Nursing Home Operators Wary of Steep Medicaid Cuts as "One Big Beautiful Bill" Moves to Senate
Even as long-term care providers celebrate a proposed 10-year moratorium on the nursing home staffing mandate[1], they are sounding the alarm over major Medicaid cuts included in the House-passed budget reconciliation bill titled the “One Big Beautiful Bill Act” or H.R. 1. Passed on May 22nd along party lines, the House bill moves on to the Senate with steep cuts to Medicaid and the Children’s Health Insurance Program (CHIP) as part of Republican efforts to eliminate $880 billion in federal spending.
Among the most feared cuts are provisions that would shrink the current 90-day retroactive coverage window to just 30 days prior to the approval of a Medicaid application.[2] Another provision would restrict the ability of states to use provider taxes to finance their share of Medicaid costs.[3] These provisions would join other cuts to reduce gross Medicaid and CHIP spending by $863.4 billion over the next ten years, according to Congressional Budget Office (CBO) estimates.[4]
Proposed moratorium on provider taxes
All states except Alaska finance their share of Medicaid in part through provider taxes. States have increased their reliance on provider taxes over time, from 7% in 2008 to 17% in 2018, according to the most recent GAO data.[5] The One Big Beautiful Bill will impose a moratorium on provider taxes, precluding states from instituting new or otherwise increasing Medicaid provider taxes.[6]
Advocates warn that states will lose flexibility to adjust healthcare taxes to meet state Medicaid needs if the moratorium is enacted.[7] The effect of a moratorium will be particularly acute in light of other cuts in the bill that shift costs to states. If a recession results in declining income or sales tax revenues, the lack of provider tax flexibility may force states to cut Medicaid programs even as workers lose their jobs and health insurance.[8]
Proposed reduction in retroactive Medicaid eligibility
Even more troubling to operators and consumers alike is the proposed reduction in retroactive Medicaid eligibility for nursing home residents. Under current law, states must provide Medicaid coverage for qualified expenses incurred up to 90 days before the date of application. Retroactive coverage protects residents and families from substantial nursing home expenses incurred prior to application, and incentivizes facilities to accept “Medicaid pending” residents with the expectation that outstanding bills will be paid when a resident is approved for benefits.
The Medicaid application process can be daunting. Many residents struggle to assemble all of the information required, even with the help of family. Individuals with dementia or without family to assist may find the process especially difficult. While nursing facilities typically are experienced with Medicaid eligibility and may be able to assist with the application, they must rely on family members to compile the needed information, which typically includes five years of bank records, and detailed information about other assets. In the case of a resident with dementia, a guardian or conservator may need to be appointed to access financial accounts and assist with the application. These processes can add many months to the time a resident is in a nursing home receiving uncompensated care while an application is prepared and reviewed.
If retroactive eligibility is reduced from 90 to 30 days, providers worry they may have to reject residents who cannot (or whose families cannot) pay for care. In a recent American Health Care Association (AHCA) survey, 55% of providers responded that they would have to reduce their Medicaid census in the wake of cuts, and 27% reported they would be forced to close.[9] As the number one payer for nursing home care in the US, a reduction in Medicaid reimbursement threatens access to care for millions who will need the services of a nursing home.
AHCA/NCAL encourages member action
As a record number of long-term and post-acute care providers gathered in Washington, D.C., on June 9-10 for the AHCA/NCAL annual Congressional Briefing, AHCA President and CEO Clif Porter called upon members to make their voices heard. “They absolutely need to hear from you and they need to understand exactly what the impact is of Medicaid cuts on your facilities,” Porter told members.[10] As the Senate takes up the One Big Beautiful Bill, anyone interested in the future of nursing home care in the US would be wise to heed that call.
If you need help navigating nursing home reimbursement or another long-term care or post-acute care issue, please contact Maynard Nexsen.
[1] “House committee proposes 10-year delay to nursing home staffing mandate,” McKnight’s Long-Term Care News, May 12, 2025, https://www.mcknights.com/news/breaking-house-committee-proposes-10-year-delay-to-nursing-home-staffing-mandate/ (visited 6/12/2025).
[2] https://www.govtrack.us/congress/bills/119/hr1/text, Sec. 44122.
[3] https://www.govtrack.us/congress/bills/119/hr1/text, Sec. 44132.
[4] “Estimated Budgetary Effects of H.R.1, the One Big Beautiful Bill Act,” Congressional Budget Office, June 4, 2025, https://www.cbo.gov/publication/61461 (visited 6/12/2025).
[5] “5 Key Facts About Medicaid and Provider Taxes,” KFF, March 26, 2025, https://www.kff.org/medicaid/issue-brief/5-key-facts-about-medicaid-and-provider-taxes/ (visited 6/12/2025).
[6] https://www.govtrack.us/congress/bills/119/hr1/text, Sec. 44132.
[7] “‘Reduce, limit, slash’: LTC providers fear Medicaid cuts, implications in House budget proposal,” McKnight’s Long-Term Care News, May 13, 2025, https://www.mcknights.com/news/reduce-limit-slash-ltc-providers-fear-medicaid-cuts-implications-in-house-budget-proposal/ (visited 6/12/2025).
[8] See “Medicaid and CHIP Cuts in the House-Passed Reconciliation Bill Explained,” Georgetown University McCourt School of Public Policy Center for Children & Families, May 27, 2025, https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/ (visited 6/12/2025)
[9] “2025 Provider Insights: Medicaid,” AHCA, June 2025, https://www.ahcancal.org/News-and-Communications/Documents/AHCA-2025-Provider-Insights-Report-Medicaid.pdf (visited 6/12/2025).
[10] “‘Providential’ moment for nursing homes as AHCA members look to sway Congress on Medicaid,” June 10, 2025, McKnight’s Long-Term Care News, https://www.mcknights.com/news/providential-moment-for-nursing-homes-as-ahca-members-look-to-sway-congress-on-medicaid/ (visited 6/12/2025).
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