One Big Beautiful Bill Update
By Alexandra Hembrough, Esq., General Counsel
In recent updates, we have shared information on the Rural Health Transformation Program established under the One Big Beautiful Bill Act (OBBBA).
As implementation details continue to emerge, several organizations are providing comprehensive analysis and ongoing coverage of the program, including Sellers Dorsey, KFF (formerly, Kaiser Family Foundation), and the Commonwealth Fund.
We encourage you to consult these resources for a deeper understanding of the program and any recent updates on this topic.
One Big Beautiful Bill Act: Medicaid Eligibility and Work Requirements – Impact on Providers
As the January 1, 2027, effective date for the Medicaid Work Requirements required under the One Big Beautiful Bill Act (OBBBA) approaches, all 50 states and D.C. are preparing, but are having a variety of responses to the new work requirements, eligibility standards, and processes for Medicaid.
The 10 states that did not expand Medicaid eligibility to working-age adults under the Affordable Care Act of 2010 (ACA) face the lightest challenge, as the tax law enacts more requirements and restrictions on expansion states.
In an effort to reduce federal Medicaid funding by $960 billion over 10 years, 40% of states will see their federal Medicaid support diminish by at least 5%, according to a recent analysis, that will likely translate into cuts on healthcare providers and beneficiaries.
CMS Passes the Medicaid Community Engagement Requirement Interim Final Rule
On June 1, 2026, CMS issued the Medicaid Community Engagement Requirement Interim Final Rule – CMS-2454-IFC under Public Law 119-21, the Working Families Tax Cut (the "Interim Rule") that includes key definitions and standards that states have been waiting for in anticipation of the January 1, 2027, effective date that will require certain adults insured under Medicaid to meet an 80 hours per month work requirement as a condition of eligibility.
While the Interim Rule does provide some helpful clarifications, many members of Congress, medical groups, patient advocates, and lawmakers argued that it does not do enough to protect beneficiaries from improper enrollment and creates new, unnecessary administrative burdens beyond what Congress originally intended.
For providers, the biggest operational risk is coverage churn – patients losing Medicaid because they fail reporting requirements, fail verification, or do not understand the exemption processes.
Even patients who remain eligible may experience temporary coverage interruptions.
What Do Providers Need to Know About the Interim Final Rule?
Providers will need to identify patients who may be subject to the requirement.
The rule primarily affects able-bodied adults ages 19–64 that are Medicaid beneficiaries who are not pregnant and are not enrolled in Medicare.
Providers serving large numbers of Medicaid-expansion population adults are going to be the most affected by the Interim Rule.
Providers should expect more patients who, while they might appear fully eligible from a clinical perspective, may lose coverage if they cannot satisfy or document community engagement requirements under the Interim Rule.
One of the most significant provider-facing aspects of the Interim Rule is the exemption process for individuals who are medically frail, physically or mentally unable to meet requirements, experiencing serious health conditions, or receiving certain treatment services.
The Interim Rule clarifies that "the [medically frail] exemption encompasses anyone with a serious medical condition or disability that significantly impairs their ability to live or comply with the requirements." HealthCareDive.
Although states will develop operational processes, healthcare providers will likely become a primary source of supporting medical documentation, potentially being increasingly asked to:
Complete medical certification forms
Document functional limitations
Verify disabling conditions
Confirm treatment participation
Support hardship or exemption requests
The Interim Rule clarified that, beginning in 2028, a Medicaid enrollee can self-attest that they're exempt, but only one time.
For the next eligibility check (of which states can decide on the frequency—it just must comply with OBBBA), the state will need data backing the attestation, such as evidence of a doctor's visit for a health condition.
This portion of the rule may add a layer of importance for the quality of provider documentation.
While providers document diagnoses primarily for clinical care and reimbursement, documentation may begin to influence Medicaid eligibility under this framework of the Interim Rule.
The Interim Rule could impose a requirement on providers to start describing, clearly, in a patient's record how a diagnosis or condition affects their ability to work, attend school or community engagements, volunteer, or participate in listed programs.
Revenue cycle teams will likely need to implement closer monitoring of Medicaid eligibility status before and after providing care.
CMS Administrator Dr. Oz, and the rest of the fraud, waste, and abuse team at CMS, have made it clear that this new rule for one-time self-attestation is not meant to penalize those who require help, but to show those who take advantage of self-attestation that this is no joking matter.
If states can't verify that someone is exempt from the work requirements, the state must notify and give the beneficiary 30 days to come into compliance, or they could be disenrolled.
The Interim Rule estimates that 2.3 million people will lose Medicaid coverage in 2027, with that figure rising to between 3.1 million and 3.3 million people in subsequent years.
That's roughly 15% of the Medicaid expansion population.
These numbers have a significant effect on providers because, in the words of Rep. Tina Liebling of Minnesota:
"When we kick people off of Medical Assistance, they still get sick, they still need to go to emergency rooms, they still need health care, and small [providers] end up with a lot more uncompensated care."
