OBBBA Medicaid Cliff: Preparing for Rising Self-Pay- Millennia

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How the OBBBA Will Reshape Patient Payments

The One Big Beautiful Bill Act (OBBBA) is a landmark piece of legislation poised to significantly reshape healthcare delivery in the United States. Signed into law in 2025, the OBBBA is expected to result in substantial Medicaid disenrollments, with many patients transitioning from Medicaid to self-pay status. This shift is anticipated to create significant challenges for healthcare providers, health systems, and patients alike, impacting both care access and financial stability. As patients move away from Medicaid coverage, healthcare providers must prepare for the ensuing disruptions, adopting new strategies to safeguard their financial performance while maintaining patient access to care. This post will explore the challenges caused by the OBBBA, how it affects patients and healthcare providers, and how Millennia can support the healthcare ecosystem during this transition.

The Problem: Medicaid Disenrollment and the Rise of Self-Pay

The OBBBA introduces several provisions that tighten Medicaid eligibility and enrollment requirements. The most notable of these include increased work requirements for able-bodied adults, more frequent eligibility checks, and stricter documentation and verification processes. As a result, many individuals who rely on Medicaid for coverage may no longer meet the eligibility requirements and will transition to self-pay status starting in 2027.

For healthcare providers, this change presents a significant financial challenge. Medicaid typically reimburses at a rate of approximately 15.4%, which is already lower than private insurance. By contrast, the self-pay rate stands at around 6.1%, significantly reducing the likelihood of successful collections. As more patients shift from Medicaid to self-pay, hospitals and other providers will see a rise in uncompensated care, leading to revenue losses and potential margin compression. Furthermore, the complexity of dealing with self-pay accounts—often uncollectible—can strain already stretched financial and administrative systems.

The Impact on Patients: Increased Barriers to Care

Patients will be directly impacted by the OBBBA’s provisions, particularly those who transition from Medicaid to self-pay. Losing Medicaid coverage means losing access to essential healthcare services at a time when many patients are already financially vulnerable. With the added burden of healthcare costs that they may not be able to pay, these patients will face significant barriers to care, potentially delaying or foregoing necessary treatments and medications.

Moreover, the administrative complexity of navigating the new Medicaid enrollment and verification processes will be a challenge for many individuals. Patients who struggle to meet the new work requirements or who are caught in the administrative gaps of frequent eligibility checks may find themselves uninsured, leading to gaps in care and potentially worse health outcomes.

The Impact on Healthcare Providers: Financial and Operational Strain

Healthcare providers are on the front lines of this transition, and the shift from Medicaid to self-pay has both financial and operational implications. From a financial standpoint, the loss of Medicaid reimbursement can destabilize the revenue cycle. Providers will need to develop strategies to handle an influx of self-pay patients while ensuring that they continue to meet the needs of their existing Medicaid and private insurance populations.

In addition to the financial strain, healthcare organizations will face increased administrative complexity as they adapt to the new OBBBA rules. This includes more frequent eligibility checks, the verification of patients’ work and income status, and the handling of an increased volume of self-pay accounts. For health systems, the potential for more unpaid medical bills creates a scenario where revenue cycle management (RCM) teams must work harder and smarter to maintain financial sustainability.

How Healthcare Providers Can Prepare for the Changes

Given the financial and operational challenges posed by the OBBBA, it is crucial for healthcare providers to take proactive steps to prepare for the changes. Here are a few strategies that can help mitigate the impact of Medicaid disenrollment and the increase in self-pay patients:

