On July 4, 2025, Public Law 119-21, often referred to as the “One Big Beautiful Bill” (“OBBBA”) was signed into law. The OBBBA’s subject matter, vast and far reaching, largely focuses on tax reform, immigration, and environmental protection repeals. The omnibus bill is not a healthcare bill in the true sense; yet it is one of the largest legislative healthcare reform measures in recent history. In addition to the Medicaid changes discussed herein, the OBBBA implements significant healthcare changes on other programs including reducing Medicare reimbursements by four percent, increasing Medicare cost sharing, expanding catastrophic plan availability on health insurance marketplaces for individuals not covered by Medicaid, and modifying provider reimbursement structures. Additionally, the OBBBA specifically targets Medicaid funds for services provided by Planned Parenthood and similarly situated providers.[i] The latter measure is already subject to a preliminary injunction.[ii]

Many of the OBBBA’s measures directed at Medicaid reform should not come as a surprise for those of us practicing in Idaho. In the 2025 Legislative Session, the Idaho Legislature passed Idaho’s House Bill 345 (“HB 345”) which targeted Medicaid reform in Idaho and has proven to be the bellwether on federal legislative policy. While there are some differences between the OBBBA and HB 345, the similarities are striking, especially around work requirements, eligibility redeterminations, and cost-sharing. This article will explore the changes brought by the OBBBA, the differences between the OBBBA and HB 345, and then close with commentary on how we can help our clients prepare.

The Basics of OBBBA

Eligibility Determinations: For Medicaid expansion populations and for those who would qualify for Medicaid under the Affordable Care Act, states will be required to perform eligibility redeterminations every six months. Presently, redeterminations occur yearly.[iii]

Work Requirements: Beginning January 1, 2027, states must require Medicaid enrollees perform “community engagement,” which is a fancy way to say “work requirements.” States can submit a Section 1115 Waiver or a State Plan Amendment (“SPA”) to seek approval to implement the work requirements earlier than January 1, 2027.[iv] States that will not meet the January 1, 2027, deadline may seek an extension if the state demonstrates a “good faith effort” in achieving compliance. Such extensions may only extend to December 31, 2028.

Unless exempted, “applicable individuals” on Medicaid must perform 80 hours of work, community service, educational programming (at least part-time), or any combination of these activities per month.[v] Alternatively, individuals can demonstrate 1) monthly income that is not less than the federal minimum wage ($7.25 per hour) multiplied by 80 hours ($580), or an average six month income that is not less than the six month equivalent of the same ($3,480).[vi]

These work requirements will apply to individuals aged 19 to 64 who are not pregnant or already receiving services under Medicare Part A or Part B. Certain individuals are specifically excluded from the work requirements. It will not apply to American Indians and Alaska Natives, including those recognized as Indians under federal law, Urban Indians served by federally funded urban Indian health programs, California Indians identified in federal statute, and anyone otherwise determined eligible for Indian Health Service benefits. Parents, guardians, caregivers of dependent children under the age of 14 or a disabled individual are not required to meet the work requirements, nor are veterans with total disability. Anyone determined to be “medically frail” is exempt as well. “Medically frail” includes anyone who is blind; disabled; has a substance use disorder or a disabling mental health disorder; and those with a physical, intellectual, or developmental disability that significantly interferes with at least one activity of daily living.

Similarly, if an individual is participating in a drug or alcohol rehabilitation program, they are exempt. If an individual is already meeting the work requirements under the Temporary Assistance for Needy Families (“TANF”) program or Supplemental Nutrition Assistance Program (“SNAP”), they are not required to duplicate their efforts to be eligible for Medicaid. Lastly, inmates of a public institution and anyone who at any point in the three months prior to application was an inmate of a public institution are exempt from work requirements. The OBBBA mandates that these individuals be “deemed” by states to have met the work requirements, yet states may elect to require verification.[vii] Alternatively, states may choose not to require proof; self-attestation could be enough.

