Tangible steps FQHCs can take today to prepare for Medicaid cuts
Many in our community are feeling the shockwaves of the proposed cuts to Medicaid. How will health centers — vital resources that serve vulnerable populations and already operate with limited budgets — continue to deliver critical care to their communities?
While we don’t have all the answers, we know that navigating through this moment will take all of us coming together to support each other and share knowledge.
That’s why Yuvo Health recently invited our community to share their questions and have a discussion about the impact these proposed healthcare budget cuts will have on health centers. You can watch the full video here:
The conversation — hosted by Cesar Herrera, co-founder and CEO of Yuvo Health and David Gross, a consultant with Sachs Policy Group — was full of insights and helpful tips.
We’ll continue to update this page as we learn more. In the meantime, we invite you to explore the sections and drop us a note if you have additional questions or resources to share.
Jump to…
- What do we know about potential Medicaid cuts so far?
- Which states will automatically cut Medicaid if services are cut at the federal level?
- How can health centers prepare for what might happen?
- How are managed care plans preparing for the possibility of reduced federal funding for HRSN like housing, medically tailored meals, or transportation?
- Are programs at the state level, like enhanced care management in California and the 1115 waivers, in danger of ending if federal funding is cut?
- How can technology be leveraged to reduce cost or increase competitiveness?
- How are health centers looking to diversify revenues with the prospect of Medicaid cuts?
- Conclusion
What do we know about potential Medicaid cuts so far?
The reconciliation bill calling for a projected $700 billion funding cut to Medicaid passed the House on May 22nd. Now, it’s up to the Senate. “You have senate Republicans who haven't really tried to make significant cuts and just plan on paying for things by working on the budget side,” David Gross explained. “So it’s not really clear yet how this will pay out from a federal level.”
One indicator of how they’re thinking? A Senate policy bill released on June 16th, 2025 calls for a limit on Medicaid provider taxes, which would reduce Medicaid funding by billions more dollars.
Which states will automatically cut Medicaid if services are cut at the federal level?
There are going to be a lot of differences in how the Medicaid cuts affect individual states. As Gross explains, “When they passed the Medicaid expansion, there were a number of states that said if the match should ever change — for example, if it were to get cut or reduced — then all of those people who were covered would immediately drop off their roles.”
Federal funding cuts may trigger automatic loss of health coverage in the following states: Arkansas, Illinois, Indiana, Montana, New Hampshire, North Carolina, Utah, Virginia, and Arizona.
How can health centers prepare for what might happen?
There are lots of ways health centers can prepare, even amid all the uncertainty. Here’s how.
✔ Know what’s happening at the state level
As David Gross says, “Everyone should be paying attention to your states.” Each state will take very different approaches. While there are some who will automatically be reducing coverage, others may be able to make up the federal dollars.
For example, as Gross explains, “From a budget standpoint, New York has a decent rainy day surplus. That’s not to say there's not going to be an impact. But it makes it feel like New York has ways to buffer some kind of federal cuts.”
Health centers should be closely following the Medicaid dynamic in their state. That way, if there are federal cuts, you’ll have an understanding of how your state legislature and state executive branch will respond.
✔ Start looking at ways to diversify your revenue stream and improve efficiencies
Amid all the uncertainty, it may seem like a “wait and see” moment. But as both Cesar Herrera and David Gross emphasized during the forum, there is a risk to inaction. As Gross explains, whether you look for ways to be more cost effective or diversify your revenue streams, “It’s an opportunity anyway.” Even if there are no cuts to Medicaid, taking action now “still has a benefit to the FQHC.” For more specific ideas and ways to think about diversifying revenue or increasing efficiencies, see our section here.
✔ Consider partnering with other health centers
As Cesar Herrera explained during the open forum, one way that health centers can be more competitive is by “joining forces with other health centers, combining their respective patient populations into a larger risk pool, so that they can then qualify for different risk arrangements.” As he explained, health centers who enter into a strategic partnership can “be more competitive with large health systems.”
How are managed care plans preparing for the possibility of reduced federal funding for HRSN like housing, medically tailored meals, or transportation?
As Cesar Herrera notes, “In the conversations we're having with our existing health plan partners, they’ve been thinking, ‘We're going to be preparing ourselves for the reductions in Medicaid membership. We're already operating on relatively thin margins. What do we need to do to better preserve or increase those margins given that our membership may go down?’”
For health centers, the news can be scary. But there are opportunities, too. As David Gross explains, “I think FQHCs will remain central to all of the plans’ strategies. The need for primary care providers is a national issue, not just in any small geography. It’s important for the FQHCs to remember how important they are for the plans at the core network level and to leverage that, whether it be value-based care or another way.”
He emphasizes that “Finding good partners is really important for plans and FQHCs as primary care providers are really good partners.” He also notes that there are many technology companies who say, “‘We can help with your network adequacy because we have virtual primary care.’” But for the plans, when they “can work with FQHCs or somebody on the ground to be their partner, that's always going to be their preferred approach. So my advice is to lean into that kind of relationship value.”
Are programs at the state level, like enhanced care management in California and the 1115 waivers, in danger of ending if federal funding is cut? Is there enough resourcing at the state level to continue these programs?
Waivers weren’t suggested as cuts initially, but David Gross believes “there is still some risk around the waivers.” As Gross explains, “It's hard to parse through what CMS (Centers for Medicare and Medicaid Services) is thinking about them. Even the waivers that are for health-related social needs, some are very big in Democrat-led states and some are in Republican-led states. It’s not a purely partisan issue. I think ECM (Enhanced Care Management and Community Supports), to my knowledge, it's actually not funded through a waiver. It's more of a core Medicaid service, but it's pretty expensive for California.”
