Timeline of Key OBBBA Impacts for Rural Healthcare

2025
End to enforcement of CMS rule on:
  • Medicare Savings Program (MSP) eligibility and enrollment, making it easier for Medicare recipients to enroll in MSPs
  • Medicaid, CHIP, and the Basic Health Program prohibition, making enrollment easier for Medicare recipients
  • Staffing standards for long-term care facilities until September 2034
Potential Impact — Possible decrease in Medicare recipients in MSPs, Medicaid, Chip and the Basic Health Program.
State directed payments (SDPs) capped at 100% of Medicaid rates in expansion states and 110% in non-expansion states; SDPs for states that exceed caps starting rolling back in January 2028

Potential Impact — Reduced money for Medicaid expansion states to fund their share of Medicaid payments.

CMS released Rural Health Transformation Fund (RHT) Program applications

CMS released Rural Health Transformation Fund (RHT) Program applications. It will be holding webinars in September and October. See its Rural Health Transformation (RHT) Program page for details.

Tip: Be in contact with state leadership and your rural health association to ensure your needs are heard.

States planning to apply for RHT Program funds must submit optional letter of intent to CMS
CMS to respond to RHT Program application questions from states throughout the month
State RHT Program plans and applications due to CMS
Enhanced Affordable Care Act (ACA) premium tax credits scheduled to expire

Potential Impact — Reduction in ACA enrollees.

Medicaid eligibility redetermination period reduces from 12 to 6 months for expansion enrollees not on an MEC waiver

Potential Impact — Reduction in Medicaid enrollees.

Individual Coverage Health Reimbursement Arrangement (ICHRA) can be used to pay for coverage on an Exchange; employers offering ICHRAs get an 18-month tax credit

Potential Impact — May increase access to ACA plans.

CMS to have approved/denied state RHT Program applications
2026
Incentive for non-expansion states to take Medicaid expansion financing ends

Potential Impact — States not becoming expansion states and continued strain on healthcare to foot the cost of uncompensated care.

Open enrollment period or ACA plans is reduced by a month

Potential Impact — Fewer people may enroll leading to reduced visits or an increase in uncompensated care as people lose access to coverage.

ACA bronze and catastrophic health plans become high-deductible health plans eligible for health savings accounts

Potential Impact — It’s unclear if people will take advantage of this change or have the funds to do so considering the end of ACA premium tax credits.

2026 RHT Program funds distributed to states
ACA premium tax credit eligibility ends for:
  • Anyone disenrolled or denied Medicaid
  • Low-income, lawfully present immigrants with incomes less than 100% of the federal poverty level
  • Low-income special enrollment period enrollees

Potential Impact — Reduced visits or an increase in uncompensated care as people lose access to ACA plans.

Temporary 2.5% payment increase under the Medicare physician fee schedule (PFS) through January 1, 2027 begins

Potential Impact — Some short-term relief from ongoing reimbursement challenges.

Possible sequestration of Medicare funds due to OBBBA’s effect on federal deficit

Scheduled to begin around January 22.

Potential Impact — May lead to automatic cuts to Medicare of roughly $500 billion from 2026 to 2034 and $45 billion in 2026 alone and lead to reduced reimbursements to providers.

Unlawful immigrants are ineligible for Medicaid and CHIP

Potential Impact — Reduced visits or an increase in uncompensated care as people lose access to coverage.

Enhanced federal funding for emergency Medicaid for undocumented immigrants ends

Potential Impact — Reduced compensation for care services for affected populations.

Medicaid work requirements begin

Adults 19 to 64 must work, do community service, or receive education for 80 hours a month to be eligible for Medicaid. States with approved Section 1115 waivers may start earlier. One-time compliance exemptions may also let some states delay until December 31, 2028.

Potential Impact — Reduced visits or an increase in uncompensated care as people lose access to coverage.

2027
Temporary 2.5% payment increase under the Medicare PFS ends

Potential Impact — An end to short-term relief from ongoing reimbursement challenges.

Lawfully present immigrants — including refugees, asylees, and humanitarian parolees — are ineligible for Medicare

Potential Impact —Reduced visits or an increase in uncompensated care as people lose access to coverage.

Retroactive coverage for new applications for Medicaid reduced from 3 to 1 month for expansion adults and 2 months for others

Potential Impact — Reduced visits or an increase in uncompensated care as people lose access to coverage.

Individuals denied Medicaid due to work reporting requirements will not qualify for ACA premium tax credits

Potential Impact — Reduced visits or an increase in uncompensated care as people lose access to coverage.

2026 RHT Program funds must have been used; 2027 funds distributed
Lawfully present immigrants are ineligible for ACA premium tax credits

Potential Impact — Reduced visits or an increase in uncompensated care as people lose access to coverage.

Individuals denied Medicaid due to work reporting requirements will not qualify for ACA premium tax credits

Potential Impact —Reduced visits or an increase in uncompensated care as people lose access to coverage.

Applicable provider tax rates for expansion states reduce from 6% by 0.5% a year until no higher than 3.5% in fiscal year 2032

Potential Impact — Expansion states may have to cut services, reduce provider reimbursements, raise taxes in other areas, and/or find innovative solutions to fund their portion of Medicaid.

2028
Fewer drugs become eligible for Medicare drug price negotiation under the orphan drug exclusion

Potential Impact — May lead to higher Medicare and patient out-of-pocket costs that reduce visits or treatment options.

SDPs paid at higher rates (grandfathered payments) reduce 10% annually until new caps reached

Potential Impact — Reduced money for Medicaid expansion states to fund their share of Medicaid payments.

2027 RHT Program funds must have been used; 2028 funds distributed
Health insurance exchanges required to verify eligibility for premium tax credits before taking an enrollee

Potential Impact Reduced visits or an increase in uncompensated care as people face barriers to coverage.

States can offer HCBS without an institutional level of care if they meet cost neutrality and reporting standards

Potential Impact May increase access to preventive care services, keep care local, and increase patient options.

Medicaid expansion adults with incomes above 100% of the FPL pay up to $35 (or up to 5% of income) for most services

Excludes primary care, behavioral health and services at FQHCs, RHCs, and CCBHCs.

Potential Impact — While FQHCs, RHCs, and CCBHCs are exempt, REHs and rural health systems may see reduced visits or an increase in uncompensated care as people face barriers to pay for their care.

2029
2028 RHT Program funds must have been used; 2029 funds distributed
2030
2029 RHT Program funds must have been used; 2030 funds distributed
2032
All RHT Program funds must have been used