States may also elect to allow short-term hardship exceptions which would permit an individual to be deemed to have met the work requirements. A short-term hardship is defined to include situations where 1) the individual for part or all of a month “receives inpatient hospital services, nursing facilities services, services in an intermediate care facility for individuals with intellectual disabilities, inpatient psychiatric hospital services, or other services of similar acuity…;” 2) the individual resides in an area where a presidential state of emergency or disaster is declared, or where the employment rate is at or above eight percent or 1.5 times the national unemployment rate; or 3) the individual must travel outside their community for treatment of a serious or complex medical condition.[viii]

Work requirement verifications will be performed at the same intervals as the individual’s regular eligibility determinations. States may elect to perform these verifications more frequently. When performing verifications, states may use “reliable information” from ex parte sources without requiring the individual to submit additional information. Such “reliable information” may include payroll data and encounter data. Encounter data captures the diagnosis, treatment, and services provided to a beneficiary which is submitted to payors such as Medicaid and Medicare. This data is used to calculate the capitated payment rated and assess quality of care.

The breadth of exemptions creates significant administrative burdens for states. The “medically frail” determination will likely require clinical assessments which may delay eligibility determinations beyond the statutory timeframes. Moreover, it is unclear what information states will use when making determinations on who qualifies as medically frail. For example, if states require those with a Serious Mental Illness (“SMI”) to reverify, will states use prescription history to determine a diagnosis or will states require enrollees to submit assessments by their treating physicians. It is also unknown how debilitating a condition must be to qualify as significantly impacting an activity of daily living. 

Administrative Due Process Protections: The OBBBA also establishes some key requirements that states will need to implement before these changes to Medicaid may come to fruition, especially around the procedural due process afforded to those impacted.

If a state is unable to verify that an individual meets the work/community engagement requirement, the state must provide the individual with a notice of noncompliance and provide 30 days for the individual to prove their exempt status or demonstrate compliance. During this time, the state must continue to provide the individual with coverage. If the individual fails to respond within 30 days or fails to prove eligibility, the state must disenroll the individual and provide them the opportunity for a fair hearing allowing the individual the opportunity to seek reconsideration and to satisfy due process concerns.

State Outreach: The OBBBA mandates that at least three months before December 31, 2026, states must educate their Medicaid enrollees on their new obligations pertaining to work/community engagement requirements.[ix] This outreach campaign must inform enrollees on the consequences of noncompliance, how to report changes to the state, the possible exceptions, and how the individual can report their exempt status. The state must use at least two different forms of outreach: 1) regular or electronic mail, and either 2) text, telephone, internet website, or other electronic means.

Timing Constraints: The OBBBA states that final rules for the work/community engagement requirement will not be promulgated until June 1, 2026. Combining this with the outreach deadline described above, which must begin no later than October 1, 2026, for the January 1, 2027, implementation date, means that states will have little time to meet its requirements. In Idaho, the Department of Health and Welfare (“Department”) may issue temporary rules pursuant to Idaho Code 67-5226, yet this leaves the Department and the Idaho Legislature little to no time to promulgate rules to ensure enrollees understand their new requirements.

Alien Eligibility: Under Section 71109 of the OBBBA, states are precluded from offering Medicaid benefits to anyone other than US citizens, legally present permanent aliens, aliens granted status of Cuban or Haitian entrants under the Refugee Education Assistance Act, and individuals lawfully present under the Compact for Free Association of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.[x] This limitation precludes refugees and asylees.  

This provision could face constitutional challenge under equal protection grounds. The exclusion of refugees and asylees—populations traditionally granted federal protection—may violate procedural due process requirements established under Mathews v. Eldridge.[xi] Does excluding refugees and asylees truly serve a legitimate governmental interest? Or will this simply increase the burden on hospital and rural health services, shifting the costs on to already strained systems.

