The 2025 Budget Reconciliation Act, known as the One, Big, Beautiful Bill (OBBB), did much to affect health care and its future. Aimed at boosting economic growth through tax cuts and reducing the federal deficit, the OBBB made, among other things, substantial changes to federal healthcare financing. Those changes, insofar as they impact Medicaid, Medicare, and the Affordable Care Act (ACA), likely will lead to increased numbers of uninsured, which will, in turn, result in increased emergency care for uninsured patients, putting increased financial strain on the medical community, particularly hospitals. To address the reduced revenue, hospital revenue cycle teams will need to become more vigilant in discovering and participating in new revenue opportunities. One way to address the challenge is arbitration of eligible medical claims under the federal No Surprises Act (NSA) and state Surprise Bill Laws (SBLs). At least with respect to out-of-network (OON) ER payment disputes, arbitration can provide an expeditious and financially rewarding opportunity to increase revenue.
The OBBB requires that Medicaid recipients spend 80 hours a month working, volunteering, or in school to maintain their eligibility for benefits. It is anticipated that because many recipients do not live in areas where employment or volunteer work is available, many will lose their coverage. There is also the fear that many will lose their eligibility by not filling out and sending in the requisite forms each month. The OBBB also reduces support for recipients of the Medicare low-income subsidy, a cost-sharing program that makes prescription drugs under Medicare part D more affordable. The law also restricts access to Medicare and Medicaid to immigrants by limiting the legal statuses that would allow eligibility. Finally, the OBBB does not extend the Affordable Care Act (ACA) subsidies that were instituted temporarily during COVID. It is estimated that the OBBB will increase the number of people without health insurance by 10 to 14 million by 2034.
How does this impact hospital revenue? To the extent patients will lose Medicaid and Medicare eligibility or will lose coverage under the ACA, they will seek treatment through the emergency departments at hospitals, because, under the Emergency Treatment and Labor Act (EMTALA), emergency treatment cannot be denied on the basis of the patient’s ability to pay. The net effect is lost revenue for the hospital. How much impact this will have on individual hospitals depends upon how weighted the hospital’s patient mix is with economically challenged patients. Hospitals in poor urban and rural communities will be impacted more than those in suburban communities where there are fewer Medicaid patients and patients with ACA health plans. Although state governments will likely need to step up in the long run to accommodate these changes, in the short run, hospitals will need to seek new sources of revenue to make up the shortfall.
https://publichealth.jhu.edu/2025/the-changes-coming-to-the-aca-medicaid-and-medicare; https://vmghealth.com/insights/blog/the-big-beautiful-bill-policy-shifts-financial-impacts-on-healthcare-systems/; https://www.ama-assn.org/member-benefits/events/one-big-beautiful-bill-act-impact-physicians-and-patients
Enter the No Surprise Act (NSA) Independent Dispute Resolution (IDR) arbitration process for OON ER payment disputes. Though this process is not open to Medicare and Medicaid claims, it does provide an arbitration process for the hospitals’ claims against private health insurers where the treatment is emergent and the hospital is OON with the carrier. In other words, what is being lost in the Emergency Departments because of increased emergent care to the uninsured can be made up, at least in part, through greater reimbursement from private commercial carriers through arbitration. Hospitals with a greater proportion of private carrier claims of course will benefit more from this process than those with heavier populations of Medicaid and Medicare patients.
One thing is certain: Because of the passage of the OBBB, hospitals need to focus even more on their revenue cycle process more intently than before. As one commentator stated:
Rising levels of uncompensated care will require a stronger focus on revenue cycle management to minimize bad debt and protect financial performance. At the same time, reevaluating payer mixes and contracting strategies will be essential particularly where commercial rates will need to compensate for reduced government funding. Ultimately, those who can adapt and align their strategies with the changing policy will be in a better position for long-term success.