The recently passed One Big Beautiful Bill Act (OBBBA) could have a disproportionate impact on nursing home residents eligible for both Medicare and Medicaid, often referred to as “dual eligibles.”

These residents often face fragmented care, higher costs and poor outcomes as a result of misaligned systems. While the OBBBA doesn’t target this population directly, it significantly redefines Medicaid, which will impact dual-eligibles, according to experts at ATI Advisory. Historically, states have expanded Medicaid access through the Affordable Care Act, but OBBBA diverges from that path and introduces constraints on program growth, leaders of the advisory firm said during a webinar Thursday.

Notably, dual-eligible special needs plan (D-SNP) integration efforts also could slow as a result of administrative pressures tied to the legislation. ATI experts said during the webinar that many health plans, including managed care plans, could reevaluate supplemental benefits amid budget constraints.

“Expect pressure on optional benefits which don’t have clear, proven cost effective impacts in coming years,” said Jennifer Sisto Gall, director of managed care strategy and operations for ATI Advisory. “We’re in a period of rapid change and realignment. Health plans will face tighter budgets. States will need to balance administrative complexity with growing needs. CMS will reinforce expectations around accountability, data and program integrity.”

Now is not the time for incrementalism, Sisto Gall said. It’s a time for “targeted, proven solutions that align with where policy is going, not where it’s been.”

Sisto Gall was among panelists in a webinar about the impact of the OBBBA on the dual eligible population, along with fellow ATI representatives Ali Rizer, EVP of payer solutions; Kersten Burns Lausch, practice director; and Andrew Bean, director of state program and policy.

States are navigating eligibility redeterminations and work requirements, which may in turn deprioritize dual eligible alignment efforts as a result of administrative strain, Sisto Gall added.

ATI’s strategic recommendations for operators include a focus on collaboration between health plans, providers and community organizations, while health plans support states with implementation, innovation and insight sharing.

“This is a moment of real opportunity, but also real accountability. So you need to get the timing right,” said Sisto Gall. “Care coordination across functional levels will be vital, and virtual tools that operate truly as clinical extenders, not just standalone services, will have an edge, especially when we couple that with the ability to take on risk.”

Acting with urgency

Operators should invest in infrastructure and tools that reduce churn and improve service targeting as well. Vendors, meanwhile, should offer scalable, cost-effective and policy-aligned solutions to nursing homes, demonstrating return on investment, ATI experts said.

OBBBA restricts provider taxes and reduces how states finance Medicaid, meaning states will face some hard choices about what to fund. Some may cut benefits like home and community-based services (HCBS) while others may reduce adult dental or therapy services used heavily by dual eligibles.

But, states could extend HCBS to dual-eligible older adults not yet in institutional care, like those who live in a nursing home. There’s an opportunity here for early intervention to keep dual eligible people in the community while reducing costs associated with institutional settings including nursing homes.

At the same time, work requirements in OBBBA could lead to caregivers of duals losing Medicaid, and duals in turn would love vital support. They could end up in an institutional setting anyway because of this, according to ATI.

States face tight budget and administrative capacity as it is, and OBBBA provisions will interact and compound with these challenges, the experts on the webinar said. Specifically, provider tax reductions will affect funding and service quality while retroactive coverage cuts could add strain to eligibility systems.

Retroactive coverage reductions limit retroactive Medicaid eligibility, which can harm access for dual eligibles experiencing sudden health declines, they said.

Currently, Medicaid will pay up to three months retroactive to a person applying for and becoming Medicaid eligible. The legislation reduces this timeline to two months for those that would need nursing home services.

“This matters because of how long it takes to really process eligibility paperwork,” said Burns Lausch. “This could be particularly challenging for dual eligibles with urgent needs or application delays. We could certainly see instances where there’s an increase of people who are not able to pay at the time of care or soon after, which could create complications and stress for the beneficiaries, as well as providers.”

Opportunities amid challenges

The ATI team mentioned some opportunities amid challenges associated with the OBBBA.

First, there’s a chance for operators to innovate upstream care before a dual eligible resident gets to their institutional setting. That is, if there are ancillaries or other care settings under an operator’s umbrella, they can focus on those areas, taking advantage of the 1915(c) waiver expansion within the bill.

Focus on automation within the legislation could help reduce administrative churn and improve staff retention as well.

Ultimately, it’s up to states, health plans, providers and advocacy groups to collaborate and be the safety net for dual eligibles, proactively adapting policies to maintain integration progress for this population.

Prioritizing interventions through data and engaging in managed care and provider networks as strategic partners are other ways nursing homes can be proactive considering provisions in the OBBBA.

“Health plans have a real opportunity to really help states carry some of that load,” said Burns Lausch. “There’s an opportunity to dig in as a thought partner, really being able to come with information, insights, ideas.”