Cost Sharing: Section 71120 requires states to impose cost sharing fees to Medicaid expansion enrollees. While premiums, enrollment fees, or similar charges are prohibited, states must impose a fee greater than $0 with respect to certain care or services.[xii] Excluded services from the cost sharing requirement include primary care; mental health treatment; substance use disorder treatment; or treatment provided by a federally qualified health center, rural health clinic, or a certified community behavioral health clinic. The cost sharing may not exceed $35 for each item or service provided, and the total amount charged for all individuals in the family of the enrolled participant may not exceed five percent of the family income, as applied on a quarterly or monthly basis. The possible silver lining in this requirement is that states have great flexibility in determining the amount charged for the cost sharing portion.

The cost sharing requirements introduce another component that will impact enrollee’s access to care. States may grant providers the right to deny treatment if the Medicaid enrollee does not pay the cost share. However, failure to pay the cost share will not result in the disenrollment of the participant, and providers are not prohibited from reducing or waiving the cost sharing amount.[xiii]

Retroactive Application: Presently, individuals who apply for and are approved for Medicaid will be granted 90 days of retroactive coverage from the date of application.[xiv] Section 71112 of the OBBBA will limit the retroactive eligibility to 60 days for non-expansion enrollees and 30 days for expansion populations. This becomes effective January 1, 2027.

Conflict of Interest Protections: The OBBBA prohibits states from contracting with a Medicaid Managed Care Organizations (“MCO”s) or other vendor to conduct work requirement compliance determinations unless the MCO or vendor has no direct or indirect financial interest in such determinations.[xv] Essentially, when Idaho contracts with its new MCO for Medicaid services pursuant to HB 345 (discussed later), that vendor cannot also perform the eligibility determinations. This will force Idaho to maintain separate administrative systems which will increase costs and administrative complexity.

What Is Not Changing

Idaho’s Medicaid Expansion is paid by 10 percent state general funds and 90 percent federal financial participation, otherwise known as the Federal Medicaid Assistance Percentage (“FMAP”). Idaho’s Legislature drafted the Medicaid Expansion statutes to include a trigger clause. Idaho Code § 56-267(5) states if the federal financial participation decreases below 90 percent, the Legislature will convene and evaluate the program’s future. If, however, the decrease occurs out of session, the Department must offset the increase demand on the state general fund. This could include immediate provider rate reductions or elimination of optional benefits.

With this axe hanging over Medicaid Expansion, many grew anxious that the FMAP for Medicaid expansion would be cut during the OBBBA’s multiple revisions. This, thankfully, did not happen, meaning the OBBBA did not result in a repeal of Medicaid Expansion; the 90 percent FMAP remains in place.

HB 345 Comparison

Idaho’s approach to Medicaid reform presents both alignment and tension with these federal requirements. House Bill 345 was the Idaho Legislature’s hazy glimpse into the crystal ball of federal policy, specifically the OBBBA’s work requirements, redetermination periods, and cost sharing. While many of the provisions align, there are a few instances where the two diverge. HB 345’s parental caretaker exception applies to parents with children under the age of six (6) instead of under fourteen (14). Idaho’s version states those who are “[m]edically classified as physically or mentally unfit for employment” are exempt, while OBBBA’s version is far broader—offering protection for those who are “medically frail.” Idaho also exempted those receiving unemployment and complying with the work requirements under the federal-state unemployment compensation program. The OBBBA does not directly address those on unemployment.

HB 345’s take on cost sharing is less forgiving than the OBBBA’s. If Idaho’s version were to prevail, a person’s eligibility would be conditioned on the cost sharing component. In contrast, the OBBBA’s version allows services to be denied if a participant can’t pay, yet the individual will not be disenrolled in Medicaid for nonpayment.

HB 345 mirrors the OBBBA in requiring six-month redetermination periods, however, HB 345 prohibits renewals “automatically based on available information and pre-populated forms…”[xvi] whereas the OBBBA appears to encourage states to do this.  

