center on:
- Turnaround time performance where state standards drive complaint or audit risk
- Member notices and appeals so timelines and documentation align with updated requirements
- Eligibility-related reviews where mid-care coverage changes create avoidable appeals and continuity-of-care risk
Medicare Advantage may see regulatory stability in 2027, creating a narrow window in 2026 to harden eligibility processes, tighten UM workflows, and reduce operational friction before the next wave of reform. Beyond 2027, pressure is unlikely to ease as Medicaid enrollment is projected to decline while utilization remains elevated. At the same time, CMS has signaled further reforms tied to risk adjustment, quality measurement, and technology-enabled oversight.
From Policy Awareness to Operational Readiness
Policy change is inevitable, but operational readiness is a choice. The work now is building clinical and pharmacy operations that adapt quickly, remain compliant, and support sound clinical judgment without disrupting care, consistency, or clinical decision-making.
