As Montana’s Medicaid Changes Take Full Effect, Key Questions Remain Unanswered

Montana is reaching the end of its hold harmless period for Medicaid community engagement requirements without the information needed to fully evaluate implementation or identify unintended coverage losses before they occur. Medicaid expansion provides health care coverage for roughly 70,000 Montanans. H.R. 1, passed by Congress in July 2025, established new work reporting requirements, also known as community engagement requirements, for participants, with an implementation deadline of January 1, 2027. Montana chose to implement these new requirements six months early to give the state additional time to prepare its systems and processes. September 30, 2026, marks the end of the ‘hold harmless period’ that was intended to create time to test and evaluate the implementation of new community engagement requirements before Montanans were disenrolled or denied access to coverage. However, the Department of Public Health and Human Services (DPHHS) does not have complete information on how many Montanans are being found noncompliant, and some eligibility determination systems will not be operational until the end of the hold harmless period. Montana’s decision to implement the community engagement requirements early came with the responsibility of ensuring the systems were ready, understanding who was affected, and identifying unintended coverage losses before they occurred. Without this information and testing, DPHHS risks thousands of Montanans’ access to health care through unintended coverage losses.

DPHHS Faced Setbacks and Implementation Challenges

Montana began implementing the community engagement requirements on July 1, 2026, months before the federal deadline. Despite several setbacks in the process, DPHHS has remained committed to moving forward with its July 1 implementation timeline. Throughout the legislative interim and H.R. 1 implementation, legislators, constituents, advocates, and Medicaid enrollees have questioned the effectiveness of implementation, potential coverage losses, and administrative challenges. Data shared by the department provides little evidence that eligible Montanans will not lose Medicaid coverage and access to critical health care that supports their ability to participate in work and maintain their health. The department has not demonstrated sufficient information to show that eligible Montanans are not being removed from coverage due to problems with the new process. DPHHS also shared that of the 60 additional staff it requested to support H.R. 1 implementation, it has successfully hired only 20. These additional staff are critical to managing the increased red tape, documentation, and questions from enrollees or people applying for the first time.

What We Know and What We Don’t

Data reporting for Medicaid programs is complicated for two main reasons: the 60-day redetermination process and the three-month Centers for Medicare & Medicaid Services (CMS) publication delay.  Redeterminations, or renewals of Medicaid coverage, are initiated before an enrollee’s current eligibility period ends. This means an eligibility determination and an actual loss of coverage do not necessarily happen at the same time. Even when someone is determined ineligible at renewal, their coverage may continue for a period before the disenrollment takes effect. This creates a misalignment in reporting of redetermination outcomes and total enrollment numbers, as the loss of coverage can be delayed.  Secondly, after DPHHS reports data to CMS, there is a publishing delay. For example, in late September 2026, CMS published Enrollment Snapshot Data for June 2026. This means that even as the hold harmless period ends, CMS has not published data for Montana’s first month of H.R. 1 implementation.

The combination of these two factors means that, particularly for the public, determining how effective community engagement implementation is before enrollees lose access to health care is almost impossible. In other words, the state is implementing a new eligibility process today. Still, the public cannot see enrollment data to determine how many people are affected. Just two weeks before the end of the hold harmless period, on September 16, 2026, DPHHS reported that it did not have estimates of how many people were found noncompliant with new community engagement requirements. The department was only able to show what proportion of people could be automatically redetermined using data sources available to the state (also known as ex parte renewal) and how many people were sent letters requesting additional information.

Before H.R. 1, Montana’s ex parte renewal rates from January through May 2026 averaged 42 percent. However, DPHHS reported to the Legislature that in July and August, only 32 percent of those up for renewal met community engagement and passed redetermination using the ex parte process. These figures should be considered carefully because, although the measures are not identical, they raise an important question about how the new requirements affect the renewal process. The state is seeing a lower share of people successfully renewed under the new process, as reflected in available data sources. At the same time, DPHHS cannot yet tell legislators or the public how many people are being found noncompliant with the new requirements.

The period must be long enough for data to evaluate the effectiveness of new processes and technology. DPHHS describes the hold harmless period as providing three months to evaluate operational and systems processes, make adjustments, and collect data before adverse actions begin. Current data reporting and statements by DPHHS to legislators indicate that the data needed for evaluation may not be fully available before the end of the hold harmless period.

Some Systems Were Not Tested During the Hold Harmless Period

Some aspects of the software systems were not tested at all during the hold harmless implementation phase. DPHHS has been working to integrate Medicaid medical claims with enrollment software systems to support the determination of certain exemptions and exclusions, such as medical frailty. During the September Health and Human Services Interim Budget Committee legislative oversight meeting, DPHHS reported that claims would be available to the eligibility systems and staff on October 1, 2026, one day after the end of the hold harmless period. This is particularly important because medical frailty is one of the exclusions from the community engagement requirement. DPHHS’s own verification matrix currently lists the Medicaid claims interface used to identify medically frail individuals as having a “go-live” date of October 1, 2026. That means a system designed to identify people who should be excluded from the new requirement will become operational on the same day the state begins enforcing it. DPHHS has expressed confidence that this data integration will go smoothly. But confidence in a system is not the same as having the opportunity to test that system before coverage losses can occur.

Montana Law Built in Safeguards Against Unintended Coverage Loss

Montana recognized in state law that community engagement requirements need safeguards to prevent eligible people from being incorrectly removed from Medicaid coverage. When the Legislature reauthorized Medicaid expansion in 2019, it established an independent audit process that is triggered when suspensions for noncompliance exceed 5 percent. Under state law, if suspensions for noncompliance exceed 5 percent, the department must notify the Legislative Audit Committee, which can select an independent third-party auditor to assess the suspensions. If more than 10 percent of people in the audit sample were suspended in error, the state must stop further disenrollments until the conclusion of the next general legislative session. This safeguard reflects a basic principle: when a new eligibility process can result in people unnecessarily losing health coverage, the state has a responsibility to ensure its systems accurately identify who is eligible and who is not. In May 2026, almost 71 percent of people who disenrolled from Medicaid lost coverage due to procedural issues rather than being determined ineligible for the program. That history makes it especially important to distinguish between people who lose coverage because they no longer qualify and people who lose coverage because they were unable to complete a process or provide information required by the state.

Montanans Deserve Answers Before Medicaid Enrollees Are Removed from the Rolls

DPHHS chose to implement the federal community engagement requirements early. That choice gave the state an opportunity to test its systems before denials of applications and disenrollment began. However, as Montana reaches the end of the hold harmless period, important questions remain unanswered:

• How many people are being found noncompliant?

• How many are going to lose health care coverage because they cannot successfully navigate the new process?

• And are the systems in place accurately identifying people who qualify for exemptions?

  
  

Montanans deserve to know whether the systems determining their access to health care are working as intended. Before the state moves forward with disenrollment, the public should have the information needed to understand who is losing coverage, why they are losing it, and whether those decisions are accurate.