Congress recently passed the “One Big Beautiful Bill Act” (OBBBA), which contains Medicaid cuts totaling $1 trillion over the next decade. Hospices are preparing for a sea of unknowns, with concerns mounting related to sustainability, referral management and health equity.

The new budget reconciliation bill is at the forefront of this second article of a three-part series examining recent regulatory changes that could significantly impact the hospice space. The first installment discussed the Wasteful and Inappropriate Service Reduction (WISeR) Model.

The legislation could lead to health care coverage instability among several different groups of underserved patient populations, according to Nancy Littlefield, president and CEO, Virginia-based Hospice of the Piedmont. Hospices need a proactive approach to understanding the biggest unmet needs that could unfold and how they can help fill these gaps, Littlefield said.

“The unknowns of the [bill] and its chaos are the true lack of clarity at both the federal and state levels of impact,” Littlefield told Hospice News. “What I’m really keeping my eye on is the impact that it will make on our underserved communities. We have to help our underserved communities to ensure that those whose safety net might be taken away have help through what could be a difficult health care crisis. The future for hospice and palliative care organizations is to keep their eye on quality, safety and making sure access is open, including for those who might have their health care change in the bill that just passed because of their ability to get consistent, reliable and supportive care — those community resources might very well go away.”

Unpacking the hospice, upstream impacts

The bill is among several federal actions to take shape under the Trump administration this year with potentially negative effects, a research analysis recently published in The Lancet Regional Health – Americas found.

White House executive orders rolled out thus far in 2025 are likely to have a range of potentially diminishing effects on health care research, clinical workforces, supply chains, as well as on Medicare and Medicaid funding, the analysis found. Recently policies could also have harmful effects on access to emergency department services and access to gender-affirming health care, according to the analysis.

The new budget reconciliation bill has several components that could have “ripple” effects for hospices and other health care providers, according to Susan Ponder-Stansel, president and CEO of the Florida-based hospice and palliative care provider Alivia Care.

The legislation did not specifically include changes to Medicare reimbursement. But its provisions to Medicaid funding and program eligibility oversight could bring financial challenges for patients with serious and terminally ill conditions, as well as for the providers who serve them, Ponder-Stansel said.

“There’s a lot of things in the bill that have to do with a more frequent need to determine and prove that a beneficiary is still eligible for Medicaid,” Ponder-Stansel told Hospice News. “Along with the budget cuts to fund Medicaid, that’s a lot of provisions that will potentially cause people to inadvertently or deliberately fall off the rolls of Medicaid. We may see a lot more uninsured patients. For hospices who accept everyone regardless of their ability to pay, that could be a real challenge. The demographic that usually needs hospice care tend to be older rural adults, dual eligibles and those on Programs of All-Inclusive Care for the Elderly (PACE)] programs.”

Medicaid dollars are allocated in different ways across each state, with certain core groups of services part of this funding pool, Ponder-Stansel explained.

Some health care services are state-mandated under Medicaid reimbursement, and hospice does not always fall within these auspices, she stated. This means that funding cuts within the new OBBA could lead to difficult decisions regarding state budget reconciliations and support for services such as hospice, according to Ponder-Stansel.

“It’s not a direct straight line of impacts around hospice that may end up being a little more difficult to deal with,” Ponder-Stansel said. “Depending on what your state budget looks like, that may mean very difficult decisions about what Medicaid will or won’t fund. Hospices have to be prepared to show their value proposition and get their data ready to show how we actually save money for Medicaid and improve outcomes. Without hospice being paid for under Medicaid, the trajectory for many people will be a lot more interaction with emergency departments, with acute care and ultimately spending a whole lot of money.”

Hospices need a clear line of sight when it comes to how Medicaid funding reductions could take effect across their geographic service regions, according to Ken Albert, president and CEO of Andwell Health Partners. The nonprofit Maine-based health system provides home health, hospice, palliative care and behavioral health, among services. Medicaid reimbursement shifts have already begun to take shape in the provider’s home state, Albert stated at the National Alliance for Care at Home’s Financial Summit in Chicago.

“On the hospice front, I would pay very close attention to what’s going to happen with Medicaid and hospice,” Albert said during the summit. “States are going to begin to insulate against the Medicaid cuts. And in the state of Maine, we already in this legislative session have seen a 23% reduction to hospice rates under Medicaid. You will see a nexus when it comes to hospice and Medicaid, that the Medicare hospice programs got to keep it strong. It’s the buttress of end-of-life care.”

The new budget reconciliation bill could also bring financial concerns for some of hospices’ most significant referral partners, said Ponder-Stansel. Hospitals and long-term care facilities in rural areas may be particularly hard-hit by Medicare reductions.

Hospitals relying on Medicaid dollars to help fuel their services could be operating at a significant financial loss as they serve a potentially higher volume of uninsured patients, she said. The trend may have some hospitals facing difficult financial decisions amid shrinking reimbursement and leave fewer health care resources available in some of the most underserved rural regions already experiencing a deficit.

Less money in the Medicaid system will mean that state-based health care spending patterns have to change. Some of the programs seeing the greatest potential for financial strain include those that provide support for dual-eligible hospice patients in skilled nursing facilities or those in home- and community-based settings, Ponder-Stansel stated.

“The big challenge is for each state to figure out where the funding cuts are going to come from and what they’ll mean for the populations who need health care, specifically those who need end-of-life or serious illness care over a longer period of time,” she told Hospice News. “That is unknowable at the moment, because each state will make very different decisions based on their budgets, and also what the hospitals will feel. Some [areas] only have one local hospital in these smaller rural regions, and they have a limited number of beds for a critical care unit. In terms of access to care, hospices are going to be needed to step in and fill that gap.”