On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill Act” (OBBBA), a sweeping domestic policy package. It carries profound implications for Medicaid and Medicare providers. Here’s a summary of what you and your senior leadership need to know.
What the bill does to Medicaid & Medicare
- Medicaid cuts up to $1 trillion over 10 years
The Congressional Budget Office estimates Medicaid reductions near $930 billion (Senate version) to $1 trillion (House version)—affecting nearly 12 million people by 2034. - Coverage losses concentrated in safety-net populations
Up to 11.8 million adults are projected to lose coverage over 10 years. Behavioral health agencies, developmental disability providers, and CCRC operators will see reduced reimbursements and increased uncompensated care. - Work requirements and eligibility recertification
Beginning January 2026, able-bodied adults (ages 19–64) in Medicaid expansion programs must document 80 hours/month of work or related activities. Eligibility checks will occur twice yearly instead of annually. - Higher cost-sharing and reduced provider taxes
Co-pays of up to $35 per service will apply for those above 100% FPL, financing increased state cost burden. Medicaid provider taxes will decrease from 6% to 3.5% by 2031. - Restrictions affecting undocumented care
States funding undocumented immigrant care may lose federal match rates. Approximately 1.4 million undocumented individuals could lose access. - Medicare adjustments
Though Medicare is less directly affected, OBBBA enacts $400–500 billion in spending cuts over the next ten years. It also accelerates Medicare insolvency by one year, shifting costs to beneficiaries and providers. The cuts are aimed primarily at:- Reductions in payments to SNFs and home health agencies
- Tightened reimbursement formulas for post-acute care and managed care plans
Implications for MHS Association Membership
- Senior living/CCRCs: Lower SNF reimbursements will strain margins for short-stay rehab and long-term dual-eligible residents.
- Behavioral health agencies: Cuts may affect psychiatric care reimbursements and mental health parity enforcement.
- Developmental disability and community-based services: While primarily funded through Medicaid, some dual-eligibles may see disruptions in Medicare-covered services.
Key Milestones Ahead
- July – Dec 2025: CMS issues state guidance; IT and billing teams should prepare.
- Jan 2026: Work/training verification begins.
- July 2026: Full recertification rollout.
- 2027–2028: State-level Medicaid adaptation windows; advocacy spots critical.
- 2027 onward: Federal fiscal year begins; budget impacts felt at state/county program level.
Proactive Strategies: Operational Adaptation & Fundraising
- Strengthen patient outreach & care coordination
- Set up eligibility and employment-support teams to decrease churn.
- Partner with job retraining programs to support required hours.
- Modernize billing and IT systems
- Automate 6-month recertification alerts.
- Implement point-of-care POS systems for collecting co-pays and documenting state cost-sharing.
- Diversify revenue
- Enhance philanthropic appeals emphasizing mission resilience.
- Launch “Bridge-the-Gap” giving campaigns aimed at covering uncompensated care shortfalls.
- Maximize grant captures
- Target rural health, workforce, and health equity grants, especially for mental health and developmental disability services.
- Form collaborative consortia
- Unite with MHS Association peers to pool admin functions, share best practices, and strengthen advocacy capacity.
- Engage legislators at the state level
- Present data to state lawmakers on community impact and seek waivers or relief programs.
- Reassess program portfolios
- Evaluate service lines for return on investment; consider reallocating resources from underfunded lines.
Final Note
The One Big Beautiful Bill delivers seismic shifts—$1 trillion in Medicaid reductions, expanded administrative demands, and tightening Medicare reimbursements. Yet, your organizations can prepare by:
- Anticipating administrative changes,
- Investing in patient and staff support systems,
- Tailoring community messaging,
- And expanding diversified funding.
As always, it’s about staying true to your mission amidst change. MHS member organizations have long demonstrated innovation, resilience, and compassion—qualities that will guide you through this next chapter.
Interested in learning about how best to communicate these changes with your board, staff, and other stakeholders? Check out our suggested talking points on the OBBBA linked below.