What OBBBA Means for Medicaid, HCBS, and Long-Term Services and Supports in 2025
The recently passed One Big Beautiful Bill Act (OBBBA) — formally H.R. 1 — ushers in the most significant shift in federal Medicaid policy in over 15 years. On July 15, ATI Advisory convened a panel of national experts to explore how OBBBA will impact Home- and Community-Based Services (HCBS), Long-Term Services and Supports (LTSS), and the broader healthcare delivery system.
Moderated by Fred Bentley, Managing Director at ATI, the session featured insights from Anne Tumlinson, Allison Rizer, and Michelle Herman Soper. The session made one thing clear: stakeholders across the Medicaid ecosystem — including states, managed care organizations (MCOs), and providers — must act now to navigate challenges and seize new opportunities to ensure Medicaid beneficiaries have access to high-quality, person-centered care. Below is a summary of the conversation, lightly edited for clarity.
Framing the Moment: A Shift in Medicaid Policy
Anne Tumlinson, Founder and CEO of ATI Advisory, opened the discussion by placing OBBBA within the broader arc of Medicaid policy evolution. Tumlinson noted that two visions of Medicaid are colliding: one that reverts Medicaid to a limited safety net for only the poorest Americans, and another that uses Medicaid expansively as a platform for health insurance coverage. With the Baby Boomer generation nearing 80, these visions of Medicaid eligibility take on new urgency.
“OBBBA reframes Medicaid’s role from a tool for expanding health coverage to a more narrowly defined safety net. That requires us to rethink how we protect and serve the people most dependent on it,” Tumlinson explained.
In light of the aging population, the implications for long-term care are profound. “Implementation and regulatory interpretation will be just as consequential as the law itself. That’s where we can still shape outcomes,” she noted.
Tumlinson urged the field to focus on innovation in value-based care, technology, and partnerships to mitigate reductions. “This is a moment to accelerate preventive care, promote community partnerships, and adopt upstream interventions that reduce the need for institutional care,” she added.
Key Provisions of OBBBA and Their Impact on Medicaid Eligibility
Allison Rizer, EVP for Payer Solutions, provided an overview of how OBBBA restructures Medicaid and LTSS delivery.
Before discussing individual provisions, Rizer emphasized how OBBBA reshapes the whole system—affecting how care is delivered, funded, and accessed across the continuum. She highlighted several major shifts in Medicaid eligibility, including:
- Tighter eligibility criteria, including potential for new functional assessments,
- Limits on retroactive coverage, and
- Reduction of home equity asset exclusions.
“These changes have operational and budgetary implications for states and families, but with careful planning, we can mitigate unintended consequences,” Rizer said.
She highlighted expanded flexibility in the 1915(c) waiver as an opportunity: “States have the potential to use waiver authority more proactively; to support individuals earlier, before they need institutional care. That could ultimately lower costs and improve outcomes.”
To address growing workforce constraints, Rizer suggested a broader role for technology and system design: “As we think about direct care workforce shortages, we need to be creative. Better use of data, virtual supports, and cross-training caregivers can all be part of the solution.”
OBBBA State-Level Impact: Rebalancing, Budget Pressures, and Aging Demographics
Fred Bentley asked Michelle Herman Soper, Managing Director at ATI, to address what’s at stake for states charged with implementing OBBBA.
Key considerations include rebalancing Medicaid spending toward HCBS, despite budgetary constraints and a rising aging population. Soper emphasized:
- HCBS Vulnerability: Mostly optional under Medicaid, HCBS are at greater risk for cuts during budget tightening.
- Cost Disproportionality: Though only 5% of enrollees use LTSS, they represent 29% of Medicaid spending.
- Historical Precedent: During the 2010–2012 fiscal crunch, nearly every state reduced HCBS spending or access.
- Eligibility Risks: States may reduce optional categories, affecting families just above SSI levels or working parents with children with disabilities.
To manage these challenges, Soper stressed the importance of preserving rebalanced systems, preparing for a rapidly aging population, and leveraging data to inform decisions. “Rebalancing has been one of Medicaid’s major policy achievements. Preserving that progress means staying laser-focused on cost-effectiveness and where dollars have the most impact,” Soper said.
She emphasized the importance of strong data analytics and collaboration: “States can’t do this alone. Having the right data, tools, and relationships — including with CMS and health plans — will be critical to navigating these choices.” She cited ATI’s Dual Eligible Data Dashboard, Near Dual Eligible Data Dashboard, and Medicaid Long-Term Services and Supports Data Dashboard.
How States Can Respond Strategically
Rizer added that states should consider program redesign, not only benefit cuts. These include:
- Expansion of managed care and investment in duals integration models,
- Adoption of value-based care (VBC) provisions in contracts, and
- Strategic use of Requests for Information (RFIs) to engage providers and plans.
“States need to be careful not to shift risk in ways that undercut provider networks or workforce capacity,” Rizer cautioned.
What OBBBA Means for Medicaid Managed Care Organizations
Rizer detailed the impact on Medicaid MCOs, which currently serve over 2 million enrollees in MLTSS, most of whom receive community-based services. Rizer noted that OBBBA could accelerate MLTSS adoption and integration opportunities, particularly if more dual eligibles qualify through a new 1915(c) pathway. She noted challenges such as:
- Financial pressures: New eligibility requirements and HCBS expansion could increase state costs and downstream pressure on MCO rate structures.
- Network disruption: Provider opt-outs, especially in behavioral health, may exacerbate existing gaps.
“Plans will need to step up with innovative partnerships, supporting redeterminations, and standing up employment and peer support programs to fill HCBS gaps,” she explained.
Rizer emphasized the opportunity for collaboration with states, “MCOs have the infrastructure and flexibility to absorb risk and deliver tailored solutions—especially when states are under fiscal pressure. Plans can build out workforce development pipelines, support employment programs, and even engage members with peer members. These strategies serve both care continuity and workforce needs.”
What OBBBA Means for Long-Term Care and HCBS Providers
Tumlinson returned to focus on providers, particularly those serving older adults and people with disabilities. She emphasized the interconnectedness of healthcare services: “Facilities like nursing homes and hospitals are protected by mandatory benefit status — but not from funding challenges. With new provider tax limits, states may struggle to maintain reimbursement levels. Providers who diversify revenue and embed value-based care into their operating models will be better positioned—not just to survive, but to lead.”
She warned of shrinking capacity if rates fall, workforce gaps widen, and administrative burdens increase — particularly for family caregivers. Tumlinson urged a forward-looking response, “Supporting caregivers doesn’t just mean avoiding losses: it means investing in tools, respite services, and streamlined eligibility so they can keep doing what they do best.”
Closing Reflections: Act Now to Shape the Future
As regulators, managed care executives, and providers absorb the nuances of the OBBBA legislation, now is the time to act to seize opportunities and mitigate emerging risks.
Bentley concluded the session with a call to action: “There’s no question that this law presents challenges, but it also opens the door to creative problem-solving. The key is to engage now before the regulations that guide how this law will work in practice are finalized.”
Tumlinson echoed this urgency: “The decisions made in 2025 will shape how care is delivered, who receives it, and how we support older adults and people with disabilities for years to come.”