The One Big Beautiful Bill Act: What It Means for Payers and Providers

By Michael LeVangie, Senior Vice President of Consulting at Sagility

Healthcare payers and providers face unprecedented financial pressures every day due to a combination of systemic, economic, and regulatory factors. With the passage of the One Big Beautiful Bill Act (OBBBA), economic stress will continue to grow, albeit at a more rapid pace.

Healthcare stakeholders already face declining reimbursements and rising costs. Traditional operational models and the continuing use of outdated data systems were unsustainable even before OBBBA entered the picture. Now, many health plans and providers are grappling with a critical question: how can we maintain quality of care and financial viability when the goal posts continue to move?

The answer lies in a strategic reevaluation and optimization of core operations — from eliminating data silos to enhancing operations and adding cost-effective healthcare resources. And while the changes won’t be quick or easy, payers and providers should consider OBBBA as an opportunity to jumpstart necessary tech and operational improvements.

Reimbursement Cuts and Rising Costs

Healthcare organizations are currently navigating a turbulent financial environment, intensified by OBBBA. This legislation is projected to reduce federal healthcare spending by approximately $1 trillion through 2034, primarily through major cuts to Medicaid and other programs.

Let’s explore the influence of OBBBA on providers and payers:

• • Decreased Reimbursement Rates: Providers are experiencing a reduction in the money they receive for services, affecting their ability to cover operational expenses.
    • OBBBA Impact: The Act will cut Medicaid and CHIP spending by more than $864 billion over the next 10 years. These cuts directly impact reimbursement rates for providers, particularly those heavily reliant on government programs. States, especially Medicaid expansion states, will face new restrictions on provider taxes and state-directed payments, further limiting their ability to supplement funding. Some hospitals, for example, will weather this storm better than others. “About 4 in 10 hospitals had negative operating margins, and 12% had margins below -10%, but 24% had margins at or above 10%, suggesting some will have greater capacity than others to absorb any losses,” according to KFF.
  • Escalating Medical Costs: The cost of medical care in the U.S. continues to climb. Like most things in life, a health plan’s Medical Loss Ratio (MLR) is a balancing act on the thin edge of a knife. If the MLR is too low, it can signal that a health plan is spending too much on administration or driving profit; if it’s too high, this can mean that more premium dollars are going to healthcare, sometimes to the detriment of decreasing fraud, waste, and abuse or bringing new operational systems online. Striking a balance will be more difficult under OBBBA.
    • OBBBA Impact: The OBBBA influences MLRs by increasing the uninsured population, estimated to number 9.9 million to 14.9 million by 2034. New Medicaid eligibility rules, strict work requirements, and eligibility checks every six months may decrease the number of people eligible for Managed Medicaid plans. These changes can cause MLRs to fluctuate, based on how medical expenditures align with declining premium income.

• Operational Strain: With fewer dollars available, payers and providers are struggling to maintain adequate staffing and resources for day-to-day operations. This often leads to a reactive, tactical approach supported by short-term fixes, leaving little time or resources for strategic planning or organizational transformation.
  • OBBBA Impact: The Act imposes new administrative burdens, such as more frequent eligibility redeterminations for Medicaid enrollees, as mentioned earlier, and work requirements. This increases operational complexity for Medicare Managed Care, demanding more resources — human and technological — at a time when funding is being cut.

Operational Optimization Amid OBBBA Realities

The moment to act is now. In this unique environment, operational optimization is essential for survival. The era of “doing more with less” is long gone; it is now time to fundamentally rethink how to provide services.

That means payers and providers must identify the core challenges caused by OBBBA. And address them quickly. The top operational improvement areas to consider amid OBBBA changes include:

• Call Center Efficiencies: Overcome long wait times, high call volumes, and inefficient member and patient processes with automation and AI enhancements
• Communications: Improved inbound and outbound experiences to enhance member loyalty
• Claims Operations: Our claims Claims Center of Excellence (CoE) speeds up processing of payments, benefiting both providers and members
• Staffing Shortages: Hybrid staffing models combine onshore, nearshore offshore teams. Augmenting clinical staffing includes licensed nurses and care coordinators to support payer and provider operations.
• Medical Cost Management: Optimizing utilization management and ensuring appropriate care delivery
• Strategic Outsourcing: Partnerships are a viable and attractive option to receive specialized expertise and realize efficiency gains
• Automation and AI: Using technology in administrative and some clinical processes can significantly reduce manual effort, improve accuracy, and lower costs
• Human-Plus-Technology Models: A hybrid approach that combines human expertise with technology is the most effective solution

Today Is the “New Normal”

Healthcare entities are so immersed in daily operations that implementing a broader, transformative vision can be overwhelming, especially with OBBBA changes in the queue. Nevertheless, building and implementing a strategic plan will help payers and providers find a path forward.

The “New Normal” demands a bold approach. By optimizing operations, utilizing technology, leveraging a skilled workforce, and forging strategic partnerships, payers and providers can make significant strides in these challenging times. It’s time to bring novel solutions and new perspectives to healthcare to uncover hidden inefficiencies and opportunities.

Whether you’re a payer or provider organization, this is the new reality. It’s time to make changes that have been put off for years.

These changes are no longer a matter of “if.” It’s “when.”

And “when” is now.

Looking for deeper insights?
Download our companion white papers to explore actionable strategies for both payers and providers:

[Download] The One Big Beautiful Bill Act: A Strategic Guide for Payers

[Download] The One Big Beautiful Bill Act: A Strategic Guide for Providers