On May 22, 2025, the House passed H.R. 1, the One Big Beautiful Bill Act (the Bill), its budget reconciliation legislation that upheld most of the Medicaid-related provisions originally approved by the House Energy and Commerce Committee (the Committee) on May 15, 2025 (the Committee-Approved Version). While many of the Medicaid-related provisions remained intact, the final version of the Bill includes several modifications to key Medicaid provisions.
Last week’s Health Headlines included an article examining several key Medicaid provisions in the Committee-Approved Version that affect state Medicaid financing mechanisms (i.e., provider taxes), state directed payment (SDP) programs, and Medicaid eligibility. The following provisions were modified prior to the Bill’s full passage:
- Revising the payment limit for certain SDPs (Sec. 44133): The Bill included an increased upper payment limit for non-expansion states, raising it from the 100% of the published Medicare payment rate (or equivalent Medicare payment rate if no published rate) established in the Committee-Approved Version to up to 110% for states that have not expanded Medicaid coverage under the ACA. These percentages are still lower than the current payment limit for SDPs, which is based on the average commercial rate. The Bill also specified that the upper payment limit would be based on an equivalent Medicare payment rate to the extent there is no specified published Medicare payment rate for a specific service. The Bill also introduces a definition for “equivalent Medicare payment rate,” which means “amounts calculated as payment for specific services comparable to the service furnished that have been developed under part A or part B of title XVIII of the Social Security Act (42 U.S.C. 1396 et seq.).”
- Work and Community Engagement Requirements (Section 44141): The implementation date for the work and community engagement requirements, which require able-bodied adults without dependents to meet community engagement criteria (e.g., working, volunteering, attending educational programs, etc.) for at least 80 hours per month, was accelerated from January 1, 2029 to December 31, 2026.
There were no changes to the other Medicaid-related provisions highlighted in last week’s Health Headlines article, including the (i) moratorium on new or increased provider taxes (Sec. 44132), (ii) HHS’s evaluation of whether a Medicaid provider tax is “generally redistributive” for purposes of waiving the uniform tax requirement (Sec. 44134), (iii) Medicaid eligibility provisions requiring more frequent redeterminations (Sec. 44108), and limiting retroactive coverage to 30 days (Sec. 44122).
Other Medicaid-related provisions introduced in the Committee-Approved Version and retained in the Bill include:
- Section 44111: Beginning October 1, 2028 (i.e., FY2028), the Federal Medical Assistance Percentage is reduced by 10% for Medicaid expansion states that use Medicaid or another state-based program to provide health care coverage to individuals who are not lawfully residing in the United States.
- Section 44125: Prohibits Medicaid or CHIP payments for specified gender transition procedures, subject to certain exceptions.
- Section 44126: Prohibits Medicaid payment for 10 years to nonprofit essential community providers (i) primarily engaged in family planning services, reproductive health, and related medica care and (2) that provides for abortions in cases other than that of rape, incest, or life-threatening conditions for the woman; and (3) that received federal and state Medicaid payments totaling more than $1 million in in FY2024.
- Section 44131: Requires states that have not elected to expand Medicaid pursuant to the ACA to do so by January 1, 2026, in order to receive the corresponding 5% enhanced federal matching rate authorized under the American Rescue Plan Act.
- Section 44142: Beginning October 1, 2028 (i.e., FY2029), states will need to institute cost-sharing requirements for the Medicaid expansion population. Cost sharing for Medicaid expansion enrollees may not exceed $35 for an item or service and total cost sharing may not exceed 5% of the family’s income.
The reconciliation bill now moves to the Senate, which will make changes to the legislation that will likely include amending some of the House-passed Medicaid provisions. Any Senate-approved changes must return to the House for a vote before the bill can be enacted.
The final version of the Bill is available here, and the amendments to the Committee-Approved Version is available here.
