The Federal Budget Reconciliation Act, also known as the “One Big Beautiful Bill”, was signed into 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.
| Provision |
Before the Bill |
After the Bill |
| Eligibility Restrictions |
Open to legal residents age 65+ regardless of duration in the U.S. |
Now limited to U.S. citizens and certain lawful immigrants (e.g., green card holders with 5+ years); 18-month phase-out |
| Physician Fee Schedule Bonus |
Temporary COVID-era bonus expired in 2024 |
2.5% bonus in 2026 for providers serving in “exceptional circumstances” (e.g., rural shortages, disaster zones) |
| Drug Price Negotiation (Orphan Drugs) |
Drugs for one rare disease excluded from Medicare negotiation |
Exclusion now extended to orphan drugs treating multiple rare conditions |
| Medicare Funding Levels |
Baseline federal spending with minor annual adjustments |
~$500 billion in cuts over 8 years - may affect provider payment updates starting in 2026 |
| Other Policy Proposals |
Included proposals on HSA reform and AI fraud detection |
Not enacted - removed during final negotiations |
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
Medicaid underwent more dramatic changes, including reduced federal funding over time, stricter eligibility checks, and new administrative mandates. These changes may not result in immediate operational disruption, but providers serving Medicaid patients should prepare for increased churn and added workflow complexity.
| Provision |
Before the Bill |
Change in the Bill |
| Eligibility Redeterminations |
Annual recertification typical in most states |
Every 6 months for certain expansion populations creates more churn and administrative burden |
| CMS Enrollment Simplification Rule |
CMS finalized streamlined enrollment rules (2023–24) |
Implementation blocked until 2034; enforcement prohibited |
| Home Equity Cap for LTC Eligibility |
$688,000 home value cap |
Increased to $1 million and indexed to inflation |
| Work/Community Engagement Requirement |
No federal requirement |
Mandatory 80 hours/month of work, education, or volunteering for expansion adults (with exemptions e.g., pregnant individuals, full-time students, individuals with disabilities, etc.) |
| Emergency Medicaid FMAP |
No federal matching for emergency cases |
Establishes temporary federal matching funds for state-level emergency Medicaid programs |
| LTC Staffing Standard Rule |
CMS finalized staffing mandates in 2024 |
Enforcement blocked under both Medicaid and Medicare |
| Duplicate Enrollment Prevention |
No mandatory tracking system |
States must create systems to detect and report duplicate beneficiaries |
| Payment Error Reductions |
No penalties for overpayments or eligibility errors |
States must demonstrate reduced payment errors or risk funding cuts |
What This Means:
Medicaid providers - particularly those serving adults who gained coverage through the ACA expansion - may see more frequent gaps in patient coverage and a rise in administrative tasks related to eligibility checks. However, these changes are not expected to happen all at once. There’s time to prepare, adjust internal workflows, and help patients understand how to stay covered under the new rules.
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:
- Increased patient churn may occur over time: New six-month redetermination cycles and work requirements for Medicaid expansion adults may cause more frequent lapses in coverage, particularly for patients with unstable employment or housing. This doesn’t mean patients will be removed overnight, but expect some added unpredictability in who’s covered and when.
- Cash flow may become more sensitive to eligibility disruptions: If a portion of your revenue comes from Medicaid, it’s worth noting that missed recertifications could lead to temporary gaps in patient visits or unpaid claims. Proactively confirming eligibility before appointments can help mitigate this. It’s not a crisis - just a workflow to keep an eye on.
- Staff may take on more administrative support roles: With patients navigating new coverage rules, your front desk or care coordination team may need to help patients understand how to maintain eligibility, including paperwork or documentation. This isn’t unique to behavioral health, but because you often serve vulnerable populations, it’s likely more pronounced here.
- 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
For home health agencies, the immediate impact of this bill is less direct, but it’s still worth staying informed, especially if you serve patients who rely on Medicaid for long-term care.
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.
- Workforce coverage shifts may affect staffing costs over time: Many direct care workers access health coverage through Medicaid or ACA subsidies. If coverage shifts push them toward employer-sponsored plans, you may see increased benefit costs or hiring friction in the future. This won’t happen overnight, but it’s something to watch, especially during open enrollment.
- 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!