H.R.1, the “One Big Beautiful Bill” Act: Major Health-Related Provisions

The “One Big Beautiful Bill” Act was passed by the U. S. House of Representatives and Senate and signed by President Trump on July 4, 2025. This summary will focus on key health care provisions of the new law. It is subject to change as the law becomes clear through regulations, amendments, and use. 

Physician-Related Provisions

Physician Payment Provisions

• The Act includes a temporary payment increase under the Medicare Physician Fee Schedule of 2.5% for services between January 1, 2026, and January 1, 2027. 
• This final law does not include the permanent, inflation adjusted, fee adjustment passed by the House of Representatives in its earlier version of H.R. 1.

Changes to the Federal Financial Aid Programs

• By July 1, 2028, federal student loan borrowers in an income-driven repayment (IDR) plan will have the option of either the current “Income Based Repayment Plan” or a new “Repayment Assistance Plan.”
• Beginning in July 2026, this Act ends the Federal Grad PLUS program and places a new cap on direct loans for medical students to a new maximum loan amount of $50,000 annually and a $200,000 total limit.

Medicaid Provisions

Work Requirements, Eligibility Changes, and Enhanced Verifications

• Beginning December 31, 2026, Medicaid beneficiaries who are non-elderly, non-pregnant adults who are eligible for Medicaid on a basis other than disability will be required to work, engage in community service, or be enrolled in an education program for a minimum of 80 hours each month. 
• States will be required to determine eligibility redetermination every six months (reduced from yearly).
• States will furthermore be required to share information with other states to prevent individuals from being enrolled in two state plans.

Provider Taxes

• In non-expansion states, provider tax rates will freeze with the maximum rate of 6%.
• In expansion states—states that adopted the Affordable Care Act (ACA) to extend health coverage for people with incomes to 138% of the federal poverty line— existing taxes will be capped and will be phased down beginning in 2028 by 0.5% yearly from the current 6% until the cap of 3.5% is reached.
• By freezing and lowering the provider taxes, the federal government will reduce their spending by reducing the amount that they match in state funding.

State Directed Payments

• These payments allow states to direct Managed Care Organizations to pay according to specific rates or schedules. States have had discretion to set these payments and for certain services, the maximum was capped at the average commercial rate. 
• Regulations in this law cap the total payment for inpatient hospital services to be 100% of total published Medicare rates for expansion states and 110% for non-expansion states. Beginning in 2028, existing rates will decrease by 10% annually until they reach those percentages.
• Many states may use average commercial rates as their benchmark of direct payments to hospitals or nursing facilities.

Rural Health Funding

• A $50 billion fund has been allocated for 2026-2030 ($10 billion/year) to counter some of the other cost-cutting measures in the Act that may particularly impact rural hospitals, clinics, and physicians.

End of Temporary Medicaid Expansion Incentive and the Reduction in Expansion Funding Match

• The American Rescue Plan Act that was passed in 2022 provided states with a financial incentive to adopt the expansion of Medicaid eligibility to non-elderly adults up to 138% of the federal poverty line in accordance with the ACA. 
• This Act eliminates the temporary incentive for states to adopt expansion beginning January 1, 2026.
• Beginning October 1, 2026, this Act removes the enhanced federal match for emergency Medicaid services provided to undocumented residents and caps reimbursement at the state’s regular Federal Medical Assistance Percentage (FMAP).  

Affordable Care Act Premium Tax Credits

• As part of the American Rescue Plan Act and Inflation Reduction Act, tax credits were utilized to reduce individuals’ health insurance premiums in the ACA Marketplace.
• The “One Big Beautiful Bill” does not include any provision relating to these tax credits and therefore without intervention, these tax credits will expire at the end of 2025 increasing premiums for those utilizing the Marketplace.