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The One Big Gorgeous Bill Act (OBBBA): A Reshaping of the Healthcare Landscape
The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, is no longer a future concern but an active force reshaping healthcare coverage, Medicaid funding, and operational processes for health systems. This is not merely a compliance issue; it represents a basic structural reset demanding proactive planning, strategic sequencing, and board-level oversight.
Medicaid Eligibility and Financing: Anticipating increased Pressure
The OBBBA introduces stricter Medicaid eligibility criteria through work requirements, more frequent redeterminations, reduced retroactive coverage, and limitations for certain non-citizens. These changes are already impacting coverage rates, increasing churn, and creating administrative burdens, particularly for systems with considerable Medicaid populations.
Providers face risks beyond coverage loss,including strain on eligibility operations,financial counseling resources,revenue cycle performance,and a potential rise in uncompensated care.systems that delay preparing for these operational demands will likely experience the most meaningful impact.
Financially, the law caps state-directed payments, restricts provider tax growth, and tightens safe harbor provisions. Existing supplemental payments may begin to be phased down as early as 2028. The Medicare payment Advisory Commission (MedPAC) provides ongoing analysis of these changes and their potential impact on healthcare financing.
Early financial modeling, contract re-baselining, and clear discussions with boards regarding potential exposure and necessary trade-offs are crucial. Waiting for the phase-downs to begin will severely limit strategic options.
340B Programme Under Increased Scrutiny
While the OBBBA doesn’t directly alter the 340B statute, it aligns with a broader federal emphasis on openness, accountability, and auditability within the program. Contract pharmacy arrangements, acquisition cost reporting, duplicate discounts, and the implementation of Medicare drug price negotiation are all facing heightened scrutiny. The Health Resources and Services Administration (HRSA) provides resources and guidance on 340B program integrity.
The 340B program can no longer be viewed as a passive financial benefit. Robust governance, thorough documentation, and board-level visibility are now essential, particularly given the potential for rebate-based models to re-emerge and introduce cash-flow timing risks.
Section 1115 Waivers: A Narrower Path
The OBBBA narrows the scope of Section 1115 waivers, imposing stricter budget-neutrality requirements and reducing opportunities
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