The passage of the One Big Beautiful Bill Act (OBBBA) introduced significant new healthcare regulatory changes that will affect healthcare providers across the care spectrum.

Medicaid Program Reforms 

Reforms to the Medicaid program have been some of the most discussed aspects of the OBBBA.  It introduces work requirements for non-pregnant adults between the ages of 19-64 years old, requiring that they complete at least 80 hours of employment, volunteering or educational activities per month.   

For Medicaid recipients above the Federal Poverty Level, there will be cost-sharing payments imposed. 

Hospitals and other healthcare providers should begin planning out what training and tools their Patient Access, Financial Counselors and other patient-facing Revenue Cycle employees will need to identify patients impacted by these changes and start developing concrete steps to have processes in place to assist Medicaid-eligible patients with complying with these new requirements beginning January 1, 2027. 

Currently, states are able to apply for waivers to distribute State Directed Payments (SDPs) to healthcare providers for services provided to Medicaid beneficiaries in excess of Medicaid fee schedule rates up to a provider’s average commercial rate to incentivize a wide range of outcomes, such as improved quality of care.  Beginning with SDPs on January 1, 2028, these SDP rates will be capped at 100% of the Medicare rate for these services for states that expanded Medicaid eligibility under the Affordable Care Act to 138% of the Federal Poverty Level and 110% of the Medicare rate for these services for states that did not.  For certain providers, this could be a looming Medicaid payment reduction of millions of dollars.  Finance and administrative personnel of these providers should begin preparing to operate with these reductions in mind. 

Affordable Care Act Exchange Impact 

The OBBBA codifies policy changes that the Trump Administration had already announced through a CMS proposed rule.  These changes include shortening the enrollment period for Exchange plans, additional income verification requirements when applying for exchange plan premium tax credits, removing caps on repayments individuals must make if their income exceeds what they estimated and other restrictions.  Again, healthcare providers should begin training their Patient Access, Financial Counselors and other patient-facing Revenue Cycle employees on these changes and developing tools and support to help affected patients maintain health insurance coverage. 

Rural Healthcare Transformation Funds 

The OBBBA establishes a Rural Healthcare Transformation Fund (RHTF) that will provide $10 billion in funds to the 50 states for support and improvements of defined aspects of healthcare delivery in rural areas and for a subset of non-rural healthcare providers for Federal Fiscal Years 2026 through 2030.  Each state will receive $100 million RHTF funds per year.  The Centers for Medicare and Medicaid Services (CMS) will then allocate the remaining $5 billion to the states based on its evaluation of states’ applications for these funds.  The law requires this $5 billion be distributed to at least 13 states, but no guarantees that all states will receive some of the funds. 

The law requires CMS to consider the following factors while considering how to allot this $5 billion: 

  • The percentage of the state’s population located in a rural area; 
  • The percentage of the nation’s “rural health facilities” located in the state; and 
  • The physical location of hospitals in the state. 

The law also provides that CMS may use any other factor it determines to be appropriate to allot the funds.  States must detail how they will use the funds and the law provides ten broad categories that the funds may be used for, focused on improving health outcomes, adoption of innovative technologies and payment models and, in general, paying healthcare providers in rural areas. 

State Responses to the OBBBA 

As the Medicaid program and insurance exchanges are jointly run by the Federal and state governments, healthcare providers should work with their regulatory and legislative contacts to understand and respond to these challenges.  Numerous states have already indicated that a combination of service reductions, internal agency cost savings and additional tax revenues will be needed to offset the reduction in Federal payments for Medicaid services.  Again, it is critical to work with your state legislative and administrative contacts to understand and influence these changes. 

If you have questions about how these regulatory changes could affect your practice, please contact the Dean Dorton healthcare team today.