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| New bill will restrict states ability to tax and in order to pay their share of medicade. It will limit SDP and Reduces retroactive eligibility from 90 to 30 days.
The following is a more detailed analysis showing how these actions of budget bill will have a detrimental effect on nursing homes
The 2025 federal budget reconciliation bill, the "One Big Beautiful Bill Act" (H.R. 1), includes several provisions that impact Medicaid reimbursement for nursing homes, contributing to the overall $793 billion to $1 trillion in Medicaid spending cuts over 10 years. These changes do not directly adjust nursing home reimbursement rates but indirectly reduce funding through restrictions on state financing mechanisms and eligibility rules, which could lead to lower payments, reduced services, or facility closures. Below is a detailed explanation based on available information:
### Key Provisions Affecting Medicaid Reimbursement for Nursing Homes
1. **Restrictions on Provider Taxes**:
- **Provision**: The bill imposes a moratorium on new or increased provider taxes and reduces existing taxes in states that have adopted the ACA Medicaid expansion. Provider taxes, levied on nursing homes and other healthcare providers, are a critical mechanism states use to fund their Medicaid programs, with federal matching funds.[](https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/)
- **Impact**: The Congressional Budget Office (CBO) estimates this restriction will save $191 billion (Senate bill) or $89 billion (House bill) over 10 years by limiting states' ability to generate revenue for Medicaid. Nursing homes, which rely heavily on these taxes for reimbursement, could face reduced payments.[](https://www.cnbc.com/2025/07/01/how-trump-bill-medicaid-cuts-will-impact-us-health-care.html)
- **Consequence for Nursing Homes**: A study cited by the American Health Care Association (AHCA) indicates that a 77% reduction in Medicaid funding could force 27% of U.S. nursing homes to close, with 55% reducing their Medicaid census. In states like Illinois, Ohio, and California, where nursing homes are heavily reliant on provider tax revenue, closures are particularly likely.[](https://skillednursingnews.com/2025/06/where-to-apply-pain-nursing-homes-warn-of-closures-revenue-loss-as-gop-budget-bill-nears-final-vote/)
- **Example**: In Ohio, provider taxes generate over $6 billion biennially for Medicaid, with 40% supporting non-hospital services like nursing homes. Restrictions could lead to rate cuts or reduced access to care.[](https://skillednursingnews.com/2025/06/where-to-apply-pain-nursing-homes-warn-of-closures-revenue-loss-as-gop-budget-bill-nears-final-vote/)
2. **Limits on State-Directed Payments (SDPs)**:
- **Provision**: The bill revises payment limits for SDPs, which states use to direct Medicaid funds to specific providers, including nursing homes. Payments for non-expansion states that later expand are capped at 100% of Medicare rates, reducing federal funding. This is estimated to save $149 billion (Senate) or $72 billion (House) over 10 years.[](https://www.hcinnovationgroup.com/policy-value-based-care/article/55292192/house-passes-budget-bill-with-huge-medicaid-cuts-and-potential-medicare-fallout)
- **Impact**: SDPs account for over 20% of managed Medicaid spending, and capping their growth could restrict reimbursement increases for nursing homes, especially in states with high Medicaid populations. While existing programs are unaffected in the near term, long-term reimbursement growth will be limited, increasing uncompensated care costs.[](https://www.hcinnovationgroup.com/policy-value-based-care/article/55292192/house-passes-budget-bill-with-huge-medicaid-cuts-and-potential-medicare-fallout)
- **Consequence for Nursing Homes**: Reduced SDP funding could force nursing homes to absorb more costs for Medicaid residents, who comprise over 60% of residents nationally, potentially leading to service reductions or closures, especially in urban areas like Illinois, Texas, and California.[](https://skillednursingnews.com/2025/06/where-to-apply-pain-nursing-homes-warn-of-closures-revenue-loss-as-gop-budget-bill-nears-final-vote/)[](https://www.pbs.org/newshour/nation/what-republicans-possible-medicaid-cuts-could-mean-for-nursing-homes)
3. **Reduction in Retroactive Medicaid Eligibility**:
- **Provision**: The bill reduces retroactive Medicaid eligibility from 90 days to 30 days for nursing home residents. Under current law, Medicaid covers qualified expenses incurred up to 90 days before application, protecting residents and facilities from unpaid bills during the application process.[](https://www.maynardnexsen.com/publication-nursing-home-operators-wary-of-steep-medicaid-cuts-as-one-big-beautiful-bill-moves-to-senate)
- **Impact**: This change could result in nursing homes rejecting "Medicaid pending" residents due to financial risks, as families may struggle to cover costs incurred before approval. The CBO estimates this provision will reduce federal spending by $195 million over 10 years.[](https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/)
- **Consequence for Nursing Homes**: Facilities may face increased financial strain, particularly those with high Medicaid populations (over 85% of residents in some cases). An AHCA survey suggests 55% of providers would reduce Medicaid admissions, exacerbating access issues.[](https://www.maynardnexsen.com/publication-nursing-home-operators-wary-of-steep-medicaid-cuts-as-one-big-beautiful-bill-moves-to-senate)
