One Big Beautiful Bill Act’s Impact on Long-Term Care Providers

The One Big Beautiful Bill Act (OBBBA) is no longer just political theater in Washington. It’s law, and it’s reshaping how the long-term care industry operates, funds services, and plans for the future. For nursing home and post-acute care leaders, this sweeping legislation brings both immediate challenges and new opportunities. In this post, I’ll break down the key provisions of the OBBBA, explain what they mean for long-term care operators, and outline actionable steps to prepare your organization for what’s ahead.

Overview: What the One Big Beautiful Bill Act Means for Long-Term Care

I remember when the Omnibus Budget Reconciliation Act of 1987 was unveiled. Buried among the more than 1,000 pages of it was the Nursing Home Reform Act. This act enacted many key provisions for nursing home providers, including the use of MDS, expanded enforcement, and increased training and staffing. But, as a facility administrator, I had no time to read through that stuff. My hands were full with the challenges of running the day-to-day operations of my facility. 

OBBBA is now in effect. Congress passed it and President Donald Trump signed it into law on July 4, 2025. All 870 pages of it. I doubt that any operator has enough time to go through the act and its impact on post-acute care providers and long-term care services. So, let’s cut through all the pages and see how the One Big Beautiful Bill affects our industry and what we should be doing about it.

Key Provisions of the OBBBA That Affect Providers

Here are some facts/observations that relate to long-term care providers:

• It enforces significant cuts to federal health spending, estimated to be between $900 billion and $1 trillion. (Yes, that’s with a “B” and a “T”!) Especially hard hit will be Medicaid. Analyses by the Congressional Budget Office estimate that millions of individuals will lose Medicaid coverage. 
• The bill restricts states’ ability to use provider taxes or state-directed payment (SDP) mechanisms (which many states have used to enhance provider reimbursement) by limiting or banning new/increased provider taxes and capping their growth.
• The law imposes a moratorium on CMS enforcement of new or more stringent long-term care/nursing home staffing rules (i.e., deferring implementation) — effectively delaying those mandates until later.
• The law expands the frequency of eligibility verification (e.g., redeterminations) and, in some cases, shortens the enrollment intervals for Medicaid expansion populations.
• OBBBA establishes stricter limits on retroactive eligibility and more frequent renewal (i.e., redetermination) for eligibility, which may shrink coverage for vulnerable populations.
• Included in the bill is a new Rural Hospital Fund (roughly $50 billion) to help rural providers mitigate some of the funding shock.
• The law enhances “program integrity” provisions, requiring additional screening of providers, enhanced verification, and stricter oversight.

Opportunities Hidden Within the OBBBA for Long-Term Care Operators

Yes, there is some good news in this bill. And, it will create opportunities for providers:

• Providers get regulatory relief as evidenced by the delay in enforcement of the staffing mandate. This relief allows operators to delay substantial investments in complying with the mandates.
• That said, the delay can offer an opportunity for some nursing home providers to strengthen their staffing. This can serve to distinguish them from their competition. Financial challenges such as poor reimbursement for Medicaid services and other funding shortfalls will continue to confront our industry. It is essential to establish trust, reliability, and reputation with your referral partners.
• Tighter margins (due to issues such as poor Medicaid reimbursement and rising Medicare Advantage penetration) call for providers to adopt efficiency-enhancing measures. Use this as an opportunity to embrace telehealth, remote monitoring, workflow automation, and others. The regulatory relief included in OBBBA is a pause you should view as an opportunity to innovate and distinguish yourself from the competition.
• With the significant impact on funding Medicaid programs, states will be challenged to review their programs, including Medicaid eligibility, Medicaid spending, and the reduction in Medicaid services. With tighter Medicaid budgets, there may be opportunities for providers to partner with managed care organizations, payers, and even states in value-based care arrangements. Providers, this is your moment to shine with the care you provide and the outcomes you achieve. Be a part of the solution in this time of budget tightening. 
• For those rural providers, OBBBA may have included substantial funding to mitigate the reduction in Medicaid spending. But now is the time to step up your game and distinguish your facility from other competitors. Look to adopt the innovations I have been addressing in this post and make your facility the facility of choice in your marketplace.
• Those nursing home providers who embrace the uncertainty of this moment with innovation, implementation, and opportunism will get ahead of the wave of change that OBBBA will create. There’s a saying I like to use, “unless you’re the lead dog, the view doesn’t change much”. Be at the forefront of your market and use this moment wisely.

