One Big Beautiful Bill Act: What It Means for Healthcare Accounting and Tax Planning

With a name that sounds more like a marketing campaign than a federal statute, the One Big Beautiful Bill Act might seem easy to dismiss at first glance. But beneath the headline-friendly title lies one of the most consequential legislative packages to hit the healthcare sector in recent memory. And for those of us managing the accounting and financial strategy side of healthcare, the changes are far-reaching and immediate.

The bill touches nearly every aspect of healthcare finance. From Medicaid billing and Medicare reimbursements to expanded tax credits and permanent telehealth provisions, it changes the math for providers and administrators alike. If your organization is updating fiscal year 2025 projections or revisiting its tax position, this act should be front and center in your planning.

We see the real-world implications of these provisions every day. Practice administrators and CFOs are asking, “Do we need to update our receivables strategy?” and “How will this affect our eligibility for key deductions and credits?” These aren’t future concerns. They are questions we need to answer right now to keep budgets accurate, reimbursements timely, and compliance risks in check.

Let’s look at what the bill includes and how these policy shifts affect healthcare organizations of all sizes and specialties. The better we understand it today, the more strategic we can be tomorrow.

Medicaid and CHIP changes: Accounting for eligibility and coverage

One of the bill’s most immediate impacts is on Medicaid and the Children’s Health Insurance Program (CHIP). The OBBBA redraws the Medicaid and CHIP map by tightening the front-door and slowing new rule rollouts. Beginning in 2026, federal funds cease for any beneficiary who is not a U.S. citizen, lawful permanent resident, certain Cuban-Haitian entrants or COFA migrants. “Expansion adults” must also clear an 80-hour-per-month work/education/service test starting the first quarter of 2027, and their eligibility must be re-checked every six months rather than annually.

At the same time, the law freezes CMS’s 2023–24 streamlining regulations until 2034, keeping today’s paperwork-heavy application and renewal rules in place for both Medicaid and CHIP. Retroactive coverage is trimmed to one month for expansion adults and two months for everyone else, cutting the traditional three-month look-back window in most cases.

For healthcare practices, these shifts mean fewer continuously insured patients and more churn. Clinics that serve low-income adults should expect a noticeable drop in member-months as some patients struggle to document work hours or immigration status; as a result, scheduling gaps and “boomerang” reenrollments will rise. Healthcare providers may see higher uncompensated-care loads just as the bill begins scrubbing “ghost” members, and the shorter retroactive window reduces opportunities to bill after the fact.

On the upside, the decade-long pause on new eligibility-streamlining rules buys billing and IT teams extra time to modernize systems gradually.

How should you prepare for these changes?

• Tighten front-desk eligibility workflows. Verify work-requirement exemptions (pregnant, postpartum, disabled) and citizenship status at each visit. Flag at-risk patients for financial-counselor outreach.
• Accelerate claim submission cycles. Move from 90-day to 30- or 60-day internal filing targets so shortened retroactive coverage doesn’t translate into lost revenue.
• Model payer-mix shifts. Reduce 2027–2028 Medicaid volume assumptions in budgets and renegotiate capitation or directed-payment rates accordingly. Build uncompensated-care reserves.
• Monitor state policy choices. If your state raises the home-equity cap or joins the HCBS pilot, revisit long-term-care service lines and workforce planning.

For healthcare organizations, these updates are more than policy shifts. They’re operational triggers that affect billing, compliance and patient access. Updating forecasting models, eligibility systems and internal control procedures will help ensure your revenue cycle is ready for the changes ahead.

Medicare updates and the Physician Fee Schedule bump

Healthcare organizations working with Medicare patients will want to take a close look at the impact the OBBBA has on the Physician Fee Schedule (PFS). The earlier enacted Consolidated Appropriations Act of 2023 that provided a statutory add-on of 1.25% to the PFS will lapse in 2025. The OBBBA reinstates a larger 2.5% bump for 2026 only. While that figure might seem modest at first, its impact on multi-provider practices and health systems is more significant than it appears.

