Big Beautiful Uncertainty
The One Big Beautiful Bill Act, signed into law on July 4, 2025, encompasses a broad spectrum of topics and modifications. Among these, the healthcare implications are a primary concern for those in the medical industry.
Medicaid Cuts and Potential Impact on Rural Hospitals
OBBBA’s Medicaid cutbacks have left rural hospitals feeling anxious for their future. Medicaid accounts for about 10% of rural hospital net revenue ($12.2 billion)[1]. Because rural facilities rely heavily on patients with public insurance, reductions in Medicaid funding mean less reimbursement for the care they provide. The National Rural Health Association estimates rural hospitals will lose 21 cents out of every dollar they receive in Medicaid funding[2].
Threat of Closure
A 2025 study of 2,000 rural hospitals demonstrated that half were operating in the red and 432 were vulnerable to closure. According to this study, a 15% decrease in Medicaid revenue would cause more than $1.8 billion to vanish from rural hospital bottom lines[3]. Without additional support, some of these already struggling facilities may close.
State by State
States with Highest Predicted Rural Hospital Revenue Losses[3].
Medicaid operates through joint federal and state funding. The federal government establishes guidelines, while individual states determine their own criteria for eligibility, services, rates, and program management[4]. Although federal Medicaid cuts impact all states, some may secure additional funding to mitigate the effects.
The One Big Beautiful Bill Act created the Rural Health Transformation Program (RHTP):
$50 billion funding for rural hospitals. Half of RHTP funding will be distributed equally among states that submit a one-time application to the Centers for Medicare & Medicaid Services (CMS). The other half of RHTP funding will be disturbed to states using a formula by the CMS Administrator[5].
The Rural Health Transformation Program funds will be distributed between 2026 – 2030, with $10 billion distributed each year[5]. If each state applies and is approved, each state will receive a minimum of $100 million each year[6].
Positives for Healthcare
OBBBA expanded HSA access to people with bronze and catastrophic tier ACA health plans. This expansion allows employers to provide a more diverse selection of HSA-compatible health benefits to their workforce.
Additionally, Direct Primary Care (DPC) is now recognized as a qualified medical expense under HSA guidelines, meaning that a DPC arrangement no longer prevents a patient from funding an HSA[7]. Utilizing Health Savings Accounts offers patients tax advantages.
We Can Help
At STATUS, our purpose is to support community health by engaging and deploying qualified healthcare professionals. Quality healthcare is our mission, and we understand that our hospital partners need our support to make that happen.
STATUS has developed a revenue cycle management program led by our CMO, Lenard Kerr, DO, FAAEM, where he and his team work with the providers and HIM coding and billing. Dr. Kerr and his team complete a full review of a random selection of charts for clinical, billing/coding, and medical legal opportunities for improvement. Once the initial review is complete, Dr. Kerr and his team work closely with the providers to educate and improve in any area not up to standards. He then follows up with the HIM coding and billing manager to ensure the improved charting is being coded and billed appropriately.
References
- Rural Hospitals at Risk: Cuts to Medicaid Would Further Threaten Access – https://www.aha.org/fact-sheets/2025-06-13-rural-hospitals-risk-cuts-medicaid-would-further-threaten-access
- Estimated Impact on Medicaid Enrollment and Hospital Expenditures in Rural Communities – https://www.ruralhealth.us/getmedia/f79547dc-19b6-4f39-ac95-4f24ba0e0a84/OBBB-Impacts-On-Rural-Communities_06-20-25-final_v3-%28002%29.pdf
- Medicaid cuts would push rural hospitals – and care for rural communities – over the edge – https://www.chartis.com/sites/default/files/documents/CCRH%20WP%20-%202025%20-%20Medicaid%20cuts_FINAL.pdf
- Medicaid – https://www.cdc.gov/nchs/hus/sources-definitions/medicaid.htm#:~:text=Authorized%20in%201965%2C%20becoming%20Title,42%20USC%201396%20et%20seq).
- Rural Health Transformation Program Summary – https://www.ruralhealth.us/nationalruralhealth/media/documents/advocacy/2025/rural-health-transformation-program-summary.pdf
- The One Big Beautiful Bill Protects Rural Hospitals – https://www.finance.senate.gov/chairmans-news/the-one-big-beautiful-bill-protects-rural-hospitals
- Guide to the New HSA Rules Under the One Big Beautiful Bill – https://livelyme.com/guides/obbb-hsa-guide