Challenges Ahead: How Medicaid Cuts and Policy Changes Will Impact Nursing Homes

If I’m a nursing home administrator/operator, there’s plenty that would keep me from getting a good night’s rest. Here are some issues that come as a result of the One Big Beautiful Bill Act that aren’t so beautiful:

• OBBBA will have a substantial impact on Medicaid programs nationwide. The reduction in Medicaid funds will have far-reaching consequences, including changes in Medicaid eligibility, Medicaid coverage, and a decrease in Medicaid programs, to name a few. According to the American Health Care Association, nursing homes report that 59% of their revenues come from Medicaid funds. As it was when I started in the nursing home business, it’s fair to say that Medicaid recipients comprise a substantial portion of a nursing home’s census. Thus, any impact on Medicaid benefits will affect nursing home residents and, consequently, nursing homes themselves.
• Some of the provisions of the act call for reduced retroactive Medicaid coverage (from 90 days to 30 days), stricter eligibility verifications, and more frequent redeterminations for eligible beneficiaries. The Congressional Budget Office (CBO) estimates that “millions” will lose health insurance coverage over time. Ultimately, many nursing home residents may lose coverage. The resulting risks to nursing home providers stem from increased administrative burdens from coverage gaps, denial appeals, and documentation requirements. 
• States’ abilities to utilize provider taxes or state-directed payments to enhance provider reimbursement are curtailed. Thus, states will face funding shortfalls, and this will increase pressure on already thin provider margins. States may elect to pass legislation that will offset some of these Medicaid cuts or even increase funding to long-term care facilities, but that may be pretty challenging. 
• The prospect of reduced Medicaid reimbursement is daunting for post-acute care providers, especially since the current Medicaid rates are inadequate to cover operating costs. Add to that reduced retroactive coverage, increased redeterminations, and other likely significant changes to the Medicaid program, and it’s not a pretty picture. 

Strategic Actions Long-Term Care Leaders Should Take Now

There’s no question that with OBBBA, we (the long-term care industry) dodged some bullets. Think staffing mandate for one. The federal government has provided us with a window of opportunity. There are some things that I would urge you to do now before your competition decides to do it for you. And then, you get left behind.

Stress-Test Your Financials

States are going to reduce their Medicaid spending. It’s time to stress test your financials. Lay out some scenarios that are likely to happen. For example, reduce your Medicaid occupancy by 10% or cut your Medicaid rates by 10%. Also, don’t forget to forecast a slowdown in your cash flow due to increased denials or increased appeals. Identify what financial levers you can pull in case these scenarios come up-cost reductions, vendor re-negotiations, or an increase in reserves to weather these storms. Create a strategic plan that gets triggered when financial stresses happen.

Reduce Costs and Improve Operational Efficiency

A reduction in operating costs was always the first thing I looked at when times got rough. The majority of your expenses are staffing-related. Hopefully, you’ve eliminated (or significantly reduced) dependency on agency staffing. Look at overtime reduction and staffing inefficiencies. Examine how technology can create a more efficient operation. Re-examine vendor arrangements and see where costs can be reduced without sacrificing quality of care. 

Strengthen Revenue Cycle Management

Cash flow is vitally important to health care operations. Take a critical look at your revenue cycle management. Make sure that your business office operations are carefully tracking redeterminations, denials, and appeals. Make sure they are flagging those nursing home residents whose coverage is at risk so your business office personnel can be proactive.

Diversify Revenue Streams

I realize that most facilities rely heavily upon Medicaid for revenue. (Most of my facilities did.) But it’s time to diversify your revenue sources aggressively. Consider new lines of service, such as dialysis or other specialty care programs. Work with key referral sources to identify their needs and, if appropriate, design optional service programs to meet those needs. Consider other programs, such as I-SNP, or working with private insurers.

Build Strategic Partnerships and Alliances

Seek strategic alliances with hospitals, health systems, home health agencies, and ACOs. You and your facility have extensive expertise in the care of older adults. America is aging. And you know about caring for older adults that your potential strategic partners do not. Whether it’s reducing risk in capitated arrangements or value-based care, you should have an essential seat at the post-acute care table.

From Survival to Leadership: Turning Policy Disruption into Competitive Advantage

The One Big Beautiful Bill forces us to make choices. We can wait for the next round of cuts and scramble to respond, or we can prepare now, tightening our operations, building more innovative partnerships, and strengthening our financial resilience. At the heart of it all, our mission hasn’t changed: residents deserve consistent, high-quality, and compassionate care. If we lead with forethought and act with urgency, we won’t just survive this legislation; we’ll prove that our industry can adapt, endure, and thrive even when the policy winds shift against us. We, in long-term care, have done that time and time again.