As the Republican Party’s so-called “One Big Beautiful Bill Act” moves closer to possible passage, health care stakeholders may be wondering about the answers to questions like: “What are the specific implications of these cuts for me?” and “How can I start preparing without knowing what the final bill will look like?”
True to its name, the OBBB contains a hodgepodge of policies that will have both direct and indirect impacts on health care organizations. And while the final parameters of the bill are unclear, organizations can immediately kick off scenario planning and financial modeling to begin getting a sense of how these policy changes are likely to impact them. SPG is ready to engage with you to begin this process to ensure you are as prepared as possible for these changes when they arrive – because some, at least, will almost certainly become law.
In the meantime, please find below a starter set of considerations relevant for most health care stakeholders.
- Medicaid eligibility cuts: The OBBB would impose work requirements, increase the frequency of redeterminations, and directly eliminate coverage for some subgroups.
Organizations might ask:- Will the Medicaid populations we serve lose their coverage, and can we help them remain enrolled?
- How will these cuts affect our operating model?
- Medicaid financing cuts: The OBBB proposes many changes which will effectively cut the federal government’s contribution to certain states’ Medicaid programs, including FMAP restrictions and limits on provider taxes.
Organizations might ask:- What’s the scale of cuts that will affect the states we operate in?
- Do we think these states will respond by cutting Medicaid payments, eliminating Medicaid benefits, raising additional state revenue, or other options?
- Ultimately, how will our funding be impacted?
- Individual insurance market: The OBBB tightens eligibility standards for individuals to receive ACA premium tax credits. Combined with the expiration of the American Rescue Plan’s enhanced credits, which will make the subsidies to the ACA individual market significantly less generous, this could reduce enrollment and damage the risk pool.
Organizations might ask:- How many people will lose ACA coverage in my region, and are they likely to find alternative coverage?
- Are these populations a major part of my service population?
- Commercial market and ICHRA: The OBBB proposes to codify the ICHRA program (renaming it as “CHOICE”) and add new incentives for businesses to offer them to their employees. ICHRA/CHOICE allows employers to offer tax-advantaged funding for employees to purchase individual coverage (rather than the employer having to provide group coverage).
Organizations might ask:- Can organizations encourage states to reduce uninsurance rates through additional ICHRA/CHOICE supports?
- What state law changes would be needed to make ICHRA/CHOICE more viable in my state?
- Should we offer our own coverage to employees through an ICHRA/CHOICE model?
- Medicare program changes: The OBBB would set a new rate of growth for the Physician Fee Schedule (PFS) payments which would essentially be one-tenth of the Medicare Economic Index (MEI).
Organizations might ask:- How will our reimbursement rates – either directly from Medicare or from health insurers benchmarked to Medicare –be affected by the new growth rate?
- What type of contract negotiations would be needed to protect ourselves from an impact?
- Technology and artificial intelligence: The OBBB would place a 10-year moratorium on state and local laws on AI regulation and would institute various new pilots to implement AI tools in government programs (including a Medicare initiative to “reduce and recoup improper payments”).
Organizations might ask:- If enacted (this provision is questionable under reconciliation rules), would this apply to states we operate in?
- Do any states we operate in currently limit our ability to use/sell healthcare-related AI?
- How would our marketing strategy change if local implementation was halted?
Answering these kinds of questions in detail is difficult. The answers will be different for every type of organization, depending on its exposure to different market segments, and many other factors. In New York, organizations will need to consider, for example:
- NYS’s approach to distributing impact of cuts. NYS may need to fill a gap of about $4-6 billion in its Medicaid program—roughly 5% of the program. Organizations should start to imagine scenarios in which their Medicaid revenues are reduced “across-the-board” by as much as 5%.
- The interface between Medicaid and the Essential Plan. As currently written, about 500,000 EP enrollees will lose EP coverage and gain Medicaid coverage, while about 1 million Medicaid enrollees might lose coverage and transition elsewhere.
- Populations of concern. The OBBB’s provisions are targeted at specific subpopulations, such as Medicaid Expansion enrollees and long-term care. For example, in New York in particular, many Medicaid enrollees with long-term care needs could be affected by the proposed $1 million limit on home equity values for eligibility.
- Handling new administrative requirements. Providers will need to be prepared for a large volume of eligibility issues that could affect billing and operations.
Many other specific situations might crop up as well. As a client, please feel free to reach out to SPG anytime with specific situations or concerns that we might be able to help you address.