First and foremost, this content is neither an endorsement nor an opposition to the One Big Beautiful Bill (“OBBB”), but rather a realistic and practical summary of the impact this bill will have on the behavioral health industry. One of the stated intents of the OBBB is to eliminate fraud and abuse in the American healthcare system. In a couple years we can evaluate whether this objective was accomplished.
In the meantime, let’s discuss what the bill does at a 30,000-foot level:
1. Medicaid Work Requirement: The OBBB introduces work-reporting requirements for Medicaid enrollees for nonpregnant, nondisabled adults aged 19 to 64.
2. Impact on Mental Health Services: Now that Covid is no longer considered by the government as an emergency, the enhanced premium tax credits will expire, and enrollees will need to prove eligibility.
3. Youth Mental Health Services: Contrary to some news outlets, the OBBB itself does not cut youth mental health grants. However, in a separate action, on January 28, 2025, the U.S. Department of Education, invoking an executive order, cancelled some mental health grants aimed at K–12 schools claiming they were discriminatory and in conflict with civil‑rights standards.
4. Cost Sharing for Essential Services: While the OBBB allows states to impose cost-sharing measures for Medicaid enrollees, it explicitly prohibits cost-sharing for certain essential services, including mental health care and SUD services. This means that, despite other changes, these services would remain free at the point of service for eligible Medicaid recipients.
Now let’s discuss the practical implications:
1. Eligible Medicaid enrollees will continue to have access to mental and SUD services with no cost sharing. Though the OBBB allows for a new Medicaid $35.00 Co-pay, mental health and SUD services are excluded.
2. The OBBB work-reporting requirements for Medicaid enrollees will likely impact SUD services, as many of these patients are unemployed at the time they are seeking treatment. This may transition these patients to subsidized ACA plans or to private-pay. Patients with diagnosed mental health disabilities appear to not be affected.
3. Over the last several years it has been a practice of some business development and outreach professionals to “encourage” otherwise private-pay patients to enroll in ACA plans with minimal eligibility verification. This has resulted in an industry-wide reduction in private-pay patients over the last five years. The OBBB will likely create a reversal of this trend and create challenges for Providers in terms of how they engage patients around cost and a growing private-pay population.
4. Expect heightened compliance enforcement with respect to inducement, Medicaid eligibility verification, and ACA income verification.
5. Expect a significant increase in deductibles, co-pays, co-insurance, and private pay (Patient Financial Responsibility “PFR”) as a percentage of a Provider’s total revenue. Reimbursement rates are not increasing, just the portion (%) of your current rate that is owed by the patient directly (out-of-pocket costs). This could account for 20-25% of a Provider’s revenue.
What to Do?
1. To avoid the risk of claim claw backs, thoroughly review your Regulatory Compliance Status for gaps.
2. Develop a private-pay strategy that includes pricing integrity and flexible payment options that are preferably automated.
3. Discontinue business development practices relating to ACA enrollment that are not compliant with the new OBBB regulations.
4. Create a Patient Financial Management Department that is solely tasked with patient financial engagement and managing & automating the anticipated growth in patient financial responsibility.
5. Don’t put your head in the sand. This bill, and the effect on the healthcare industry, will impact your business.
Summary
Though there are challenges presented with the OBBB, an opportunity has also been created. For well-prepared Providers a growing private-pay population is not a bad thing. In fact, it could be a blessing to your cash flow. Building an automated patient financial management strategy means you can earn more from your existing census instead of adding additional pressure on your admissions team to make up any gaps caused by the OBBB. Lastly, it is never a bad investment to stress test your Regulatory Compliance Status for potential gaps for inducement, Medicaid eligibility verification, ACA income verification, and consumer protection laws. Remember, don’t put your head in the sand hoping it will all go away.