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Answer first: Nebraska went live May 1, 2026, and your census clock started
Nebraska began enforcing Medicaid work requirements on May 1, 2026, and behavioral health operators in Omaha, Lincoln, and Kearney have roughly 60 to 90 days before census, AR aging, and denial rates start moving the wrong direction. The first meaningful wave of disenrollments will hit claims in Q3 2026, tied to renewals ending July 31 and after.
The trigger is federal, not state. Governor Jim Pillen and CMS Administrator Dr. Mehmet Oz announced in December 2025 that Nebraska would implement H.R. 1’s community engagement requirements roughly eight months ahead of the federal January 2027 deadline. Pillen signed a letter to CMS, detailing Nebraska’s intent to implement requirements by May 1, 2026.
Here is the rule in plain terms. Per Nebraska DHHS: “Starting May 1, 2026, members and applicants eligible under Medicaid expansion will have to meet work requirements to keep or get Medicaid coverage.” Adults ages 19 to 64 in the expansion population (Heritage Health Adult) must document 80 hours in a calendar month of qualifying activity, or earn at least $580 in a calendar month (equal to 80 hours worked at the current federal minimum wage), or sit inside an exemption category.
The scale is not theoretical. As of March 2025, there were about 72,000 expansion enrollees in Nebraska who could be affected by the new requirements. The Center on Budget and Policy Priorities projects around 25,000 Nebraskans will lose Medicaid coverage from the combined provisions, equivalent to a 35 percent decline in the Medicaid expansion population. For SUD and mental health programs in those three cities, that is a census problem with a known fuse length.
Arkansas remains the closest historical comparison. In Arkansas, more than 18,000 people, nearly 1 in 4 of those subject to work requirements, lost coverage over the course of just seven months. The losses were a paperwork failure, not a behavioral one. Of those removed, 97% were compliant or had exemptions, but still lost coverage.
Exemption pathways exist on paper. Your admissions team makes them real
Nebraska’s rule includes a medically frail exemption and pathways that can cover people with substance use disorder and serious mental illness. Neither is automatic. Under H.R. 1, states must verify work or exemption status at application and at renewal. Expansion adults face redeterminations every six months. Twice-a-year exposure to the same paperwork failure that sank Arkansas.
A patient sitting in your ASAM Level 3.5 clinically managed residential program, or your Level 2.5 partial hospitalization program (which is outpatient, full stop), does not get exempted because they walked through your door. They get exempted because someone on your admissions or UM team submits the medically frail attestation or hardship documentation to DHHS inside the window. Miss the window and the patient is disenrolled.
Per the Governor’s Office release: “Individuals found non-compliant will receive notice and have 30 days to meet the requirement or claim an exemption before denial or disenrollment.” Thirty days is not a generous window when your patient is in active withdrawal management or has just stepped down to residential. Arkansas operators learned this the hard way. Providers delivered care in good faith and then ate 30 to 45 days of services because eligibility had quietly terminated.
Nebraska has published a list of qualifying medical codes for the medically frail exemption, but per Healthcare Dive reporting, the state did so a week before the work requirements took place, and it seems the list has some gaps, such as the exclusion of codes related to some cancers, heart failure and HIV. A related concern flagged by advocates: though the state says it will automatically check whether a beneficiary’s health codes qualify them for the medically frail exemption, the systems appear to be basing that determination on the first code they see. That means if someone goes to the doctor for a cough, that visit might not include other previous diagnoses that would qualify someone for medical frailty, such as anxiety or diabetes.
Self-attestation alone will not carry the day. For existing enrollees, Nebraska is reviewing medical claims data prior to renewal and will auto-exempt an individual if indicated based on diagnosis/procedure codes; if Nebraska cannot determine medical frailty through claims data or other data sources, existing enrollees will need to submit a self-declaration form. Build the exemption submission into intake. Not into discharge planning. Intake. Day one, next to the ROI and the financial responsibility form.
