On May 22nd, the House of Representatives passed the “One Big Beautiful Bill Act.” While the name of the bill may not sound serious, its contents are; the legislation, which still has to be passed by the Senate, is set to dramatically change both the Medicare Physician Fee Schedule (MPFS) and Medicaid programs.

While the Senate likely will make changes to the bill, it is prudent to examine the current contents to discover the full implications for the healthcare industry and the American people.

In this piece, we’ll break down how the bill attempts to modernize and streamline healthcare funding, and how its methods for doing so could result in millions of Americans having reduced access to core medical services.

‍

Changes to the Medicare Physician Fee Schedule

Over the past year, we have repeatedly noted the efforts of physicians and other advocates in the healthcare industry to fight the proposed 2.83% cut to the MPFS for the 2025 calendar year. Despite these efforts, the bill includes no provisions to eliminate this cut.

Looking forward, the legislation outlines updates to the MPFS conversion factor tied to the Medicare Economic Index (MEI). For the year 2026, the bill announces an update equivalent to 75% of the MEI (e.g., an MEI of 2% results in a 1.5% update to the MPFS). For 2027 and beyond, the bill offers annual updates of 10% of the MEI (e.g., an MEI of 2% yields a 0.2% update to the MPFS).

At first glance, these adjustments appear to mitigate some of the strain caused by both the current healthcare marketplace and prior cuts.

However, these incremental increases fall short of addressing inflationary pressures over the medium to long term. If this aspect of the bill remains unchanged in the Senate, healthcare providers will continue to struggle in delivering quality care while maintaining financial stability and viability.

‍

Changes to Medicaid

As a result of this bill, the Congressional Budget Office (CBO) estimates a $715 billion reduction in federal Medicaid spending over the next decade. To reach this number, a substantial amount of cuts have been made, which are all laid out across 24 provisions in the Energy and Commerce portion of the bill.

Some of these provisions include alterations to the process through which eligibility is determined and evaluated. Specifically, the interval for eligibility reviews has been shortened from twelve months to six for Medicaid expansion adults, doubling the administrative burden on beneficiaries and states alike.

Next, the bill states that certain able-bodied adults without dependents would need to work or complete 80 hours of community engagement (including community service, enrollment in an educational program, or other defined activities) every month to either enroll in or maintain their Medicaid coverage.

Following that, the bill states that there will be a 10% reduction in Federal Medical Assistance Percentage (FMAP) for states that offer Medicaid coverage to undocumented immigrants. 

Finally, adults covered by Medicaid expansion earning over 100% of the federal poverty level ($15,650) will face a $35 per-service cost sharing, capped at 5% of their individual income. Exemptions apply to primary, prenatal, pediatric, and emergency care; non-emergency care provided in an emergency room is not exempt.

‍

Criticism and Controversy

As a result of the aforementioned changes, the CBO predicts that 10.3 million Medicaid enrollees will lose coverage over the next ten years. While this does include some people potentially gaining employer-sponsored insurance, and others possibly transitioning to marketplace plans, this still means that between 7.6 and 8.6 million people will become uninsured.

This is where much of the controversy around this bill lies. If enacted as currently written, the reduction in Medicaid coverage will disproportionately affect low-income populations — especially those who are unable to meet the new work requirements or afford cost-sharing expenses. This, in turn, will widen health inequities, especially in states with expanded Medicaid coverage.

Furthermore, the shift from a 12-month to a 6-month interval for eligibility determinations will have devastating consequences. State systems are already overwhelmed with their current workload, and recipients are not eager to take on more work in order to receive coverage. Both of these factors will likely work in tandem to prevent eligible individuals from actually receiving coverage.

‍

Conclusion

Advocacy groups and medical professionals are still hard at work encouraging Congress to make changes to this bill before it is eventually passed. The American Medical Association has emphasized the inadequacy of the MPFS updates to keep pace with inflation, while other professionals have noted the potential issues of the proposed changes to Medicaid.

At the time of this writing, it seems unlikely that any significant alterations to the bill will be made. However, there is still a possibility that Congress will make changes if enough pressure is applied to them by both the public and industry professionals.