He suggests putting waivers on the side, for now, because the way they could get cut is different. However, he explains that for things like ECM and similar services such as Health Homes in New York, “the question becomes, ‘If the state has to withstand some Medicaid cuts, where are they going to look? Have the ECM providers shown value?’ I think that's how it'll play out. If there are dramatic cuts at the federal level, no matter what your state, there's going to be some downstream impact. And the question is, will it be through pulling people off their rolls or some kind of cutback of benefits?”
How can technology be leveraged to reduce cost or increase competitiveness?
Both Cesar Herrera and David Gross agree that technology isn’t a silver bullet. For health centers, it’s important to:
✔ Understand the ROI
As Gross explains, “There’s so much technology out there and technology is advancing so quickly, it's easy to get overwhelmed with what the choices are.” When you’re evaluating technology, make sure to really focus on where the value propositions are. For example, does it integrate with your EMR? Otherwise, you risk expending time and effort on something that isn’t going to work for you.
✔ Take the time to train your team and integrate it with your system
Cesar Herrera advises you have to put “in the effort to support change management for your teams that are using that technology, or create protected time for your providers to enable the technology as well.” For him, technology is “a good supporter and enabler of more operational efficiency, but it is not the only thing. It should be part of a broader practice transformation effort within your center.”
✔ Make sure you’re tackling the right problem, and not adding more inefficiencies
Another point Herrera emphasizes? Technology can “help enable things to get better, but unless you have a good understanding of what those processes are or problems that you want to solve for, then technology just for the sake of technology is not going to help.”
How are health centers looking to diversify revenues with the prospect of Medicaid cuts?
There are several ways health centers are thinking about diversifying their revenue amid the uncertainty with Medicaid, including:
✔ Value-based care
As Cesar Herrera explained during the forum, health centers have always been operating under a value-based care model. “It’s your mission. You just haven’t gotten credit for it in the eyes of a health plan.” The shift to value-based care helps health centers get paid for the work they’re already doing.
For example, Herrera explains, “If your Medicaid premium is $500 per member per month — or those are the costs associated with it — and you're able to bring through all of your preventive care and primary care and wraparound services that you provide, you're able to bring down the total cost of that care from $500 to $450. You created $50 in savings. Is there a way that you can get credit for that savings and extract that as value to you as a health center? And that's what value-based care is meant to do while making sure that you're incentivizing increasing the quality of care that you're providing.”
✔ Medicare
Another area we touched on during the forum was Medicare. As David Gross explained during our forum, “I know a lot of FQHCs have worked in the past really hard to build their Medicaid patient pool, which is challenging because when people get access to Medicare, a lot of times they look for a different practice that can see them.”
There’s still a lot of political support for Medicare. As Gross explains, “This is going to depend on where you are, but the number of people on Medicare is going to keep growing. So that's a place where you've got political support, you've got more money going in, and you have more people becoming eligible. It’s a really interesting focus area as people look to diversify and figure out what to do to balance their Medicaid revenue.”
✔ Moving into other adjacent licensed areas
Health centers might also explore different licenses. As Gross explains, “In New York, most FQHCs get licensure from New York's Department of Health, which basically oversees medical facilities, and a number are looking to get a second licensure now specifically from the state's mental health agency.”
The reason? Getting the license means, “A) you get enhanced rates for all your commercial patients, and B) there's additional flexibility for telehealth when you have mental health licensure versus primary care only licensure,” says Gross.
Gross cautions that that’s a “very New York-specific example, but I imagine that kind of licensure framework plays out differently in other states, and there may be ways to enhance rates or to get flexibility with the workforce using the way the licenses are set up. It’s diversifying, but it's also shifting the way you focus on your patients and recruit staff who might be helpful at a time like this.”
✔ Pursuing PCMH designation
One person in our community asked, “How would you advise health centers in pursuing PCMH designation, or not, for enhanced Medicaid payments that can buffer some of the pending Medicaid cuts?”
Gross explains that, “PCMH in New York is great. It's not on payment. That's very helpful. I also think there's a Medicare benefit these days called a PCM, which is kind of the Medicare fee for service version of it.”
FQHCs who are interested in this can get revenue from both the Medicare and the Medicaid side. But, for Gross, the question is, “How do you help an FQHC do it? It's a lot of work. There are a few vendors and consultants out there who do it. If you reach out to me separately, I'm happy to send those names along.”
Conclusion
While there’s still a lot of uncertainty about what’s happening federally, there are actions FQHCs can take to prepare. This includes understanding the legislation at the state level, increasing efficiency in your own practice, and looking into alternative revenue streams like value-based care.
Yuvo Health can help
Read more about how community health centers can take action in a time of uncertainty and survive Medicaid cuts.
FQHCs that recognize this transitional moment and adapt to it will be better positioned to achieve their goals and continue to support their communities with exceptional and sustainable care.
As both an MSO and an IPA, Yuvo Health has experience leading other community health centers through these changes.
As Dr. Rita Bilello, CEO of at Metro Community Health Centers, put it:
“With Yuvo taking this challenge on and eliminating the barriers, it gives FQHCs a voice in the conversation but also allows us, to some degree, to prove what we’re capable of doing.”
In particular, we can help your team:
- Enter into higher quality VBC contracts with extensive bargaining power
- Gain access to revenue where Yuvo Health assumes the downside risk
- Overcome common hurdles with technology, including data collection, processing, and analytics
- Organize care coordination, patient outreach, planning, and engagement
- Make data-driven decisions that result in increased quality of care and revenue
You can learn more about us here or schedule a meeting today.
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