Pro forma stress tests: what to actually model
If your pro forma assumes a static Medicaid mix, throw it out. The federal macro is unambiguous. Recent estimates from the Urban Institute find 4.9 million people (with a range of 3 to 7 million) are projected to lose Medicaid coverage in 2028 from H.R. 1’s new mandate, and even more people (8 million on average, with a range of 4.9 to 10.1 million) will lose Medicaid coverage in 2028 due to the combination of work requirements and the megabill’s burdensome requirement that eligibility be redetermined more frequently for people getting Medicaid through the Affordable Care Act’s expansion to low-income people.
For our Nebraska clients with 40 percent or higher Medicaid concentration, we model three scenarios on the expansion book:
- 12% coverage loss over 12 months (conservative, adjusted downward from Arkansas because Nebraska’s automated verification appears broader)
- 22% loss (mid case, blended across a Medicaid book that is not 100% expansion)
- 30% loss (upper end, consistent with the Urban Institute estimate that about 25,000 Nebraska Medicaid enrollees could lose coverage, or about 36% of those subject to the restrictions)
At a 22 percent coverage loss, a 60-bed residential program billing an average $625 per diem on Medicaid sees roughly $1.8M in annualized revenue exposure before you factor in the increased denial rate from eligibility lapses. Days in AR will stretch. We tell clients to budget for days in AR moving from the high 30s into the mid 50s during the first two quarters of implementation, because eligibility verification will be the single largest source of new denials.
For feasibility studies on new builds or acquisitions in work-requirement states, we now require a coverage-churn sensitivity layer. If the deal does not pencil at a 20 percent Medicaid attrition assumption on the expansion book, the deal does not pencil. AHS does not work in California or New York, but the Florida, Tennessee, and Ohio operators we serve are running the same math.
Intake, UM, and payer communication: the workflow changes that actually matter
Three concrete changes your team can implement this quarter.
- Run a real-time eligibility check at admission, then again on day 15 and day 30 of any episode longer than two weeks. DHHS is phasing enforcement by renewal date, not all at once. Per DHHS statements to Nebraska Public Media: “Members with renewal dates in May or June 2026 will not be subject to the requirements. The first group impacted will be those with eligibility periods ending July 31, 2026, with phased implementation continuing through June 2027.” Most billing teams check eligibility once at admission and assume the coverage holds. That assumption is now wrong.
- Designate a single staff member, usually inside UM or admissions, as the exemption submission owner. Their job is to file the medically frail or hardship exemption within 10 days of admission for every Medicaid expansion patient. Track it like you track prior auths. Same urgency, same accountability.
- Open a written line with your Nebraska Medicaid managed care plans (Healthy Blue, Nebraska Total Care, Molina). Ask them, in writing, how they intend to handle claims for episodes that span an eligibility termination tied to work-requirement non-compliance. Get the answer in writing. When the first denials hit, you want a documented payer position to appeal against.
One more piece worth flagging. DHHS is not planning to hire new staff members to assist with Medicaid enrollment, and there is also no new state funding allocated to support the additional verification. Sara Maresh, healthcare access program director at Nebraska Appleseed, told reporters, “A vast majority of Nebraskans are working or would meet an exemption, but it is the red tape that’s what causes the problems and really causes people to lose coverage.” Parity arguments under MHPAEA may also apply where exemption administration is more burdensome for behavioral health conditions than for medical ones. Build a clean documentation trail now. You may need it.
The bigger picture, and a note from Amelia Island
Nebraska is not the story. Nebraska is first, and the federal floor underneath it forces every Medicaid expansion state to follow. Montana plans to roll out the requirements on July 1 and Iowa on Dec. 1. Arkansas plans to soft launch its requirements in July, but not actually disenroll anyone until Jan. 1, 2027. If you operate in Iowa, Ohio, or any of the January 2027 states, Nebraska is your preview.