Strengthen Revenue Cycle Management (RCM): Providers should focus on fortifying front-end processes to ensure that Medicaid eligibility is verified in real-time. This will help identify coverage gaps early, reducing the number of patients who unknowingly fall into the self-pay category. Additionally, updating billing systems to accommodate the shift to self-pay patients and automating charity care screening processes will help providers better manage the financial burden.
Offer Flexible Payment Options: Establishing formal self-pay policies, including offering interest-free payment plans, short-to-mid-term payment options, or long-term loans with trusted financial partners, can help make payments more manageable for patients. This can lead to improved collection rates while maintaining financial flexibility for patients.
Prioritize Price Transparency: Providing patients with accurate, real-time cost estimates for their services helps ensure they understand their financial responsibility upfront. This transparency not only fosters trust but also helps patients plan their payments, reducing confusion and frustration later in the process.
Leverage Technology and Automation: Utilizing AI and automation in RCM processes can streamline operations, improve claim accuracy, and reduce the need for manual intervention. These tools can also help manage high call volumes, track financial performance in real-time, and improve overall operational efficiency.
Engage and Educate Patients Early: Healthcare providers can work proactively by educating at-risk patient populations about their coverage options before disruptions occur. This can include providing resources on ACA marketplace plans or other insurance alternatives for those who lose Medicaid coverage.
Rethink Payer Mix Assumptions: Healthcare providers should reevaluate their budgeting and forecasting models to better reflect the expected shift in payer mix. This will help organizations plan for a greater volume of self-pay patients and anticipate revenue losses.

How Millennia Can Assist Healthcare Providers

As health systems and providers navigate the complexities of the OBBBA, Millennia can offer a range of solutions to help mitigate the financial and operational challenges associated with this transition. Millennia specializes in revenue cycle management (RCM) and patient engagement strategies that can help healthcare organizations improve financial sustainability while maintaining a patient-first approach.

Millennia’s technology-driven RCM solutions can streamline processes, automate eligibility verification, and enhance billing accuracy, reducing the administrative burden associated with self-pay accounts. In addition, Millennia’s patient engagement tools enable proactive education and support, ensuring that patients are aware of their coverage options and payment responsibilities before disruptions occur.

Furthermore, Millennia can help healthcare providers implement flexible payment solutions. These solutions not only improve collection rates for self-pay accounts but also help providers maintain strong relationships with patients during challenging times.

In conclusion, the OBBBA represents a significant shift in healthcare policy that will have far-reaching implications for both patients and healthcare providers. By preparing for these changes through strategic financial planning, enhanced patient engagement, and operational adjustments, health systems can weather the storm of Medicaid disenrollment. Millennia’s expertise and solutions can help guide healthcare providers through this transition, ensuring that they continue to deliver high-quality care while maintaining financial sustainability.

Frequently Asked Questions:

1. What is the One Big Beautiful Bill Act (OBBBA)?

The One Big Beautiful Bill Act (OBBBA) is a federal law signed in 2025 that introduces new Medicaid eligibility and enrollment requirements. These changes are expected to increase Medicaid disenrollment and shift more patients into uninsured or self-pay status over the next several years.

2. How will the OBBBA affect Medicaid coverage?

The OBBBA tightens Medicaid eligibility through measures such as work requirements, more frequent eligibility redeterminations, stricter verification rules, and reduced retroactive coverage. As a result, many individuals who previously qualified for Medicaid may lose coverage or experience gaps.

3. When will Medicaid disenrollments related to the OBBBA begin?

While the law is already in effect, major coverage changes—such as work requirements for Medicaid expansion populations—are expected to begin in 2027, with earlier impacts from eligibility checks and documentation requirements occurring sooner.

4. What happens to patients who lose Medicaid coverage?

Patients who lose Medicaid coverage often become uninsured or self-pay. This increases their financial responsibility for care and may lead to delayed treatment, medical debt, or avoidance of care altogether if affordable payment options are not available.

5. How does the shift from Medicaid to self-pay impact healthcare providers?

Medicaid typically reimburses providers at higher rates than self-pay collections. When patients shift to self-pay, providers often see lower collection rates, higher bad debt, and increased uncompensated care, placing pressure on operating margins and revenue cycle performance.

6. How can health systems prepare for increased self-pay volume?

Health systems can prepare by strengthening front-end eligibility verification, improving price transparency, automating financial assistance screening, offering flexible payment plans, and modernizing revenue cycle operations with digital and AI-enabled tools.

7. Why is early patient engagement critical during Medicaid disenrollment?

Early engagement helps patients understand coverage changes, explore alternative insurance options, and prepare financially before care is delivered. Proactive communication reduces confusion, improves payment outcomes, and supports better patient experiences.

8. How can Millennia help providers manage Medicaid disenrollment and self-pay growth?

Millennia helps healthcare organizations navigate Medicaid-to-self-pay transitions through patient-friendly payment solutions, digital engagement tools, and revenue cycle optimization strategies that improve collections while maintaining compassion and access to care.