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Congress passed President Trump’s Federal budget on July 3, which includes many provisions affecting health care providers and recipients of health care services. The relevant provisions include the following:

Medicaid Coverage and Cost-Sharing Changes

• Eliminates enrollment fees or premiums for Medicaid expansion adults (effective October 1, 2028).
• Requires states to impose cost sharing of up to $35 per service on Medicaid expansion adults with incomes 100-138% of the Federal Poverty Level (FPL) (effective October 1, 2028).
• Explicitly exempts primary care, mental health, and substance use disorder services from cost sharing.
• Exempts services provided by federally qualified health centers, behavioral health clinics, and rural health clinics.
• Maintains existing exemptions of certain services from cost sharing.
• Limits cost sharing for prescription drugs to nominal amounts.
• Maintains the 5% of family income cap on out-of-pocket costs (effective October 1, 2028).

Eligibility, Work Requirements, and Renewals 

• Limits federal matching payments to the state’s regular FMAP for Emergency Medicaid for individuals who would otherwise be eligible for Medicaid expansion coverage but for their immigration status (effective October 1, 2026).
• Requires states to condition Medicaid eligibility for individuals ages 19-64 applying for coverage or enrolled through the Medicaid expansion group (or a waiver) on working or participating in qualifying activities for at least 80 hours per month (effective not later than December 31, 2026).
• Mandates that states exempt certain adults, including parents of dependent children ages 13 and under and those who are medically frail, from the requirements.
• Requires states to verify that individuals applying for coverage meet requirements for one or more consecutive months preceding the month of application; and that individuals who are enrolled meet requirements for one or more months between the most recent eligibility redeterminations (at least twice per year).
• Specifies that if a person is denied or disenrolled due to work requirements, they are also ineligible for subsidized Marketplace coverage.
• Caps the “look-back” for demonstrating community engagement at application to three months.
• Specifies that seasonal workers meet requirements if their average monthly income meets the specified standard.
• Requires states to use data matching “where possible” to verify whether an individual meets the requirement or qualifies for an exemption.
• For renewals scheduled on or after December 31, 2026, requires states to conduct eligibility redeterminations at least every six months for Medicaid expansion adults.
• Limits retroactive Medicaid coverage to one month prior to application for coverage for Medicaid expansion enrollees and two months prior to application for coverage for traditional enrollees (effective January 1, 2027).

Staffing Rules and Provider Restrictions

• Prohibits until October 1, 2034, the Secretary of Health and Human Services from implementing, administering, or enforcing minimum staffing levels (including a 24/7 RN on-site and a minimum of 3.48 total nurse staffing hours per resident day (HPRD)) required by a Biden Administration rule.
• Allows states to establish 1915(c) HCBS waivers for people who do not need an institutional level of care (new waivers may not be approved until July 1, 2028).
• Prohibits Medicaid funds to be paid to providers that are nonprofit organizations, essential community providers primarily engaged in family planning services or reproductive services, provide for abortions outside of the Hyde exceptions and received $800,000 or more in payments from Medicaid in 2024 (effective upon enactment).
• Requires states to conduct checks at enrollment, reenrollment, and monthly to determine whether HHS has terminated a provider or supplier from Medicare or another state has terminated a provider or supplier from participating in Medicaid or CHIP. Requires states to conduct quarterly checks (in addition to at provider enrollment or reenrollment) of the Social Security Administration’s Death Master File to determine whether providers enrolled in Medicaid are deceased (effective January 1, 2028).

Oversight and Rural Health Funding

• Establishes a rural health transformation program that will provide $50 billion in grants to states between fiscal years 2026 and 2030, to be used for payments to rural health care providers and other purposes (effective upon enactment but funding is first available in fiscal year 2026).
  • Distributes 40% of payments equally across states with approved applications; the remaining funds will be distributed by CMS based at least in part on states’ rural populations that live in metropolitan statistical areas, the percent of rural health facilities nationwide that are located in a state, and the situation of hospitals that serve a disproportionate number of low-income patients with special needs.
  • Uses of funds include promoting care interventions, paying for health care services, expanding the rural health workforce, and providing technical or operational assistance aimed at system transformation.

Contact BMD Member Daphne Kackloudis at dlkackloudis@bmdllc.com with questions.