In light of the recent Senate adjustments to the One Big Beautiful Bill Act, it’s important to understand how proposed changes may impact state administration of Medicaid. Differences between the House and Senate versions could pose barriers to reconciliation and must be resolved before the legislation can pass to the President. The bill, in its current form, proposes legislative amendments states should prepare for.
One Big Beautiful Bill proposed Medicaid-related changes
Provider Tax
Our last post on the One Big Beautiful Bill Act (House bill) analyzed the risks to state Provider Taxes to understand the impacts of the two interacting clauses of the bill: one that prohibited new or “increased” Provider Taxes, and one that required Provider Taxes to confirm to new interpretations of conforming with the “hold harmless” provision. Any changes to existing Provider Taxes would likely have resulted in an increase in some individual Provider Tax rates.
The Senate version removes this specific Provider Tax concern for the states. It allows changes to and increases in the Provider Tax if for the purposes of conforming to new hold harmless interpretations (see Senate bill Section 71122(a)(3)).
Additionally, while the House bill froze the “hold harmless” provision at 6 percent, the Senate bill makes these discernments for Medicaid expansion states (which extended eligibility under the ACA) and non-expansion states:
- Non-expansion states: 6 percent
- Expansion states: 6 percent, reduced by 0.5 percent annually starting fiscal year 2027 until it reaches 3.5 percent in 2031.
- All states: Neither the 6 percent nor the phased reduction percents apply for any Provider Tax on nursing facility services or intermediate care facility services for individuals with intellectual disabilities, and similar waiver services furnished by community-based residences for individuals with intellectual disabilities.
Expansion Population Redetermination
Like the House bill, the Senate bill requires redetermination of the expansion population every six months rather than annually. The Senate bill would make this requirement effective as of January 2027, 10 months earlier than the October 1, 2027 deadline specified in the House bill.
Work Requirements
Under the new Senate bill, work requirements would become effective at the beginning of 2027, rather than 2029 as noted in the House bill (unless granted a waiver for a later date due to technical or other limitations on enacting the policy, or unless states elect to enact them earlier).
Where the House bill applies work requirements to expansion populations without certain exemptions, the Senate bill extends those requirements to parents and caretakers of children over age 14. The same other eligible activities (other than paid work) are included in the Senate bill.
States have some autonomy in determining the number of months Medicaid recipients must work to meet the work requirements. The minimum states can require is one qualifying month every six months for expansion members, and one qualifying month per year for parents and caretakers. States electing this minimum level must require recipients to earn $580 in income every six months or year, depending on eligibility group—an amount equal to just over 33 total hours of work at minimum wage in Washington, D.C., the relevant area with the highest minimum wage.
As state Medicaid agencies are well aware, there’s an administrative cost to churning members. Advanced data analytics can help the state compare the costs of maintaining a member on Medicaid (by, for example, paying them an income stipend), the cost of an uninsured resident, and the administrative costs of churn. This analysis will be critical information for your legislatures as they consider how the state will choose to implement work requirements.
Managed Care Organization (MCO) rates
The House bill caps MCO rates for all states at 100% of the Medicare rate. The Senate bill caps MCO rates for expansion states at 100% of the Medicare rate, and rates at 110% of Medicare rates for non-expansion states and phases out previous grandfathering provisions.
Ineligible Immigrants
The Senate bill removes Medicaid eligibility for certain immigration groups. Eligible under the Senate bill are:
- Legal permanent residents
- Certain Cuban immigrants
- Lawful migrants from Compact of Free Association States
- Lawful children or pregnant adults covered under the Immigrant Children’s Health Improvement Act option
Previous regulations required states to provide coverage during a “reasonable opportunity period” for an applicant to provide proof of citizenship or immigration status eligibility. Both the House and Senate bills modify this requirement to allow states to choose to provide coverage during that “reasonable opportunity period,” or during the period that the state attempts to verify citizenship or immigration status through other means. If the state does decide to provide coverage during this period, any expenditures will be eligible for federal financial participation only if the individual is determined to have citizenship or a qualifying immigration status by the end of the period.
What your state can do now to prepare for the One Big Beautiful Bill changes
In both the House and the Senate versions of the bill, work requirements are an integral part of Congress’ vision for the future of Medicaid. States will have substantial flexibility in the implementation of federal work requirements and will need to make both policy and operational choices.
The role of data analysis in Medicaid impact assessment
The national conversation on Medicaid changes doesn’t include many of the nuances and choices that face state Medicaid agencies as they look at these bills. The impact on capital costs eligible for enhanced federal funding vs. administrative costs with lower federal match percentages, as well as the shorter deadlines contemplated by the Senate bill, place a complex set of options before state Medicaid directors.
Resultant’s data analysis experts have been partnering with our legislative policy wonks to identify the best data and iterative approaches to estimating costs and funding options, such as those mentioned above for work requirements, that individual states will face from changes the bill introduces.
The types of “what if” analysis that will bring together both increased and decreased services costs, increased administrative costs, and different state funding options impacting the cost of provider services is well beyond what can effectively and efficiently be done in most Medicaid programs’ favorite tool: Excel.
Our data analytics experts welcome the opportunity to work with state leaders on how to best run scenario analyses to predict, plan for, and help state governments make the best strategic and data driven decisions in light of these Senate bill changes.
Preparing for work requirements
In addition to helping Medicaid leaders understand the options it has for work requirements, Medicaid agencies will face the operational requirement to verify member compliance with the work requirements. Resultant’s teams working on Medicaid have paired up with our SNAP and Unemployment Insurance experts to pool knowledge and resources. There are many different ways to develop a plug-and-play module for state Medicaid agencies to tie into eligibility systems that easily implement work requirements.