As we know in the industry, ambulance providers, emergency departments, and hospitals frequently care for patients regardless of their insurance status. If, and more likely when, these coverage losses occur, providers could experience:
Higher uncompensated care
More retroactive eligibility applications
Increased Medicaid reinstatement activity
Greater demand for financial assistance services
How Should States and Providers Respond?
While the Interim Rule clarifies the overall framework of the federal rule, states will need to determine the operational details of how to implement these requirements, including:
Verification methods
Forms
Exemption procedures
Reporting systems
Outreach approaches
These processes will be critical to ensuring beneficiaries are not improperly disenrolled.
As a result, providers operating in multiple states should not assume a uniform process nationwide and should closely monitor guidance from their state Medicaid agencies over the next several months.
States will also need to continue modernizing their technology infrastructure, data sharing, and verification systems to make sure these processes are smooth.
The Interim Rule coming only seven months before the work requirements are set to kick in raises questions about whether states are prepared to take on the changes in advance of the deadline.
Further, it is unclear how the Interim Rule will affect states like Nebraska, which have already implemented or plan to roll out work requirement enforcement well before the January 1 deadline.
See below for an outline of Nebraska's Medicaid Work Requirements law that went into effect May 1, 2026, along with examples of pending legislation from other states implementing the new work requirements under OBBBA.
With the likelihood of millions of individuals losing Medicaid coverage in the coming months, maintaining accurate and up-to-date billable information has become more important than ever.
Solutions Group's Payer Discovery tool and advanced scrubbing automations—including Medicaid retro-scrubbing—help providers identify active coverage, validate reimbursement opportunities, and reduce disruptions caused by coverage changes.
By equipping providers with timely, reliable billing intelligence, we help support continuity of care and minimize reimbursement challenges during this transition.
Nebraska – Medicaid Work Requirements – Effective May 1, 2026
As of May 1, 2026, able-bodied adults ages 19–64 enrolled in or applying for coverage through Nebraska's Medicaid expansion group (Heritage Health Adult) must meet Nebraska's Medicaid Work Requirements.
These adults include those meeting income limits up to 138% of the Federal Poverty Level (FPL) who are not pregnant, disabled, or enrolled in Medicare.
These individuals must complete at least 80 hours per month (or have equivalent earnings of $580 per month at the federal minimum wage, including seasonal averages) of qualifying activities such as:
Working
Attending school or an apprenticeship at least half-time
Participating in a work program
Volunteering
A combination of qualifying activities
Individuals are exempt if they:
Are under age 26 and aged out of foster care
Are members of federally recognized Native American tribes, Urban Indians, or the Indian Health Service
Are parents or caretakers of a child age 13 or younger
Are caregivers for a person with a disability
Are veterans with total disability ratings
Have medical conditions preventing work (including medically frail individuals or those receiving qualified substance use disorder treatment)
Are compliant with SNAP or TANF requirements in certain cases
Are pregnant or within 12 months postpartum
Were recently incarcerated or released
Meet other qualifying exemption criteria
Temporary hardships—such as hospitalization, nursing facility stays, travel for medical care, federal emergencies, or residence in a county with high unemployment—also qualify individuals for exemption from the work requirements.
Nebraska – Medicaid Work Requirements – Verification Process
To verify an individual meets an exemption, Nebraska's Department of Health and Human Services (DHHS) primarily uses existing data for automated verification.
If the data is insufficient, DHHS sends a notice requesting additional information through a declaration form covering volunteering, education, caregiving, medical issues, and other qualifying circumstances.
The requested information must be returned within 30 days through one of several methods, including:
Nebraska's iServe online portal
Mail
Phone
QR code
In person
For some hardships and exemptions, self-declaration or claims data may be sufficient. However, applicants and members should check their mail, email, and text messages regularly for requests from DHHS.
DHHS integrates these verification checks into the Medicaid renewal process, beginning with coverage ending on or after July 31, 2026, and phasing implementation over the following year. Existing members are subject to a 12-month look-back period, while new applicants have a shorter review period.
Non-compliance with the work requirements may result in an applicant or member losing Medicaid coverage.
Minnesota – HF4428 Pending as of April 14, 2026 – Medicaid Work Requirements
Minnesota recently proposed legislation (HF4428) specifying several ways an individual could comply with the community engagement requirements imposed by the OBBBA each month.
Qualifying activities include:
Working at least 80 hours
Completing 80 hours of community service
Participating in a work program for 80 hours
Being enrolled at least half-time in an institution of higher education or a career and technical education program
The bill also outlines exemptions similar to Nebraska's law, including:
American Indians, Alaska Natives, and California Indians
Parents, guardians, or caregivers of dependent children age 13 or younger
Caregivers of individuals with disabilities
Veterans with total disability ratings
Former foster care youth under age 26
Medically frail individuals or those with qualifying medical needs
Participants in drug or alcohol addiction treatment or rehabilitation programs
Inmates of public institutions
HF4428 also includes short-term hardship exceptions for individuals who:
Require inpatient hospital services
Need nursing facility services
Must travel for an extended period to receive medical services necessary to treat a serious or complex medical condition
Alexandra Hembrough, Esq. General Counsel, Solutions Group