Interoperability in 2026: A Roadmap for State Agencies 

The landscape of health information exchange is rapidly evolving. Landmark federal mandates, expanding adherence requirements, and new infrastructure opportunities are reshaping how your agencies exchange information with providers, health plans, and other government partners. As we move further into 2026, it is crucial to understand the regulatory milestones, operational challenges, and strategic decisions that will define interoperability this year and beyond. The decisions you make now will directly impact your ability to meet critical 2026 and 2027 deadlines and unlock new efficiencies for your programs. 

This guide provides a forward-looking roadmap for state agencies, examining the key developments that will shape your strategy and drive better outcomes for the populations you serve.

Federal Policy Milestones Poised to Impact State Agencies in 2026 

TEFCA’s Growing Momentum: New Opportunities for States 

The Trusted Exchange Framework and Common Agreement (TEFCA) is no longer just a federal policy; it is a functioning national infrastructure for health information exchange. With eight Qualified Health Information Networks (QHINs) now actively operating, the network’s reach and utility are expanding rapidly throughout 2026. This presents powerful new opportunities for your agency. 

The operational launch of TEFCA provides the legal clarity many state agencies needed to commit resources. With a formalized governance structure in place, states now have a clear voice in the network’s evolution. The designated QHINs bring vast pharmacy and payer networks into the fold, expanding your ability to exchange data with managed care plans, pharmacies, and provider networks. 

A key development to watch in 2026 is the expansion of federal agency participation. The Social Security Administration, Department of Veterans Affairs, Department of Defense, CDC, CMS, NIH, and Indian Health Service are all preparing to join the TEFCA network. This creates unprecedented opportunities for cross-agency data exchange to support eligibility determination, care coordination for dual-eligible beneficiaries, and public health reporting. 

Furthermore, TEFCA use cases are expanding beyond treatment to include payment, healthcare operations, government benefits determination, and public health. This shift signals that TEFCA can become a core component of your strategy for program integrity, eligibility verification, and population health initiatives. 

The CMS Interoperability Rule: Critical Deadlines Arrive 

The phased implementation of the CMS Interoperability and Prior Authorization Final Rule reaches a critical juncture in 2026. The approaching deadlines have significant implications for your Medicaid program. 

As of January 1, 2026, state Medicaid managed care plans, CHIP managed care entities, and Medicaid Fee-for-Service (FFS) programs using a modular MMIS are required to provide the following:  

• Patient Access API: A FHIR-based API providing beneficiaries with access to their claims, encounters, clinical data, and prior authorization decisions. 

• Provider Access API: An API enabling in-network providers to access patient data. 

• Payer-to-Payer Data Exchange: A mechanism to support seamless beneficiary transitions between plans. 

As a state Medicaid director, you have a dual responsibility: ensuring your managed care plans and MMIS vendors achieve adherence while also determining how to leverage these new data flows for program oversight, quality improvement, and enhanced care management. Tools like the Sequoia Project’s Payer-to-Payer FHIR API Adherence Readiness Checklist remain valuable resources as you navigate the January 1, 2027, extended deadline for certain requirements. 

Critical Challenges for State Medicaid Programs in 2026 

The Behavioral Health Infrastructure Gap 

A significant challenge remains the interoperability gap in behavioral health. We know that Medicaid programs cover a large percentage of adults with serious mental illness. However, many behavioral health clinics, substance use disorder treatment facilities, and community mental health centers still operate without certified EHR systems. This is often because they were excluded from HITECH funding and lack the capital to invest in modern platforms. 

This technology gap creates dangerous breaks in care coordination for your beneficiaries. Adding to the complexity, 42 CFR Part 2 regulations continue to isolate substance use disorder data, often requiring separate consent for each disclosure. This barrier prevents critical coordination when a Medicaid beneficiary with a substance use disorder presents at an emergency department or transitions between care settings. For states operating integrated care models, this infrastructure gap undermines care coordination and creates risks when vital information is not available. 

Legacy System Challenges in Rural and Safety-Net Settings 

Your programs disproportionately rely on providers in rural areas, Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs), and long-term care facilities. In these settings, certified EHR adoption often lags, creating incomplete data for care management, gaps in program integrity, and significant health equity concerns. Addressing this disparity is essential to ensuring all beneficiaries receive high-quality, coordinated care. 

Aligning MMIS Modernization with New Standards 

Many states are in various stages of MMIS modernization, forcing strategic decisions about how to align legacy systems with new interoperability standards like TEFCA and FHIR. 

• Modular Certification: If you are pursuing a modular MMIS certification, you must ensure that individual modules can support FHIR-based APIs and participate in TEFCA where applicable. 

• Data Standardization: A significant technical lift is required to map legacy Medicaid data to USCDI and FHIR standards. This work demands clinical and technical expertise that is often in short supply. 

• Vendor Capabilities: Not all MMIS vendors have the same level of TEFCA readiness. It is critical to assess your vendor’s roadmap and include specific interoperability requirements in your procurement specifications. 

Strategic Opportunities for State Agencies in 2026 

Choosing Your TEFCA Participation Model 

Your agency has several options for participating in TEFCA. The model you choose should align with your MMIS architecture, HIE relationships, and strategic goals. 

• Direct QHIN Participation: Some states may become QHINs themselves for maximum control, though this requires a significant infrastructure investment. 

• Participation Through an Existing QHIN: Most states will likely connect through an established QHIN, leveraging existing infrastructure while maintaining governance. 

• Sub-participant Model: You can join as a sub-participant under your MMIS vendor or state HIE, reducing the technical burden while gaining access to the national network. 

As federal agencies formalize their participation plans in 2026, now is the time to evaluate which model best fits your state’s needs. 

Leveraging CMS API Requirements for Program Innovation 

The new API requirements are more than an adherence exercise; they are an opportunity for innovation. 

• Enhanced Care Management: Real-time access to claims, clinical data, and prior authorization information enables more effective care management for high-risk beneficiaries. 

• Program Integrity: The Provider Access API can support real-time eligibility verification and help reduce improper payments. 

• Beneficiary Empowerment: The Patient Access API allows beneficiaries to access their own data through apps, supporting health literacy and engagement. 

• Quality Improvement: Standardized data access streamlines quality measure reporting, outcome tracking, and value-based payment initiatives. 

Preparing for 2026-2027: An Action Plan 

To capitalize on these opportunities, state Medicaid directors should focus on these key actions: 

1. USCDI v3 Implementation Planning: Work with your providers, plans, and MMIS vendor to prepare for USCDI v3, focusing on social determinants of health (SDOH) data elements relevant to your health equity goals. 
2. Federal Agency Coordination: As federal agencies join TEFCA, establish governance frameworks for cross-agency data exchange to address eligibility, care coordination, and public health reporting. 
3. Workforce Development: Invest in training programs to build internal capacity in FHIR, TEFCA, and modern interoperability standards. 
4. Information Blocking Monitoring: Establish processes to monitor and address information blocking in your provider and plan networks.

Conclusion: Seizing the Interoperability Opportunity 

State Medicaid directors face a critical choice in 2026: view these evolving requirements as an adherence burden or as a strategic opportunity to transform program operations. By aligning MMIS modernization with TEFCA, leveraging new APIs for innovation, and addressing infrastructure gaps, you can deliver more coordinated, efficient, and effective care. The momentum built in 2025 continues to drive unprecedented opportunity in 2026. With clear vision and sustained commitment, you can shape your state’s interoperability trajectory and improve health outcomes for years to come.