Major Changes Coming to Medicaid in 2027
The One Big Beautiful Bill Act (OBBBA) brings changes to the Medicaid program beginning January 1, 2027. The legislation makes several changes, including increasing the frequency of eligibility reviews, introducing work requirements for certain beneficiaries, and limiting state funding options. Individuals and healthcare organizations should begin preparing for how these changes will affect them.
New Work Requirements
Most adults ages 19 to 64 who do not have a dependent will have to complete at least 80 hours per month of qualifying activities. These activities include working, performing community service, participating in a work-training program, or attending school. Pennsylvania Medicaid applicants and recipients will have to provide information to PA DHS at each renewal. Please click here to view a list of exemptions and reporting methods.
More Frequent Eligibility Reviews
Another major change requires states to review eligibility for certain Medicaid recipients every six months rather than once a year. For Pennsylvania residents, PA DHS will use previously provided information to verify work requirements and exemptions. If additional information is needed, PA DHS will send a letter notifying the individual. Failure to respond within 30 days of receiving the letter could result in a loss of benefits.
Changes to Medicaid Funding
The legislation also changes how states finance their Medicaid programs. The provider tax rate, on which many states, including Pennsylvania, typically rely for funding, is being reduced from 6% to 3.5%. The Hospital and Healthsystem Association of Pennsylvania estimates that the change will result in a $4.5 billion loss in hospital funding. This may lead Pennsylvania and other states to reduce provider payments, change eligibility requirements, or find other sources to replace the lost funding.
What About Rural Hospitals and Healthcare Providers?
To address the financial concerns of rural healthcare facilities, the legislation establishes a $50 billion Rural Health Transformation Program to be distributed over five years. The funding is intended to help rural hospitals and other healthcare providers. It will support the Center for Medicaid & Medicare Services’ goals related to rural health, sustainable access, workforce development, innovative care, and technological innovation. However, this fund will likely not completely offset the additional costs or funding losses resulting from the other changes.
Healthcare facilities and providers need to prepare in advance to maintain their services and level of care as these changes take effect, particularly in rural and underserved communities.
If you have questions about the information outlined above, McKonly & Asbury’s experienced professionals are here to help. Learn more about our Healthcare practice by visiting our Healthcare industry page or by contacting the Director of our Healthcare practice, Partner Janice Snyder.
About the Author
Jesse is an Assurance Supervisor, where he specializes in serving nonprofit and healthcare organizations. He provides audit, assurance, and advisory services to a broad range of mission-driven entities, including charitable organizations, foundations, associations, and social service providers.
In his role, Jesse manages day-to-day audit operations, mentors junior staff, and works closely with clients to ensure timely and accurate financial reporting. His technical knowledge includes Uniform Guidance audits and Generally Accepted Government Auditing Standards (GAGAS). Known for his thoroughness and collaborative leadership style, Jesse is dedicated to building strong client relationships and delivering high-quality service. He is actively involved in staff training and plays a key role in process improvement initiatives within the firm.
