Budget Legislation Passed by House Includes Impacts on HME
Last week, the House of Representatives narrowly approved H.R. 1, the “One Big Beautiful Bill Act” containing major tax and spending initiatives championed by the Trump Administration.
According to Congressional Budget Office scoring, provisions including work or school requirements for Medicaid enrollees could result in 7.6 million individuals losing coverage and more than $600 billion in decreased spending in the program over the next ten years. The bill sets a deadline of December 31, 2026, for all states to begin verifying work or exemption status at the time of both enrollment and eligibility renewal.
The legislation also mandates the use of artificial intelligence tools to identify and recoup improper payments in Medicare parts A and B, setting a January 1, 2027, implementation deadline. The bill directs HHS to produce an annual report on the success of the new AI tools, including detailing reasons for “failure” in the event their adoption does not achieve a 50% decrease in the improper payment rate. The bill allocates $25 million from hospital and supplementary insurance funds for FY 2025 to begin the AI effort.
The new bill could also result in a 4% cut to Medicare reimbursement rates across the full spectrum of healthcare providers automatically triggered by legislation that causes significant debt increases – these are commonly known as PAYGO cuts, referring to the Pay-As-You-Go Act of 2010 that created them. Congress could choose to block implementation of the PAYGO cuts, as it has done in the past, but that would include meeting a statutory requirement for a 60-vote threshold in the Senate. Congress could take that action any time before the end of 2025 to prevent those cuts from beginning in CY 2026.
However, prospects for the Medicaid-related provisions in the legislation remain very fluid as some Republican Senators have voiced concerns over the potential impacts on Medicare beneficiaries in their states.
AAHomecare will continue to evaluate the current 1,116-page bill and developments that could affect the HME community as it is considered by the Senate.
Visit our AAHomecare Advocacy & Policy page to learn more about key issues affecting the HME industry.