The Federal Budget Reconciliation Act, also referred to as “The One Big Beautiful Bill”, became law on July 4, 2025. It brings sweeping changes to tax policy, infrastructure, and healthcare. While it doesn’t cut reimbursement rates directly, it introduces major structural shifts to both Medicare and Medicaid that will affect healthcare providers in the years ahead.
This guide breaks down what’s changing and what’s staying the same. It also explains what these updates mean for your healthcare practice, especially if you rely on Medicaid or work in medical specialities like behavioral health, home health, or long-term care.
Medicare Changes at a Glance
Medicare saw targeted reforms that tighten eligibility and contain costs. There’s a small bonus for providers in special situations and expanded exemptions for orphan drug pricing. While no immediate reimbursement reductions were enacted, budgetary pressure will likely grow in the years ahead.
What This Means:
Providers should prepare for narrowed eligibility, particularly among aging immigrant populations. The 2.5% physician bonus is reserved for a small subset of providers and will not broadly offset funding pressure. Expect gradual reimbursement tightening beginning in 2026, and stay informed on CMS payment updates.
Medicaid Changes at a Glance
Changes were more pronounced in Medicaid with reduced federal spending, tougher eligibility screening, and additional administrative requirements. While the above changes may not lead to disruptions in operations right away, providers dealing with Medicaid patients should expect higher patient turnover and increased complexity in work processes.
What This Means:
The Medicaid providers – especially those who provide healthcare services to adults newly enrolled due to the Medicaid expansion under the ACA – could possibly experience more disruptions in their patients' health insurance coverages as well as an increase in administrative work related to verifying patients' eligibility. Nevertheless, all these challenges would not occur overnight. There is still sufficient time for preparation and patient education.
What This Means for Behavioral Health Providers
Behavioral health providers, including ABA therapy centers, outpatient mental health clinics, and SUD treatment programs, will be affected by Medicaid policy changes more than most specialties. But let’s be clear: these changes are not immediate, and there are steps you can take now to stay ahead.
Here’s what to be aware of:
- Churn may rise over time: The introduction of six-month redeterminations and work requirements for those newly enrolled in Medicaid expansion will likely lead to greater fluctuations in coverage status for patients with unstable work and living situations. This isn’t an immediate threat, but does imply some increased unpredictability with regards to who is covered when.
- Your cash flow may be increasingly reliant on eligibility status: If you generate some of your income through Medicaid, you should consider how any lapses in eligibility verification could impact patient flow and outstanding claims. Getting ahead of this issue by verifying eligibility in advance is key. This isn’t a problem - it’s a process to be aware of.
- Your staff may assume additional administrative support responsibilities: Your patients will have to figure out how to stay eligible under the new requirements, which means that your front desk or care coordination staff will be called upon to assist them in understanding the process of staying eligible, whether it is documentation or something else.
- Smaller clinics should build some cushion: If you’re a smaller provider with a high Medicaid patient mix and tight margins, now may be a good time to revisit your cash reserves or billing cadence, just in case there are delays in payments due to eligibility complications. You don’t need to overhaul your finances - think of this as rainy day prep.
Bottom line: These changes are not expected to derail your operations overnight. But staying informed and fine-tuning your workflows now will help ensure your practice stays resilient in the months and years ahead.
What This Means for Home Health Agencies
While the impact of this bill may not have an immediate effect on home health agencies, it is still important that you stay up-to-date, particularly if you serve any Medicaid recipients.
Here’s what to keep in mind:
- Home- and community-based services (HCBS) are protected - for now: The bill does not reduce reimbursement rates for HCBS programs, which is a welcome relief. If you provide services under a Medicaid waiver, your current funding levels should remain stable, but keep in touch with state Medicaid agencies, as budget discussions could shift long-term.
- More frequent eligibility checks may affect continuity of care: Some patients - particularly in long-term care programs - will now need to re-verify their Medicaid eligibility every six months. That may create small gaps in service if their paperwork is delayed. While it won’t affect most of your patients immediately, it’s helpful to be aware and plan for occasional hiccups in scheduling.
