Programming note: There will be no Digest next Monday, July 14^th. We will return the following Monday, July 21^st.

ONE BIG BEAUTIFUL BILL SUMMARY:

With the President signing the Reconciliation bill on Friday, the “One Big Beautiful Bill” is now law. It’s an extremely comprehensive makeover of the tax code. The Congressional resource page for the bill is here. For those so inclined, the full text of the 870-page bill can be found here (PDF). For a general guide to all healthcare related provisions, KFF has an excellent summary. The NY Times has a general timeline for when all the different cuts will go into effect. While a full breakdown of the bill is beyond the scope of the Digest, I’ve summarized a few of the provisions that I think will be of particular interest to our readers:

• • Provider Taxes (Section 71115): The final version of provider tax cuts followed the Senate framework. SNF’s are excluded from the cuts, while hospitals in expansion states will start to have a phasedown from whatever their current number is all the way down to a max 3.5%, at the rate of 0.5% a year, starting in 2028. The major concern for us is the potential halo effect the cuts will have on state Medicaid budgets as they lose millions in federal funding for hospitals.

• • Medicaid Eligibility Verification (Section 71107): States will be required to verify eligibility of individuals that are part of the expansion population every six months. The concern is that once a state is implementing eligibility redeterminations for this segment of the population, they may choose to do so for the entire Medicaid population.

• • Minimum Staffing Rule (Section 71111): Delays the implementation of the minimum staffing rule for 10 years (through September 2034). While the rule is mostly dead legally, this provision just continues the rule’s slow demise.

• • Retroactive Medicaid Eligibility (Section 71112): Changes retro eligibility for Medicaid applications to 60 days, down from the current 90 days. On a practical level, it will be critical for providers to make sure they’ve put into place appropriate safeguards to ensure timely processing of applications.

• • Rural Health Transformation Program (Section 71401): Recognizing that the provider tax cuts can hit rural health care providers particularly hard, the Senate created a new $50 billion fund to help offset the costs of the cuts. Importantly, the language does NOT exclude specific provider types and, in theory, while carved out of the provider tax cuts, SNF’s in rural areas may still be eligible to participate in the program. Ultimately, it will be up to CMS to put in the language for how the program will be administered.

• • State & Local Tax Deductions (Section 70120): Following an intense push by blue state Republicans, State & Local tax deductions were raised for a five-year period to $40,000 (depending on income).

• • School Choice Tax Credit (Section 70411): For the first time, a new tax credit was created for those contributing to scholarship granting organizations of up $1,700. This can be a huge help to parents who send their children to private schools. A good summary of the program is here (PDF).

• • One provision that didn’t make it into the final bill was the 10-year moratorium on state regulation of AI.

• • There are quite a few other changes to the expansion population, state-directed payments, and other general tax payments, but as those are broader in nature, I didn’t focus on them. Ultimately, following the passage of Reconciliation, you’d rather be a SNF than any other type of healthcare provider, including a hospital, but there’s plenty of work to be done in the coming years.

WHITE HOUSE:

The White House focused this week on deregulating the permitting process for energy projects, the national parks, foreign relations with regards to Cuba & Syria and highlighting the more than sixty groups that have signed the pledge to invest in youth AI education.

CONGRESS:

And that’s a wrap! After months of back and forth, all-nighters in the Senate and the House, and the usual fold by the House Freedom Caucus and the rest of the GOP, Reconciliation bill finally passed Congress this week. A messy process from the beginning, the bill’s passage highlights something that has become clear in the current Presidential era: the GOP will do everything in their power to align precisely with the President’s vision for the party. It also showcased Speaker Mike Johnson’s ability to navigate the unruly GOP caucus with its competing moderate and conservative factions. For all intents and purposes, Congress has essentially cleaned the slate for the summer. When they come back to session on July 14^th, the conversations regarding the next fiscal year’s government funding will start, but with that deadline not coming till the end of September, there are few major pieces of legislation that need to be passed until then.

Elsewhere in the political world:

• • The President did a lot of work behind the scenes to get the bill over the finish line, although GOP leadership played their part. Dr. Oz also got involved, although it’s not clear that his engagement moved the needle.

• • The Reconciliation process highlighted another concern for the political world: moderates are fleeing Congress as the process become ever more partisan.

• • Just how crazy were the all-nighters and drafting process? No one knew how some provisions made it into draft versions of the bill, while handwritten changes made on the Senate floor might actually incentivize states to game the system.

• • Both parties, of course, are already gearing up for the messaging battle surround the Big, Beautiful Bill,

• • A group of bipartisan lawmakers introduced, again, a bill to ease the 3-day stay rules.

• • One interesting CRS report from the week: a guide to the AI arms race going on between US companies and those based in China.

AGENCIES:

CMS released the 2026 proposed payment rule for Home Health. The full rule can be accessed at the Federal Register, where comments can be submitted through September 2^nd.

CMS also released the 2026 ESRD proposed payment rule. The full rule can be accessed at the Federal Register, where comments can be submitted through September 2^nd.

CMS updated their guide for PBJ submissions. It’s available here (PDF).

This may be of interest only to the research folks, but the NIH’s new policy that all taxpayer funded research should be available to all went into effect on July 1^st.

FROM THE NOTEBOOK:

• • Recognizing the changes coming down the pike with Reconciliation, especially related to the federal match, Wisconsin rushed to get their budget bill signed, as both Republicans and Democrats worked together to make it happen. The state’s budget page is here and the full budget can be found here (PDF).

• • Ohio also got their budget done, although the Governor did choose to do quite a few line-item vetoes. The full list of line-item vetoes is here (PDF). The press release on the budget is here and the full budget is here (PDF).

• • New Jersey passed their budget, largely along party lines, with some helpful provisions. As it’s Governor Murphy’s final budget, no one is happy with it. The official Governor’s announcement is here, the central resource page is here, and the full budget is here (PDF).

• • As we mentioned above, one major halo effect of Reconciliation is their impact on state budgets. For now, Governors remain mostly quiet on how they plan on dealing with it.

• • Several states are exploring a new way to fight the federal government funding freezes: withholding the funds they’re supposed to send the feds.

• • OptumRX is continuing its efforts to rein in prior authorization requirements, announcing an additional 60 medications that will no longer require a prior authorization.

• • Axios has a guide on where minimum wage increases went into effect across the country on July 1^st.