What States Need from Medicaid Technology Partners in 2026

An Outlook on Rewriting the Vendor Playbook

Change is the only constant in Medicaid. And right now, it’s at an inflection point. As federal requirements shift under H.R. 1, modernization is critical for Medicaid sustainability. States have long relied on technology partners to help drive modernization. But the stakes are even higher today, with billions at risk.

The demand isn’t just for better technology. It’s for fundamentally different kinds of partnerships. Modernization is not solely about working with a technology vendor to achieve compliance. In 2026, states need technology partners with flexible solutions and ways of working that align with their mission. The best partnerships will go beyond modernizing systems. They will shape the next generation of Medicaid. 

New Pressures, New Priorities

State Medicaid agencies have always worked in a high-stakes environment. Medicaid is most states’ largest budget item. Federal compliance requirements are complex. Eligibility determinations and other decisions impact people’s lives and health outcomes. And public scrutiny is intense.

Beyond these realities, additional pressures are increasing the urgency for modernization. While the fiscal environment has always been difficult, it’s getting harder. Longstanding state challenges may accelerate with H.R. 1 policy changes likely reducing federal funding.

Just as resource constraints are tightening, states are doubling down on health outcomes, emphasizing whole-person care, care coordination, and population health management. Many are aiming to address social determinants of health through systems that unify data across interactions.

At the same time, lightning-fast technology cycles present opportunities and risks. There is a constant flow of new tech and analytics-powered solutions to drive the next era of Medicaid. Yet investment uncertainty and fears of technology obsolescence can sometimes create decision paralysis.

How to Build Partnerships that Meet the Moment

Deeper and more meaningful vendor partnerships can help states navigate this complicated environment. Here are five partnership fundamentals to help states optimize Medicaid modernization in 2026.

1. Choose Mission Partners, not Technology Vendors

Medicaid programs require modernization tailored to state-specific business goals. Yet not all vendors consider business, member, and provider needs when building statewide solutions. What states require are mission partners that ground their work in solving business problems. Mission partners provide wraparound services that streamline their solutions for states and fill capability gaps to reduce the burden on overloaded state resources. A good partner should also have the experience and agility to solve for new requirements quickly, such as Community Engagement or SNAP error rates under H.R. 1.

Some states are explicitly asking vendors to work more as mission partners. One procurement requested an embedded partner to expand analytics capability. The state wants a partner to co-develop dashboards, reports, and models. The goal is to create an analytics center of excellence that goes beyond traditional “blocking-and-tackling” with analytics initiatives well aligned to the state’s strategic objectives. What makes this notable is that the state isn’t just looking for a technical solution. They want a partner with specific analytics expertise that can leverage the technology they provide to deliver next-level insights for better outcomes.

2. Establish an AI-Ready Data Foundation

There is a lot of talk about how AI will profoundly change how work is done and who does it. For state Medicaid agencies, the buzz isn’t just distracting; it’s overwhelming. Most states aren’t optimizing the tools they already have to operate Medicaid programs. Resource constraints make it difficult for many states to identify the best AI uses cases for their organization.

While AI will help manage data more efficiently and effectively, states’ ability to harness its potential will depend on the quality of the data they provide to train and support the models. As such, states need a partner that understands the foundational component of a data strategy and strong data management and can apply AI practically with proper guardrails and nimbly as new requirements like H.R. 1 arise. The right partners should also be transparent about how they use AI to accelerate response time to data requests, initiate new analyses, and provide efficiency in hour pools.  

3. Simplify Vendor Management

Dividing complex Medicaid management systems into separate, scalable modules that address specific business functions can deliver cost savings, flexibility, and efficiency. However, modularity shouldn’t make vendor management unnecessarily complex. After all, the best approaches to Medicaid modernization are those that states can effectively manage.

States can deliver on their modularity ambitions and avoid vendor complexity with a technology partner that provides a thoughtful combination of modules. This can reduce states’ need to manage interdependencies across vendors or invest in integration solutions. In addition, states benefit from out-of-the-box integrations and interfaces with a common data and analytics foundation. As part of a targeted modernization of its MMIS, one state consolidated platforms with an experienced vendor. The state now has fewer vendors to manage, and consolidation reduced operating costs and streamlined policy changes across the system.

4. Implement Future-Proof Technology

Many states are constrained by legacy technology as they create their modernization roadmaps. States can protect Medicaid investments and support continuous improvement with a future-proof technology infrastructure.

Getting flexible technology means working with partners that build flexibility into the core architecture. They provide scalable, cloud-based solutions. They adopt interoperability and API standards for seamless data exchange and follow industry-standard security frameworks. These partners value transparency and openly share the underlying logic of their technology solutions.

5. Support Flexibility in Procurement

Medicaid technology is one of the biggest purchases that states make, and it routinely stretches procurement processes. Public sector procurement practices may need to evolve, and organizations like NASPO ValuePoint are leading the way in this effort. There are ways to approach purchasing to simultaneously procure needed solutions and redefine partner relationships.

One approach is to make procurement more situational, flexing strategies with program-specific needs. This could be supporting contractual relationships that enable vendor collaboration. Or it could mean contracting for shared responsibility for idea generation, management, policy, and analytic innovation. It comes down to codifying partnerships around states’ most pressing needs right from the start.

The Power of the Right Partnership

Medicaid modernization isn’t about predicting the future. It’s about building partnerships and technology solutions that can shape it. When states have technology partners with experience and an understanding of each state’s unique mission, they are well positioned to navigate the challenges and opportunities to come.