- Changes in workforce coverage could have an impact on staffing costs: The majority of direct care workers get their insurance from either the Medicaid program or the ACA subsidy. Should the changes in coverage move them towards getting their benefits from their employers, you could see higher benefit costs and/or increased difficulty hiring down the line.
- Some added admin time may be required for patient support: Patients (or their family members) may turn to your team with questions about eligibility or paperwork, especially during redetermination cycles. While this isn’t core to your clinical role, having a point person who knows where to direct them (e.g., a local caseworker or navigator) could help streamline support.
Bottom line: For most home health agencies, these policy shifts are more of a “watch and plan” than a cause for immediate concern. Stay in the loop, keep lines open with Medicaid liaisons, and be ready to support patients and staff through potential bumps.
Need Advice on How to Manage These Policy Changes?
At Flychain, we specialize in helping small-to-medium-sized healthcare practices stay financially resilient, especially during times of policy change and uncertainty. As Medicaid and Medicare programs evolve, we’re here to help you stay ahead with full-service accounting and bookkeeping, clear financial reporting, and access to fairly priced capital when you need it. We also provide benchmarking data, contracted rate analysis, and other financial insights to help you navigate changes with confidence - all so you can focus on what matters most: delivering care. If you’re feeling unsure about how these changes might impact your bottom line, let’s talk. We’re in this with you.
Contact us here for a free consultation - no strings attached!
Beautiful Big Bill Medicare and Medicaid FAQs
The One Big Beautiful Bill What it means for Medicare and Medicaid?
The One Big Beautiful Bill would make sweeping changes to Medicaid eligibility, enrollment, work requirements, state financing, and other program rules and would also make more targeted changes to Medicare. Changes in patient coverage, more frequent checks of a patient’s Medicaid eligibility, additional administrative requirements and longer-term pressure on government health spending may hit health care providers hardest.
Does the One Big Beautiful Bill gut medicaid?
Yes. The legislation is expected to result in substantial cuts in federal Medicaid spending over the next decade through changes to eligibility, work requirements, financing, and more. The cuts don’t mean that all providers will automatically experience a cut in reimbursement, but states and providers could feel more financial pressure as the provisions take effect.
When do the new Medicaid work requirements take effect?
The federal Medicaid work and community engagement requirements will take effect January 1, 2027, for the impacted Medicaid expansion populations, on the whole. Some states may have earlier requirements. If you have a large Medicaid population, monitor your state’s implementation timeline, as changes in eligibility may impact patient coverage and continuity of care.
Who Does the New Medicaid Work Rules Affect?
The new requirements primarily affect some adults eligible under the Affordable Care Act Medicaid expansion population and some Medicaid waiver programs. Some groups and circumstances are exempt. Health care providers should refer patients to their State Medicaid agency for questions about individual eligibility. Eligibility rules and verification processes can be complex.
How frequently will the new law require renewal of Medicaid eligibility?
Generally, beginning in 2027, states will be required to redetermine eligibility for individuals enrolled through the ACA Medicaid expansion population at six-month intervals, rather than the annual renewal cycle that is typically used today. More frequent redeterminations could result in more coverage churn if patients miss deadlines, requests for documentation, or other renewal requirements.
Does the One Big Beautiful Bill cut Medicare payments to health care providers?
The law does not simply impose a blanket cut in Medicare reimbursement. Other payment changes included a temporary 2.5% increase to the Medicare Physician Fee Schedule conversion factor in 2026. This temporary increase ends after 2026, and CMS’s proposed 2027 Physician Fee Schedule indicates lower conversion factors than 2026, so providers should watch for annual CMS payment updates.
Planning for Changes to Medicare and Medicaid
Healthcare providers need to keep up with changes in Medicaid eligibility and reimbursement in their state, improve their eligibility verification workflow, monitor denial and payment trends, and know how much they rely on their revenue from Medicare and Medicaid. Organisations with high exposure to government payers also should monitor cash flow, maintain adequate reserves and model the impact of coverage disruptions or changes in reimbursement on revenue, staffing and operating margins.
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