HB 345 also mandated that Idaho shift its provision of services to MCOs, thereby privatizing its Medicaid services. The timeline for Idaho’s shift to an MCO model is largely dependent on federal approval of its state plan amendment, but the Department has expressed a commitment to go-live by 2029.[xvii] While the MCO shift is unlikely to occur simultaneously with the work requirement start date, Idaho will still see several major systematic changes, heightening the risk for disruptions and administrative errors.

Why the Differences Matter

The Idaho Legislature directed the Department to seek waivers under Section 1115 of the Social Security Act to enact HB 345’s legislative purpose. A Section 1115 waiver is required for a state to conduct an “experimental, pilot, or demonstration project” that would assist or promote the goals of the Medicaid program. Essentially, if a state wants to implement its Medicaid program in a manner not contemplated by the federal plan, a waiver is required. The state must prove certain elements such as: 1) cost neutrality, 2) that the state adhered to administrative notice requirements, and 3) provide a detailed analysis for how the state will monitor and evaluate the program.

All this to say, because HB 345 is more stringent than the OBBBA on several matters (e.g. work requirement exemption criteria, cost sharing, ex parte verifications for renewals), to implement HB 345 as written will require a waiver. However, if the Legislature determines that the OBBBA fulfills its legislative intent, then we will likely see revisions to Idaho Code § 56-2205. Even then, the Legislature could still direct the Department to seek waivers as originally contemplated in HB 345, making compliance and execution all the more complicated.

Implementation Challenges

These legal and administrative complexities translate into real-world challenges for healthcare stakeholders and enrollees. The OBBBA and HB 345 are not the first attempts at work requirements. Lessons can be learned from another state’s prior unsuccessful attempt. 

In 2018, the Centers for Medicare and Medicaid Services (“CMS”) approved Arkansas’s work requirement demonstration project. Upon implementation, initial estimates suggest that 25 percent of the Medicaid population lost coverage primarily due to an inability to regularly report work status or document eligibility.[xviii] Granted, the fungibility of those numbers to those that would lose coverage with the implementation of the OBBBA are somewhat limited. Arkansas’s model relied on unconscionable obstacles such as requiring applications to be submitted only by phone or through an online portal. Both methods exclude those without access or limited computer literacy. Those who were disenrolled had to wait until the following plan year to reenroll, unless they qualified through another program.[xix] Arkansas also relied on regular mail to notify individuals of the new reporting requirements; much of that mail was returned undeliverable. The work requirements lasted six months before a court determined Arkansas’s program to be unconstitutional.[xx]

Assuming the OBBBA’s implementation date arrives without legal challenge, the combination of six-month redetermination and work requirements will result in significant enrollment instability. The Congressional Budget Office estimates that 7.5 million individuals will lose healthcare coverage as a result of these changes to Medicaid by 2034.[xxi] While the OBBBA attempts to force states to engage with enrollees through proactive outreach, the reality is that this population may not be reached by those measures or may not understand their new responsibilities.

Health care providers must anticipate uncompensated care costs to account for the enrollment churn from coverage interruptions. Consider the very likely scenario where an individual loses coverage for six months due to eligibility redeterminations or failing to understand the requirements. Once eligibility is reestablished, only the most recent 30 days of services may be retroactively covered. Yet, the patient will have experienced months of delayed, untreated, or self-managed conditions. Alternatively, during the period of noncoverage, the individual may instead rely on emergency departments for nonemergent conditions, for which the provider can expect not to get paid. The gap in care can increase clinical complexity and increase cost of care. Providers, therefore, may likely bear the financial burden of non-reimbursable services and the operational challenges of managing sicker patients once coverage resumes.

How to Prepare

The challenges presented by the OBBBA and HB 345 are foreseeable. Advocacy may be key on those issues where states retain discretion (e.g. ex parte information sourcing, cost sharing amounts). The implementation of the OBBBA and HB 345 is dependent on federal and state regulation that has yet to be drafted; participating in stakeholder meetings and utilizing public comment options is highly recommended.