Since this reimbursement bump is scheduled to apply for a limited period, it creates a budgeting challenge. Should you revise your annual revenue forecasts to account for higher payments now, or smooth out the estimates across the fiscal year? That decision depends on the volume of Medicare patients your organization serves and the timing of your pay cycles.

Another important consideration is compensation planning. Provider contracts often tie bonuses or compensation thresholds to collections or relative value units. Temporary payment increases can create misaligned incentives if those plans are not adjusted to account for new reimbursement levels. Financial leaders should revisit physician contracts to ensure compliance and budget accuracy.

Beyond the payment increase itself, there are broader accounting implications. Organizations that rely on accrual-based accounting may need to adjust their estimates for unbilled revenue and receivables. If your system automatically applies prior-year fee schedules, you may be underestimating revenue, which can skew dashboards and reporting packages.

For healthcare administrators and finance teams, the bottom line is simple: This update may be temporary, but the accounting work to support it is not. Be sure to document your assumptions, update your revenue recognition policies and flag this adjustment for internal and external audit teams.

To support these adjustments with tailored advice and hands-on assistance, our Healthcare Accounting Services team can help you translate these changes into smart financial strategy.

Telehealth, tax credits, and safe harbors: The finance side of care innovation

One of the most future-facing aspects of the bill is its permanent extension of the telehealth safe harbor for high-deductible health plans paired with Health Savings Accounts (HSA). For healthcare organizations offering telehealth services, this means more patients can receive virtual care without first meeting their deductibles. That translates into increased utilization and more stable reimbursement patterns for digital health visits.

The safe harbor had been renewed on a temporary basis in past years. Now, with permanent approval, finance teams can model telehealth revenue more reliably. If your organization had previously treated telehealth revenue as volatile or uncertain, this is the time to revisit your assumptions.

The bill also provides renewed clarity on Direct Primary Care Arrangements (DPCAs). Under current IRS guidance, patients who pay for these services can treat the monthly fees as qualified medical expenses (provided the arrangement meets specific requirements). That opens the door for broader use of DPCAs, especially in hybrid care models that combine traditional insurance billing with subscription-based services.

From an accounting perspective, organizations that offer or partner with DPCAs need to treat these revenue streams separately. These payments do not go through traditional insurance billing, which means they may bypass claims systems and require different treatment in your general ledger. This can create complications if your organization uses revenue cycle software that was not designed to track non-claim revenue.

There are also tax implications to consider. If your healthcare organization operates with both nonprofit and taxable service lines, DPCAs can blur the lines. Proper documentation and reporting will be critical to ensure these programs do not create issues with tax-exempt status or unrelated business income.

Finally, keep in mind that the safe harbor provisions do not eliminate the need for consistent reporting or HIPAA compliance. If your telehealth platforms are generating significant income, they may also be subject to different state-level tax treatment, especially for out-of-state services.

With these changes now in place, your organization has more flexibility to build or expand digital care programs. Just make sure the accounting and tax planning catch up with the innovation.

New compliance triggers for healthcare providers

While much of the One Big Beautiful Bill Act focuses on reimbursements and tax policy, the law includes new compliance mandates that will affect how healthcare organizations track and report financial data. For finance teams, these changes require an operational response, not just a legal review.

The OBBBA hits pause on CMS’s Minimum Staffing & Medicaid Institutional Payment Transparency rule for nursing homes until Sept. 30, 2034, so no new facility-level cost reports or pricing files are due anytime soon. Finance teams can shelve those builds but should keep internal cost data in case the rule returns later.

Starting with the next rating periods, any new state-directed payment in managed care may not exceed 100% of the Medicare rate in expansion states or 110% elsewhere. Grandfathered arrangements must step down 10% a year beginning in 2028. Plans and providers will need to be able to provide documentation that ties every supplemental dollar back to the matching Medicare fee schedule.

