Everyone’s perspective on the “One Big Beautiful Bill” (OBBB) changed July 4 when President Trump signed it into law.  Our field pivoted from lobbying the OBBB (cheering some provisions and strongly opposing others) to understanding its impact.   While OBBB’s  “beauty” is in the “eye of the beholder,” the bill is undeniably “big” – in terms of length, coverage, and impacts.   We must now evaluate and plan for those impacts.

A newsletter editorial is not the place for a technical deep dive on the OBBB.  But the new law commands the attention of members, so sharing observations and referring you to resources is appropriate.  The OBBB will directly and indirectly impact member residents, operations, and strategies.  Moreover, how our State reacts to the Budget Reconciliation law may affect our calling even more.  In that regard, today we have questions without answers, but LA MO is asking them to inform thoughtful analysis, actions, and advocacy.

Generally, the OBBB challenges all healthcare providers because it reduces federal Medicaid spending by more than $1 trillion over the next decade.  The Congressional Budget Office estimates as many as 16 million people may lose Medicaid healthcare benefits – an estimated 170,000 in Missouri.  Overwhelmingly, the largest number of people at risk of losing coverage are in the Medicaid expansion population of 41 states that expanded their Medicaid coverage.  Missouri is among these states and our State will receive less Medicaid funding – perhaps $21.1 billion less over ten years – to cover our expanded Medicaid enrollment.  Importantly, nursing home residents and HCBS recipients are not specifically the target of the federal spending cuts.  Indeed, nursing homes are exempted from OBBB provisions that will reduce federal spending for other Missouri healthcare providers (and significantly impact MO HealthNet’s overall financing).  That said, LA MO members will be affected by the following OBBB provisions: 

Retroactive Medicaid Eligibility – Currently, nursing home and HCBS Medicaid providers can be retroactively reimbursed for Medicaid services up to three months before the resident’s Medicaid application.  Beginning in 2027, retroactive eligibility is limited to two months.  This adds process pressure and increases costs on both Medicaid providers and the State.  And uncompensated care is likely to increase!

6-Month Eligibility Redetermination – In 2027, OBBB moves Medicaid redetermination from annual to semi-annual for the Medicaid expansion population.  While this does not directly affect nursing home residents or HCBS clients, it will affect some affordable housing residents and LA MO member part-time employees who rely on Medicaid for healthcare.  And the increased cost of twice-yearly redetermination will have budget implications for MO HealthNet and the State.

Work Requirements – In 2027, an 80 hour per month work requirement will be imposed on some Medicaid enrollees in the expansion population.  Again, this work requirement will not apply to most LA MO member residents or HCBS clients, but it may apply to affordable housing residents under age 65.  Similarly, compliance complexity may cause part-time LA MO member employees and affordable housing residents on Medicaid to lose coverage.  Like new eligibility requirements and more frequent redeterminations, work requirements will add significant new Medicaid administrative and compliance costs.  How will MO HealthNet pay for these new costs?   

Immigrant Coverage – The OBBB takes away access to healthcare insurance (Medicaid and ACA) for certain categories of lawful immigrants.  This may impact LA MO member employees and it will increase state record-keeping, reporting, and compliance costs.

Provider Taxes (Missouri’s Federal Reimbursement Allowance) – Traditionally the Missouri General Assembly annually renews provider taxes on different healthcare providers to finance the State’s share of Medicaid coverage and capture more federal reimbursement.   The OBBB prohibits new  or increased provider taxes not “imposed” by July 4, 2025.  

This raises a multi-billion-dollar question for Missouri: Do renewals of long-time provider taxes trigger the OBBB prohibition?  LA MO is engaged in finding out.  However, even assuming a positive response allowing for periodic Missouri renewals, under the OBBB, all of Missouri’s provider taxes shrink to 3.5% (from nearly 6%) between 2027 and 2032 – except for the Nursing Facility Reimbursement Allowance.  Nursing homes taxes are exempt from the provider tax reductions.  But will that insulate nursing home and HCBS reimbursement from Missouri’s reaction to large  Medicaid funding reductions and increased Medicaid compliance costs?  This is another significant question LA MO will be working on with and for its members.  With less money and higher costs, LA MO is concerned MO HealthNet will look at optional programs like HCBS and PACE to close its Medicaid budget gap.  

While not a “silver lining”, the OBBB has positive provisions.  Our field is pleased Congress joined the Judiciary in stopping CMS’ nursing home staffing mandates.  The OBBB imposes a moratorium on the CMS rule for ten years.  Also, the new law delivers substantial financing improvements for affordable housing and encourages more charitable contributions to non-profits by broadening charitable tax deductions.  For more information on both positive and negative OBBB provisions, here are five excellent LeadingAge explainers.  Not only do these summaries clearly explain changes, but they also explain why the changes matter to aging services providers:

• Overview: 2025 Reconciliation Bill: Overview of Aging Services Provisions
• Provider Tax Provisions: 2025 Reconciliation Bill: Provider Tax Provisions
• Medicaid Eligibility and Work Requirements: 2025 Reconciliation Bill: Medicaid Eligibility Changes and Work Requirements
• Rural Health Transformation Program: 2025 Reconciliation Bill: Rural Health Transformation Program
• Affordable Housing: 2025 Reconciliation Bill: Affordable Housing Provisions
• Tax Policy: 2025 Reconciliation Bill: Tax Policy

The OBBB is not what our field wanted.  But LeadingAge and LeadingAge Missouri are working to make as much “lemonade” out of “OBBB lemons” as possible!

Yours in service,