One Big, Beautiful Webinar: Washington Updates

One Big Beautiful Bill Act – Update

In the early morning hours of May 22 – the day after we presented One Big, Beautiful Webinar, the House of Representatives approved its budget reconciliation bill, known as the One Big Beautiful Bill Act (OBBBA), by a vote of 215-214. The path to final passage was cleared by a 42-page amendment to the version of the bill previously approved by the House Budget Committee. Here are the key healthcare-related changes:

States must comply with the new Medicaid work requirements by December 31, 2026 (2 years earlier than originally proposed).
HHS is required to publish guidance (as opposed to regulations, which would require notice and comment rulemaking) regarding implementation of work requirements no later than December 31, 2025.
Several provisions that afforded states some flexibility in implementing the Medicaid work requirements have been deleted.
For states that have not expanded Medicaid, the cap on provider rates for state-directed payments will be 110% of Medicare rates (vs.100% for other states).
The prohibition on the use of Medicaid funds for gender transition procedures is no longer limited to minors
ACA Marketplace insurers will again receive cost-sharing reduction payments as reimbursement for reduced deductibles, copayments, and/or coinsurance for low-income enrollees.

In other late-breaking news, the Congressional Budget Office released its analysis of the potential Statutory Pay-As-You-Go (PAYGO) effects of OBBBA. According to CBO, OBBBA will increase the deficit by an average of $230 billion over the next 10 years. “Without enactment of subsequent legislation that would offset the deficit increase, waive the recordation of the bill’s effects on the scorecard, or otherwise mitigate or eliminate the statutory requirement,” Medicare payments would be reduced by 4% beginning in 2026 and continuing through 2034 under PAYGO’s automatic deficit reduction provisions. That’s an estimated $45 billion reduction in payments to providers, Medicare Advantage plans, and stand-alone prescription drug plans for next year.

Assuming OBBBA is enacted, Congress could act before the end of the year to block sequestration cuts as it has done in the past (e.g., with the 2017 Tax Cuts and Jobs Act and the 2021 American Rescue Plan). However, unlike the reconciliation bill, it will require 60 votes in the Senate to exclude OBBBA’s deficit increase from the PAYGO scorecard.

Keep in mind the party is just getting started. The Senate will begin consideration of OBBBA when it returns from its Memorial Day holiday on June 2.  Majority Leader Thune said on May 21 that the Senate “will have its imprint” on OBBBA. There are several Republican senators on record opposing cuts to the Medicaid program. And wouldn’t it be nice if Congress finally made the Medicare telehealth waivers permanent as part of the reconciliation bill?  The Majority Leader hopes to have the Senate complete its work before the 4th of July holiday.

These days, it’s nearly a full-time job keeping up with developments in D.C., much less figuring out how to respond to the changes. During this one-hour webinar, PYA’s Martie Ross and Kathy Reep brought some clarity to the chaos by addressing these topics:

Status of Budget Reconciliation and FY 2026 Appropriations  
Department of Health & Human Services Reorganization
New Medicare and Medicaid Enforcement Activities

This webinar is part of PYA’s twice-monthly Healthcare Regulatory Roundup, a popular series during which PYA experts provide practical insights on the latest industry regulatory developments.

If you would like assistance with legislative or regulatory impacts or any matter involving compliance, valuation, or strategy and transactions, our executives are happy to assist.