The news on Medicaid changes daily as Republicans consider how to fund President Trump’s call for “one big, beautiful bill” that would amount to the largest tax reduction in history. For providers in states with “trigger laws,” this uncertainty can either cause anxiety or serve as an opportunity to consider how to address any business vulnerabilities and come out stronger.
In the numerous states with “trigger laws,” any legislation that reduces the federal share of payments in states that have expanded Medicaid under the Affordable Care Act would lead to the loss of coverage for 5.5 million people.
Here’s what healthcare businesses in states with trigger laws need to know to weather the storm.
What are Medicaid trigger laws?
Medicaid trigger laws are state laws that automatically expand or contract Medicaid eligibility or benefits when a specific event occurs, such as a change in federal law or funding.
The laws work like a legal “switch” or contingency: if a predetermined event (“trigger”) happens, the law goes into effect or is automatically repealed, without requiring a new legislative vote.
Several states have laws that will automatically terminate Medicaid expansion if the federal matching percentage is reduced. This means enrollees with Medicaid expansion coverage would lose their coverage soon after a reduction in federal funding.
The trigger laws vary from state to state:
Illinois: The trigger law calls for Medicaid expansion eligibility to end “no later than the end of the third month following” the month the federal funding reduction takes effect.
Arkansas: The trigger law calls for the state to transition enrollees from the Medicaid expansion program within 120 days of the federal funding reduction.
Arizona: The trigger law simply says that the state “shall discontinue eligibility” under Medicaid expansion if federal funding drops below 80%. There’s no set waiting period before this would take effect.
Utah: The trigger law would end Medicaid expansion “no later than the next July 1” after the date the federal funding is reduced. Depending on the timing of a federal funding cut, that could be an almost immediate termination of Medicaid expansion, or there could be a delay of up to almost a year.
What happens if trigger laws are activated?
Trigger laws would cause a coverage gap for most adults with income below the federal poverty level. This is because marketplace subsidy eligibility would begin at household incomes equal to the federal poverty level (FPL). However, in states that have Medicaid expansion in place, Marketplace subsidy eligibility begins with household incomes above 138% of FPL. Subsidies are the premium tax credits adults get on HealthCare.gov or state exchanges.
If a trigger law is activated, causing Medicaid expansion to end, access to coverage in those states would then work as it does in non-expansion states, including:
- Kansas
- South Dakota
- Missouri
- Oklahoma
- Florida
- Wisconsin
- Tennessee
- South Carolina
- Wyoming
- Georgia
- Mississippi
In non-expansion states and states with trigger laws, only children, pregnant women, seniors and those with disabilities qualify for Medicaid. Childless adults and many working poor do not.
Which states have trigger laws?
The states with trigger laws are as follows:
- Arizona: Expansion would end if the federal match drops below 80%.)
- Arkansas
- Illinois: Legislation introduced in 2025 would remove the trigger law.
- Indiana
- Montana
- New Hampshire
- North Carolina: Legislation introduced in 2025 would change the trigger law so that it would only be activated if the federal matching rate for the expansion population were to drop below the federal matching rate for the rest of the Medicaid population. This is currently about 65% in North Carolina.
- Utah
- Virginia: A 2025 Virginia budget amendment that would have developed “recommendations to preserve healthcare access to as many Medicaid members as possible” was not included in the state’s budget. However, if federal funding for Medicaid expansion is reduced, Virginia’s legislature can reconvene for a special session.
Another three states – Iowa, Idaho, and New Mexico – have rules in place that would trigger a review of Medicaid expansion if the federal match rate were to drop below 90%. These are technically trigger laws, but the trigger is for a review of the program rather than an automatic termination. Still, a review could result in benefit cuts or the elimination of Medicaid expansion.
Besides the obvious effect this would have on the millions of Americans who would lose health coverage, this could cause a significant revenue reduction for healthcare providers in the affected states.
3 practical steps to prepare for the risks of a large revenue reduction
While no one wants to face budget cuts that threaten healthcare businesses and cause patients to lose coverage, the threat of funding cuts is an opportunity to strengthen your business. The following are three possible ways providers can respond to the proposed legislation.
Cost-Containment
When money is tight, do a full deep dive into all your expenses, line by line, to prioritize them.
Analyze employee benefits
For example, the costs of some employee healthcare benefits have increased significantly due to increased use of GLP-1s. Business owners could shift part of that cost to the employee versus entirely to the employer, saving thousands per employee.
Educate patients
Ensuring patients know what requires care and what does not can help minimize the number of patient visits that result in limited or no pay. This benefits patients as well.
Improve systems
Find ways to make your team more efficient, such as using AI to improve systems for administrative work, coding/billing, notes and more.
Group Purchasing Organizations (GPOs) or Professional Networks
These organizations help small businesses start and stay in business by leveraging their collective buying power to negotiate better contracts with suppliers.
Diversify your offerings
Sustaining a practice in times of economic uncertainty requires diversification. The typical “fee-for-service” payment structure, such as Medicaid, is no longer considered viable by many practice owners in the industry. Value-based care is the future.
Another way to diversify is by adding services, such as cash-based offerings. For example, one CM&F Group client was barely scraping by as a nurse practitioner with a family care practice. After numerous requests for Botox and dermal fillers, she had her staff trained and certified to offer these services. They grew their revenue by 3x without any net-new hires or expenses (other than the training and the product supply costs). Now, they can offer Family Care but also profit substantially from aesthetic care.
Several physical therapists (PTs) who are CM&F Group clients have launched cash-pay fitness services or nutrition services.
Advocacy
Several CM&F Group clients have successfully advocated for changes to reimbursements or access to care issues at the state and federal levels. For example, PTs have succeeded in getting higher reimbursement for their musculoskeletal care. Physician associates in states like Utah have advocated for direct pay and full practice authority. This allows them to bill patients directly and get paid directly by insurers.
If the federal government cuts spending, states have the authority to fill care gaps. This makes state-level advocacy even more powerful.
Insurance for business disruption
Finally, be sure you have the insurance policies your practice needs to thrive despite financial threats.
- Professional liability insurance with flexible payment options
- Practices can better manage cash flow during uncertain financial periods with flexible installment plans.
- Tailored coverage ensures you’re protected from legal costs during a time when reduced Medicaid reimbursement could amplify financial vulnerability.
- Business owner’s policies & general liability coverage
- Broader P&C solutions (offered through CM&F Group partnerships) can be bundled or customized to include property, cyber, EPLI and business interruption coverage.
- This protects against operational disruptions that could become more common as funding declines.
- Revenue cycle management and billing services partnerships
- CM&F Group partners with vendors and consultants who specialize in optimizing coding, billing and collections to improve cash flow.
- Employee benefits restructuring
- CM&F Group’s partner, HUB, can consult on employee benefits plans to reduce overhead without sacrificing employee care during times of reimbursement uncertainty.
- This can help avoid layoffs or benefit cuts while managing tighter budgets.
- Practice transition and acquisition advisory
- For practices considering consolidation or sale due to financial uncertainty, CM&F Group’s partner, HUB, can advise you through mergers and acquisitions to be sure your insurance protections are aligned during the transition.
If you’re in a state with a trigger law, CM&F Group can advise you through these changes. Reach out to your representative with any questions.
