President Trump delivers remarks at an event on the “One Big Beautiful Bill Act.”President Donald Trump’s sweeping tax-and-spending legislation – the “One Big Beautiful Bill Act” (OBBBA) – is now law.
The legislation has far-reaching implications not only for the federal deficit and tax policy but also for the health care sector. For ambulatory surgery centers (ASCs), it presents a mixed bag of short-term relief and long-term uncertainty.
Passed on July 3 by the narrowest of margins – a 51-50 Senate vote, with Vice President J.D. Vance breaking the tie, then a 218-214 vote in the House – the package has been billed by the White House as the “largest tax cut in American history.” Many outside of the Republican party, though, dispute that claim, with some critics warning of its potential to “wreck” the U.S. economy.
Among its provisions, the legislation extends key provisions of the 2017 Tax Cuts and Jobs Act, while also introducing new tax exemptions for overtime and tipped income.
But from a health care perspective, the biggest aspects of OBBBA include cuts to Medicaid and Medicare, along with changes to the Affordable Care Act (ACA) marketplace, with millions of Americans projected to lose coverage moving forward.
“Today’s Congressional passage of [OBBBA] paints a grim future for America’s physician practices by stripping health care coverage from millions of Americans,” Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association (MGMA), said in a July 3 statement.
Of note for ASCs, the legislation also includes a temporary payment increase under the Medicare physician fee schedule to account for “exceptional circumstances.” It additionally includes $10 billion a year through 2030 for rural hospitals and providers, which could include surgery centers.
Major cuts to Medicaid and Medicare
OBBBA includes a projected $1 trillion in Medicaid cuts over the next decade, primarily by tightening eligibility rules, adding work requirements and implementing biannual redeterminations.
Analysts estimate that nearly 12 million Americans could lose Medicaid coverage as a result. ASCs, many of which serve Medicaid populations – particularly in rural or lower-income urban markets – could see a contraction in covered patient volume.
“If Medicaid reimbursement rates are cut, ASCs serving a significant Medicaid population could see a reduction in revenue per procedure,” Grant Luke, strategic account manager at CapExpert, previously told ASC News.
For the work requirements, adults 19-64 years old without a disability will need to participate in at least 80 hours per month of qualifying activities starting Dec. 31, 2026. Enrollees will be required to affirm monthly that they are meeting these requirements.
Medicare, meanwhile, may be subject to across-the-board cuts under Pay-As-You-Go (PAYGO) rules unless Congress acts separately to waive the sequestration. Broadly, PAYGO kicks in when legislation is projected to make the federal deficit worse.
The Congressional Budget Office (CBO) estimates up to $500 billion in reductions to Medicare spending if those cuts proceed. That would likely translate into lower reimbursement rates for ASC procedures, further straining margins already under pressure from inflation and labor costs.
In the past, Congress has typically voted to waive automatic Medicare payment reductions due to sequestration under statutory PAYGO rules.
“While MGMA supports meaningful health care reform, it is not in the best interest of patients or providers to rescind coverage for 11.8 million people without providing an alternative pathway to receiving care,” Gilberg continued. “Make no mistake, these beneficiaries are not going anywhere. They will still find care in our U.S. health care system. Only now, under the OBBBA, it leaves medical groups and hospitals to pick up the enormous tab.”
Outside of Medicaid and Medicare, OBBBA also restricts premium tax credit eligibility under the ACA, limiting subsidies and narrowing special enrollment periods.
That could further reduce the number of commercially insured patients accessing non-emergent surgical care at ASCs, especially in markets where individuals purchase plans directly on the exchange.
The American Hospital Association has warned that these changes could increase uncompensated care across the health care system – an effect that would also extend to ASCs offering elective or outpatient procedures.
Updates to the physician fee schedule and rural health investments
As for positives, the bill does include a temporary 2.5% increase in the Medicare physician fee schedule for 2026.
While welcome, the hike is narrowly tailored and time-limited. What’s more, it doesn’t fully offset existing cuts to physician reimbursement.
“While we appreciate the inclusion of a one-year Medicare conversion factor increase for 2026, physician practices are still dealing with the detrimental consequences of this year’s 2.83% cut, and a future one-year adjustment fails to provide long-term financial stability for practices,” Gilberg said.
Other health care experts echoed those sentiments.
“Unfortunately, the final version of the One Big Beautiful Bill fell quite short of delivering the promise of its name on a fix for physician reimbursement,” Rachel Carey, an attorney with McDonald Hopkins LLC, wrote in a LinkedIn post. “The final only includes a 2.5% physician pay increase under the Medicare Physician Fee Schedule for 2026 and does not tie future updates to the Medicare Economic Index as originally proposed.”
During the lawmaking process, members of Congress hotly debated OBBBA’s impact on rural health care providers, many of which are already on the brink of closure. Cuts to Medicare and Medicaid – the lifeblood for many rural providers – would assuredly accelerate their collapse, some feared.
To mitigate some of those concerns, OBBBA was amended to include rural health care funding.
Specifically, the law includes $50 billion over five years for a new Rural Health Transformation Program, designed to stabilize care access in medically underserved areas. While the funding is primarily aimed at critical access hospitals and rural clinics, ASCs may be eligible for grants or infrastructure support under the program, depending on how the rules are ultimately written.