We will serve our clients best by preparing them to navigate the immediate compliance demands. We can do this by monitoring ongoing litigation and legal challenges as the timeline gets closer. We will also want to encourage our clients to 1) review and monitor MCO contracts for work requirements and verification obligations, ensuring clear delineation between clinical services and eligibility determinations, 2) strengthen charity care policies and procedures, and 3) develop patient screening protocols for Medicaid eligibility changes in new and current patients. Staff training on exemptions categories and documentation requirements will be integral to the success of provider led enrollment support.

The future of healthcare under the OBBBA may appear rocky and uncertain, and in Idaho—where every shift in Medicaid policy creates ripple effects across our rural and urban health systems—the outlook may be daunting. But one thing is clear: proactive preparation and persistent advocacy will determine how this story unfolds.

Chelsea Kidney is a partner of CHC Legal, PLLC. She provides strategic and practical legal guidance across the full spectrum of healthcare operations, with particular expertise in regulatory compliance, billing and reimbursement, professional licensure, and employment matters. Chelsea is a trusted advisor to physicians, group practices, health centers, and licensed independent professionals, offering tailored solutions that support both legal protection and business growth. She spends her free time chasing mediocrity in her recreational endeavors which include rock climbing, mountain biking, and gardening.

[i] Pub. L. No. 119-21 § 71119, (2025) (amending 42 U.S.C. 1396a).

[ii] Planned Parenthood, District Court Grants Partial Relief, Blocks Law “Defunding” Planned Parenthood for Some Members (Press Release, July 21, 2025), available at https://www.plannedparenthood.org/about-us/newsroom/press-releases/district-court-grants-partial-relief-blocks-law-defunding-planned-parenthood-for-some-members (Oct. 2, 2025).

[iii] Pub. L. No. 119-21 § 71107, (2025) (amending 42 U.S.C. 1396a(e)(14)).

[iv] Section 71119(a) modifying SSA §1902 (xx)(1).

[v] Pub. L. No. 119-21 § 71119, (2025) (amending 42 U.S.C. 1396a).

[vi] Id.

[vii] Specifically, states “may elect to not require an individual to verifying information resulting in such deeming….”

[viii] Pub. L. No. 119-21 § 71119, (2025) (amending 42 U.S.C. 1396a).

[ix] Id.

[x] Pub. L. No. 119-21 § 71109, (2025) (amending 42 U.S.C. 1396b(v)).

[xi][xi] Mathews v. Eldridge, 424 U.S. 319, (1976).

[xii] Pub. L. No. 119-21 § 71120, (2025) (amending 42 U.S.C. 1396o).

[xiii] Id.

[xiv] Pub. L. No. 119-21 § 71112, (2025) (amending 42 U.S.C. 1396a(a)(34)).

[xv] Pub. L. No. 119-21 § 71119, (2025) (amending 42 U.S.C. 1396a).

[xvi] Idaho Code § 56-2205(1)(c).

[xvii] Testimony of Juliet Charron, Medicaid Review Panel, Interim Hearing Before the Idaho Legislature (July 29, 2025).

[xviii] Elizabeth Hinton and Robin Rudowitz, “5 Key Facts About Medicaid Work Requirements,” (KFF Feb. 18, 2025), https://www.kff.org/medicaid/5-key-facts-about-medicaid-work-requirements/ (Oct. 2, 2025).

[xix] Laura Harker, Pain But No Gain: Arkansas’ Failed Medicaid Work-Reporting Requirements Should Not Be a Model, https://www.cbpp.org/research/health/pain-but-no-gain-arkansas-failed-medicaid-work-reporting-requirements-should-not-be (Oct. 2, 2025).

[xx] See Gresham v. Azar, No. 19-5094 (D.C. Cir. 2020).

[xxi] Congressional Budget Office, Distributional Effects of Public Law 119‑21, Pub. No. 61367 (Aug. 11, 2025), https://www.cbo.gov/system/files/2025-08/61367-Distributional-Effects.pdf (Oct. 2, 2025).