4. **Repeal of Nursing Home Staffing and Payment Transparency Rules**:
- **Provision**: The bill blocks implementation of a May 2024 CMS rule (effective until January 1, 2035) that mandates minimum staffing levels in nursing homes and requires reporting on the percentage of Medicaid payments spent on direct care worker compensation. This repeal is estimated to save $121 billion over 10 years.[](https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/)[](https://www.cbpp.org/research/federal-budget/2025-budget-impacts-house-bill-would-cut-assistance-and-raise-costs-for)
- **Impact**: While nursing homes celebrate the moratorium on staffing mandates due to cost concerns, the repeal also eliminates transparency requirements that could have ensured adequate funding for direct care staff. This could indirectly affect reimbursement by allowing facilities to allocate less to wages, potentially lowering care quality without federal oversight.[](https://www.maynardnexsen.com/publication-nursing-home-operators-wary-of-steep-medicaid-cuts-as-one-big-beautiful-bill-moves-to-senate)
- **Consequence for Nursing Homes**: The lack of staffing mandates may reduce operational costs, but reduced Medicaid funding could still force facilities to cut staff or services, especially in high-risk facilities (579 identified with over 85% Medicaid residents, low occupancy, and poor quality ratings).[](https://skillednursingnews.com/2025/06/where-to-apply-pain-nursing-homes-warn-of-closures-revenue-loss-as-gop-budget-bill-nears-final-vote/)
5. **Eligibility Restrictions for Long-Term Care**:
- **Provision**: The bill caps home equity limits for Medicaid eligibility for nursing home care and other long-term services at $1 million (down from $730,000 or $1,097,000, adjusted for inflation, in 2025). States can no longer apply disregards to raise this limit, affecting 12 states with higher caps, such as California.[](https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/)
- **Impact**: This restriction, saving $195 million over 10 years, could limit eligibility for nursing home care, reducing the number of Medicaid-covered residents and thus facility revenue.[](https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/)
- **Consequence for Nursing Homes**: Fewer eligible residents could decrease Medicaid reimbursement, forcing facilities to rely on private-pay patients or face financial losses, potentially leading to closures.[](https://www.pbs.org/newshour/nation/what-republicans-possible-medicaid-cuts-could-mean-for-nursing-homes)
### Estimated Financial Impact
- **Total Medicaid Cuts**: The bill cuts federal Medicaid spending by $793 billion (House) to $1 trillion (Senate) over 10 years, with nursing homes significantly affected as Medicaid covers over 60% of residents and 70% of home- and community-based services (HCBS).[](https://www.medicarerights.org/medicare-watch/2025/05/22/broken-promises-republicans-budget-reconciliation-bill-would-cut-medicare)[](https://www.cnbc.com/2025/07/01/how-trump-bill-medicaid-cuts-will-impact-us-health-care.html)
- **Provider Tax and SDP Cuts**: These alone account for $375 billion in combined savings ($191 billion from provider taxes, $149 billion from SDPs in the Senate bill), directly reducing funds available for nursing home reimbursements.[](https://www.cnbc.com/2025/07/01/how-trump-bill-medicaid-cuts-will-impact-us-health-care.html)
- **Closure Risks**: A Brown University study identifies 579 nursing homes at high risk of closure due to high Medicaid reliance, low occupancy, and poor quality ratings, particularly in states like Illinois, Texas, and Ohio.[](https://skillednursingnews.com/2025/06/where-to-apply-pain-nursing-homes-warn-of-closures-revenue-loss-as-gop-budget-bill-nears-final-vote/)
- **State-Level Impact**: States may respond by lowering reimbursement rates, cutting optional services (e.g., therapy or social services), or restricting eligibility, further reducing nursing home revenue. For example, Ohio’s Medicaid program could face significant cuts if provider tax revenue is limited.[](https://skillednursingnews.com/2025/06/where-to-apply-pain-nursing-homes-warn-of-closures-revenue-loss-as-gop-budget-bill-nears-final-vote/)[](https://www.pbs.org/newshour/nation/what-republicans-possible-medicaid-cuts-could-mean-for-nursing-homes)
### Broader Consequences
- **Access to Care**: With Medicaid funding over 60% of nursing home residents, cuts could lead to reduced services, staff layoffs, or facility closures, particularly in rural and urban underserved areas. The CBO estimates 5.2 million adults could lose Medicaid coverage due to work requirements, indirectly reducing nursing home admissions.[](https://www.cbpp.org/research/federal-budget/2025-budget-impacts-house-bill-would-cut-assistance-and-raise-costs-for)
- **Financial Strain**: Nursing homes operate on thin margins, and Medicaid often pays less than the cost of care. Further reductions in reimbursement could exacerbate this, with experts warning of a “two-tiered system” where low-income residents receive worse care.[](https://www.pbs.org/newshour/nation/what-republicans-possible-medicaid-cuts-could-mean-for-nursing-homes)
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Trump speech in Iowa