States must pull updated addresses by 2027 and, by 2029, send each enrollee’s social security number to a federal hub every month to block duplicate coverage. Quarterly checks against the administration’s Death Master File for beneficiaries (2027) and providers (2028) follow close behind. Expect faster disenrollments and tighter payment recoupments when these feeds go live.

For payments after 2025, the information-return threshold in Form 1099-MISC/NEC jumps from $600 to $2,000, with automatic inflation bumps after 2026. Accounts payable systems need new logic, but most providers will issue far fewer forms each January.

Finance teams must take several steps to plan for operating under the OBBBA. Pause nursing-home transparency projects, build Medicare-rate comparison tools for state-directed payments, set up monthly social security number and quarterly death-file feeds to your Medicaid trading partners, and update 1099 workflows for the higher threshold.

Outsourced controllership services can also be a helpful resource, especially for multi-site providers without dedicated compliance accountants.

Tax credits and deductions for healthcare entities

The One Big Beautiful Bill Act also brings with it meaningful tax-related updates. It refreshes a different (and often-overlooked) incentive, the employer-provided child-care credit. For amounts paid after Dec. 31, 2025, the credit rate jumps to 40% of qualified child-care spending (50% for employers that meet the bill’s relaxed “eligible small business” test) and the annual cap rises to $500,000 (or $600,000 for those eligible small businesses), with automatic inflation bumps starting in 2027. Finance teams that sponsor on-site centers or purchase third-party slots should revisit payroll and general-ledger codes now so those expenses flow cleanly into next year’s return.

Contrary to some early summaries, the final statute leaves hospital charity-care and community-benefit deductions exactly where they were. No language alters the long-standing standards or the Form 990 Schedule H framework. Boards can keep following existing IRS guidance: maintain robust cost documentation, separate reimbursed services from true free care, and report those figures under today’s rules.

The OBBBA terminates the § 179D energy-efficient commercial-building deduction for projects that begin construction after June 30, 2026. Hospitals, outpatient centers and administrative offices planning HVAC upgrades or envelope work should accelerate design timelines if they want to lock in the current deduction. After the cutoff date, no replacement credit is offered, so any assumed tax savings must be stripped from post-2026 ROI models.

The bill also extends the Paid Family and Medical Leave credit and lets employers claim it on either direct wage payments or premiums paid for an insured leave policy — a helpful tweak for organizations that buy coverage instead of self-funding. Together with the richer child-care credit, these changes make 2026 the year to refresh benefit-cost analytics and ensure payroll systems capture the right data for both credits.

We recommend working with your tax advisors early in the fiscal year to identify opportunities and flag any risk areas. These changes may require updates to accounting policies, tax preparation workflows, and internal reporting structures.

To sum up: How to plan with confidence in the wake of big legislation

The One Big Beautiful Bill Act introduces wide-ranging changes that directly affect how healthcare organizations plan, budget and report. From Medicaid and Medicare payment updates to new compliance mandates and tax incentives, the provisions in this bill require attention from both operational leaders and financial professionals.

Healthcare providers that delay updating their systems and projections could face costly missteps. But for organizations that stay ahead of the curve, this legislation also creates opportunity. Now is the time to review your accounting policies, revisit internal controls and assess whether your current tax strategy aligns with the new rules.

James Moore helps healthcare organizations adjust to policy shifts with clear financial strategy, detailed forecasting, and consistent tax support. Whether you need help modeling Medicare reimbursements, reviewing DPCA revenue classifications or restructuring your cost accounting systems, we’re here to support your success.

To navigate the accounting and tax complexities of the One Big Beautiful Bill Act with confidence, contact a James Moore professional. Whether you are reviewing next year’s budget or adjusting your chart of accounts, we can help you apply these legislative changes in a way that supports growth, compliance, and clarity.

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