What Changing Medicaid Coverage, Reimbursement Pressures, and Compliance Demands Will Mean for Your Practice and How to Prepare Effectively
The One Big Beautiful Bill Act introduces significant changes that will impact all medical practices. Whether you operate as a private practice or within a hospital-employed physician network, you will be impacted by these changes, which carry both operational and financial implications. Preparation is essential.
Operational Implications
The anticipated reduction in Medicaid coverage for patients will require operational adjustments across several areas:
- Front-Desk Preparedness: Staff must verify whether patients have active Medicaid coverage or are self-pay. For self-pay patients, time-of-service collections become critical.
- Insurance Verification Teams: These teams will face increased workloads as they determine patient coverage status. Practices that assist patients in obtaining Medicaid coverage—such as OB/GYN offices—will feel this impact even more.
- Policy Consistency: For practices affiliated with health systems, understanding and applying financial hardship policies consistently across the organization are essential, especially for those operating under a single tax ID.
Financial Implications
- Decreased Reimbursement: Your organization should expect an increase in self-pay patients and a decrease in Medicaid payments. While the One Big Beautiful Bill Act allows for a one-year 2.5% increase in the Medicare Physician Fee Schedule, this allowance will likely be offset by sequestration and other adjustments, resulting in overall reduced revenue. (Read about revenue cycle and managed care consulting services.)
- Rising Expenses: Both private practices and hospital-affiliated groups will experience higher expenses, as hospitals face additional Medicaid reimbursement challenges at the state level. Your practice should be ready to do more with fewer resources.
- Physician Compensation: For physicians on a work relative value units (wRVU) model, compensation may remain stable since the model is payer-agnostic. Declining reimbursement, however, will squeeze organizational margins, requiring creative strategies to manage overhead. (Read about wRVU strategy.)
Patient Implications
- Many patients will lose Medicaid coverage and might have to change to a self-pay status. These patients would need to pay for all or a portion of their services at the time of service.
- Starting in 2027, retroactive Medicaid coverage will be reduced from 90 days to 30 days prior to the Medicaid application date for enrollees under ACA Medicaid expansion and 60 days for all other Medicaid applicants. This shift makes it even more important to know a patient’s coverage status throughout the care continuum.
Compliance and Audit Implications
The government is strongly focused on identifying and reducing fraud, waste, and abuse in healthcare. Provider audits are expected to rise. To prepare for this increased scrutiny, your practice should strengthen its compliance and audit readiness:
- Ensure providers document thoroughly and close and sign notes promptly.
- Maintain compliance with coding and documentation rules.
- Be audit-ready with increased program, risk, and contract assessments; staff training; and internal policy audits.
How to Prepare Now
- Strengthen Medicaid verification workflows
- Train front-desk teams on self-pay protocols
- Tighten documentation and coding accuracy
- Update hardship policies and system-wide consistency
- Model reimbursement shifts and margin compression
- Increase audit readiness and policy oversight
For more details and insights on the One Big Beautiful Bill Act, read PYA’s Washington Updates.
For more than 40 years, PYA’s consultants have helped healthcare organizations successfully prepare for and manage regulatory changes.
FAQ: The One Big Beautiful Bill Act and Its Impact on Medical Practices
What is the One Big Beautiful Bill Act, and why is it important for healthcare providers?
The One Big Beautiful Bill Act introduces major healthcare policy changes that affect both private practices and hospital-employed physician networks. These changes impact Medicaid coverage, Medicare reimbursement, and compliance requirements, making it essential for practices to prepare now.
How will changes to Medicaid coverage affect Medicaid coverage for medical practices?
Many patients will lose Medicaid eligibility, leading to more self-pay patients. Front desk staff should verify coverage status and prioritize time-of-service collections to reduce revenue loss.
What happens to retroactive Medicaid coverage under OBBBA?
Starting in 2027, retroactive Medicaid coverage will be reduced from 90 days to 30 days prior to the Medicaid application date for enrollees under ACA Medicaid expansion and 60 days for all other Medicaid applicants. Practices must track patient coverage status throughout the care continuum to avoid billing issues.
How will the One Big Beautiful Bill Act impact reimbursement rates?
Expect lower reimbursement rates overall as patients shift to self pay. Although OBBBA provides a one-year 2.5% increase in the Medicare Physician Fee Schedule, this increase in Medicare allowables will likely be offset by sequestration and other adjustments, resulting in tighter margins.
What operational steps should healthcare organizations take now?
- Train front-desk staff on Medicaid verification and self-pay collections.
- Prepare insurance verification teams for increased workloads.
- Apply financial hardship policies consistently across the organization.
How will hospital-affiliated practices be impacted?
Hospitals and health systems will experience additional financial strain due to changes in Medicaid reimbursement at the facility level. Practices may need to do more with fewer resources.
What compliance risks should providers anticipate?
The government is increasing efforts to combat healthcare fraud, waste, and abuse. Practices should
- Ensure accurate documentation and timely note completion.
- Follow coding and documentation rules.
- Stay audit-ready, as provider audits are expected to rise.
Where can I find more information on the One Big Beautiful Bill Act?
Read PYA’s Washington Updates for guidance and insights on OBBBA’s implications for healthcare organizations.
