Where health centers can find real ground amid H.R.1's Medicaid cuts

H.R.1 cuts roughly $1 trillion from Medicaid over the next ten years, and more cuts may be coming. For community health centers, whose single largest source of revenue is Medicaid, that's not just a policy change — it's a direct hit to the revenue that allows them to serve the most under-resourced populations in the country. And it’s exactly why Yuvo Health Co-founder and CEO Cesar Herrera says finding and using the opportunities that do exist matters so much right now. We're laying out a few of those opportunities below.

First, community health leaders were dealt disappointing news on June 1, 2026, when CMS released an interim final rule spelling out how states must implement H.R.1's community engagement requirement. Starting in January 2027, non-exempt Medicaid members will need to document 80 hours per month of work, education or community service to keep their coverage, or demonstrate at least $580 in monthly earnings. A few details worth knowing:

• New applicants must show a full month of compliance before they can apply, which can create a coverage gap for people who would otherwise qualify.
• Medical frailty is not a categorical exemption. That means a person with cancer or HIV, for example, must continuously prove their exemption. States can accept self-declaration through 2027, but starting in 2028, documentation is required at every renewal except one during an enrollment period. 
• Seasonal and gig workers without a traditional pay stub may find the documentation itself harder to manage than the underlying requirement.

None of that is good news. But H.R.1 also contains provisions that can at least help offset some of the damage. It’s critical to remain practical about where the openings actually are.

"This is a moment to advocate loudly and act strategically." 

— Cesar Herrera, Co-founder and CEO, Yuvo Health

Health centers and health plans have a shared reason to work together 

Cesar Herrera has spent years working closely with both health centers and health plans to create value-based care opportunities. As he puts it, "FQHCs and health plans have largely operated in parallel — aware of each other, occasionally at the same table, but rarely moving together in the same direction."

“FQHCs often question the motive of the health plan,” he says. “And health plans often question the leadership value of the FQHC.” 

The community engagement rule, Cesar explains, gives both sides the same urgent problem to solve: keeping eligible patients enrolled through a process that's now more paperwork-heavy than ever.

States implementing the rule must send noncompliance notices and give patients 30 days to demonstrate compliance before coverage is denied or terminated. That's a narrow window, and health centers are best positioned to meet it. Patients can already delegate authority to their provider to manage compliance documentation on their behalf, which current regulations support. That puts health centers in a position to flag at-risk patients early, help them document hours or secure an exemption, and prevent a gap before it happens.

This kind of outreach, navigation, and hands-on documentation support takes real infrastructure, and it costs money that health centers don't have the margin to absorb on their own. Health plans have the capital to fund that work, but not the on-the-ground trust or care management relationships to do it themselves. Patients won't hand over paperwork to a call center the way they will to their care team. 

Neither side can close this gap alone, but together they can: health plans fund the infrastructure, and health centers are the ones with the relationships to make it work.

Health plan - health center collaboration in action

This kind of collaboration isn't hypothetical. United Healthcare has previously worked directly with CHCs on Medicaid redetermination support, recognizing health centers as the front line for helping members navigate exactly this kind of process. Health center leaders can raise the community engagement rule directly with health plan partners as a similar, and now more urgent, opportunity for upfront investment in retention.

Centene Corporation recently committed $3 million to health centers, including embedding patient care advocates to work inside health centers, investing in maternal and child health, managing chronic conditions and other initiatives. Centene is also co-leading a Community Health Center Leadership Council with the National Alliance for Community Health Centers (NACHC). 

The Rural Health Transformation Program has already been awarded, and now it's about follow-through

CMS announced in December 2025 that all 50 states received their first-year awards under the $50 billion Rural Health Transformation Program, averaging roughly $200 million per state for FY2026 alone, with funding continuing through 2030. The money is already in states' hands, and states are now moving into contracting, grantmaking and program design.

That means the priority now is finding out how your state is deploying its award and making sure your health center is part of that planning process. 

A number of states have already directed funds specifically toward CHC readiness for value-based care. Massachusetts’s plan includes a program offering health centers funding and technical assistance to adopt new technology within their existing systems, and Rhode Island's plan directly funds the transition of primary care practices to value-based payment. 

If your health center isn't at the table for your state's implementation planning, that's the most urgent, practical step available right now. CMS's program overview lays out the approved uses of funds, which is a useful starting point for a conversation with your state's health agency about where you fit.

RHTP funds can go toward infrastructure most health centers already need, including:

• Population health analytics to track quality metrics, flag high-risk patients and identify who's at risk of falling out of compliance.
• Remote patient monitoring, equipping patients with tools like cellular scales or blood pressure cuffs for chronic disease management, so problems get caught before they lead to ED visits.
• Care coordination hubs that make it easier to follow patients across the full continuum of care, and to catch them within that 30-day noncompliance window instead of losing them between visits.
• Tele-diagnostic tools that keep specialty care connected to your health center rather than sending patients — and the relationship — elsewhere.

This funding won't undo what the Medicaid cuts take away. But it's real and it can build infrastructure health centers will need regardless of what happens next in Washington.

The cost-sharing exemption protects your patients at the point of care

Starting October 1, 2028, states must impose cost sharing of up to $35 per service for Medicaid expansion adults earning 100-138% of the federal poverty level. Services provided at CHCs are exempt, along with primary care, mental health and substance use disorder services. That means patients seen at your health center won't face that charge, even as the same visit could cost them more elsewhere. It's an advantage worth communicating to your patients, and to the health plans you work with.

Value-based care lays the foundation for more stability moving forward 

Fee-for-service revenue tied to Medicaid volume is shrinking. 

Value-based care contracts offer a different foundation — one built on the outcomes health centers are already producing rather than the number of visits billed. It's not a substitute for what H.R.1 takes away, but it's a lever health centers can pull today, and it’s one that builds on the actions health centers are already taking. The same population health infrastructure funded through RHTP, and the same patient-retention work worth pitching to health plans, are what will help make health centers successful in value-based care.

That lever matters more once you see how small a share of Medicaid funding health centers currently touch. As Cesar has pointed out, health centers have access to only an estimated 3% of Medicaid funding today, while roughly 92% flows directly to managed care organizations and other healthcare entities. 

That's the gap value-based care starts to close. It’s a way for health centers to earn a larger share of dollars tied to the outcomes they are already producing, instead of competing for a shrinking slice of fee-for-service revenue.

"The CHCs that build the right infrastructure now, while continuing to deliver the care they always have, will be better positioned to serve their communities through this unpredictable time and prepare for whatever comes next." 

— Cesar Herrera, Co-founder and CEO, Yuvo Health

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