Policy Snapshot
July 7, 2025
On July 4, President Donald Trump signed into law H.R. 1, the One Big Beautiful Bill Act (OBBA). Below is an overview of its key implications for the post-acute and long-term care (PALTC) settings.
Medicaid Changes
- The Congressional Budget Office (CBO) estimates approximately $1 trillion in Medicaid cuts over the next decade.
- Work requirements will be implemented for certain Medicaid enrollees, with specified exceptions. Additionally, self-attestation for citizenship and immigration status will no longer be accepted; individuals must now provide official documentation as proof.
- Retroactive eligibility is reduced from 90 to 30 days, meaning providers may lose payment for care delivered before enrollment.
- Beginning in the first quarter of 2027, states must conduct Medicaid eligibility redeterminations every six months, rather than annually, for individuals enrolled under Medicaid.
- Limits on provider taxes, which states use to fund Medicaid programs.
Possible Financial Stress on SNFs, HHAs, and LTCHs
- Long-term care hospitals (LTCHs): LTCHs are already facing rising costs, e.g., high-cost outlier thresholds, and significant staffing pressures. The staffing moratorium may help in the short term, but financial viability remains a concern.
- Skilled nursing facilities (SNFs) and home-health agencies (HHAs): Could face funding shortfalls from Medicaid cuts and reduced Medicaid reimbursements, amplifying ongoing pressures.
Moratorium on LTC Staffing Rules and Mandates
- The bill prohibits the Department of Health and Human Services (HHS) from enforcing the Biden-era minimum staffing standards for nursing homes and LTC facilities, initially through 2034.
Medicare Physician Payments
- There will be a one-year conversion factor bump. The bill includes a +2.5% adjustment to the MPFS conversion factor for 2026.
- However, it does not reverse the existing 2.83% payment cut that began in January 2025.
- Pay as You Go (PAYGO) sequestration risk: Because H.R. 1 adds to the federal deficit, Congress' PAYGO rules could trigger up to a 4% cut on Medicare provider payments across the board to offset the budget impact.
PALTmed will continue to monitor the implementation and evolving impact of the OBBA on the PALTC landscape over the coming year. Read PALTmed’s previous statement on Medicaid.