Behavioral health operators who built their census strategy around steady Medicaid expansion populations will feel this in clean claim rate, AR aging, and their ability to fund growth. Operators who get out ahead will treat this as an operational redesign rather than a policy headline. Intake workflow, exemption tracking, eligibility re-verification cadence, payer documentation, pro forma sensitivity. None of it is glamorous. All of it decides whether your Medicaid book is a strength or a liability 18 months from now.
AHS is sponsoring the Women in Leadership Luncheon at NAATP National in Amelia Island, May 4 through 6. Allison, Benjamin, Leah, and I will be on site. If you operate in Nebraska, Iowa, Montana, or any of the next-wave states and want to walk through your specific numbers, find us there. Bring your Medicaid concentration percentage and your current days in AR. We can do useful work in 20 minutes.
Frequently asked questions
When does Nebraska’s Medicaid work requirement actually start affecting my patients?
Enforcement began May 1, 2026, but Nebraska DHHS is phasing exposure by renewal date. Per DHHS quoted by Nebraska Public Media, members with renewal dates in May or June 2026 are not subject to the requirements, and the first group impacted is those with eligibility periods ending July 31, 2026, with phased implementation continuing through June 2027. New applicants on or after May 1, 2026 must verify community engagement or claim an exemption at application. For behavioral health operators, the first meaningful wave of disenrollments hits claims in Q3 2026.
How many Nebraskans are expected to lose Medicaid coverage?
KFF reports about 72,000 Nebraska expansion enrollees are subject to the requirement as of March 2025. CBPP projects roughly 25,000 will actually lose coverage, a 35 percent decline in the expansion population. The Hill, citing CBPP, has reported a range of 28,000 to 41,000 Nebraskans at risk. The Arkansas precedent saw more than 18,000 adults lose coverage over the first seven months of implementation before a federal court struck down the policy in 2019.
Are SUD and serious mental illness patients automatically exempt under the federal rule?
No. H.R. 1 includes a medically frail category and hardship pathways that can cover many SUD and SMI patients, but the exemption is not automatic. Nebraska has released a large index of qualifying diagnosis and procedure codes covering conditions such as certain cancers, HIV, heart disease, and mental health conditions and substance use disorders, per KFF. Healthcare Dive reported the list was published only about a week before implementation and appears to omit codes for some cancers, heart failure, and HIV. Per the Governor’s Office release, individuals found non-compliant have 30 days to claim an exemption before disenrollment. Your admissions or UM team must submit the medically frail attestation or SUD-treatment declaration inside that window.
What should our pro forma assume for coverage churn in Nebraska and other next-wave states?
AHS models three scenarios on the expansion book: 12% coverage loss (conservative), 22% (mid case), and 30% (upper end, consistent with the Urban Institute’s Nebraska estimate cited by CBS News that about 36% of those subject to the restrictions could lose coverage). At 22% loss, a 60-bed residential program billing $625 per diem on Medicaid sees roughly $1.8M in annualized revenue exposure before eligibility-related denials are layered in. Days in AR should be budgeted to move from the high 30s into the mid 50s during the first two implementation quarters.
References
- Nebraska DHHS: Medicaid Work Requirements (official state page)
- Office of Governor Jim Pillen: Nebraska First in the Nation to Pursue Medicaid Work Requirements (Dec. 17, 2025)
- KFF: A Closer Look at Nebraska, the First State Planning to Implement a Medicaid Work Requirement
- KFF: The Medical Frailty Exemption from Medicaid Work Requirements
- Center on Budget and Policy Priorities: Nebraska Launching Punitive Medicaid Work Requirements Early
- CBPP: States’ Experiences Confirm Harmful Effects of Medicaid Work Requirements
- Healthcare Dive: Nebraska rolls out Medicaid work requirements (May 1, 2026)
- Nebraska Public Media: DHHS and advocates disagree on how implementation will go
- Health Affairs: Medicaid Work Requirements In Arkansas: Two-Year Impacts On Coverage, Employment, And Affordability Of Care
- Nebraska DHHS: Medically Frail and SUD Treatment Program Exemptions (PDF)