The implementation of the 2025 One Big Beautiful Bill Act (OBBBA) left community clinics that rely on Medicaid patients at a critical juncture. The bill introduced new policy variables that will affect clinics unevenly across the country, with facilities in Medicaid expansion states likely to experience a more pronounced impact.
CEOs and leadership teams face significant decisions. What are the bill’s most pressing provisions? How are Medicaid expansion and non-expansion states affected differently? What operational strategies — and technologies — are available to behavioral health leaders as they navigate what’s next?
Current patients will be affected directly
A recent RAND Corporation analysis projects that state Medicaid budgets will decline by $664 billion by 2034 as a result of OBBBA provisions, with the impact varying significantly by state. Separately, the Congressional Budget Office estimates that the OBBBA will eliminate at least 10.5 million people from Medicaid and CHIP by 2034, driven by work requirements, more frequent eligibility reviews, and changes to immigrant eligibility.
For local clinics that rely on Medicaid patients — Certified Community Behavioral Health Clinics (CCBHCs), Community Mental Health Centers (CMHCs), Federally Qualified Health Centers (FQHCs), and Rural Health Clinics (RHCs) — these are not abstract projections. They represent enrolled patients and revenue that funds current operations.
The OBBBA’s Medicaid provisions are not a single policy change, but rather a sequence of deadlines that compound on each other. Understanding the timeline is essential for any planning effort.
- Six-month redeterminations: Among the most broad-reaching implications of the OBBBA: Beginning Jan. 1, 2027, states must conduct Medicaid eligibility redeterminations for ACA expansion enrollees every six months, replacing the current annual cycle.
- Work requirements: Also effective Jan. 1, 2027, able-bodied Medicaid recipients ages 19-64 in expansion states must document 80 hours per month of work, education, or community service to maintain eligibility. Qualifying activities include employment, educational enrollment, or community service, or earning at least $580 per month.
- State-directed payment caps: Beginning Jan. 1, 2028, state-directed payment (SDP) rates phase down to 100 percent of Medicare in expansion states, and 110 percent of Medicare in non-expansion states, declining at 10 percentage points per year until they reach those ceilings. For states whose current SDP rates exceed these thresholds, the reduction in federal matching funds will directly affect provider reimbursement.
- Provider tax moratorium: The OBBBA establishes a moratorium on new or increased provider taxes, and requires reductions in existing provider taxes in expansion states. This limits one of the primary mechanisms state legislatures have used to generate Medicaid revenue, constraining states’ ability to backfill lost federal funding.
Expansion vs. non-expansion states
The most important variable affecting community clinics is which state they call home. Not all states are affected by the OBBBA provisions equally. As of March 2026, 40 states and Washington D.C. have adopted Medicaid expansion. Ten states have not.
In expansion states, clinics face the full weight of OBBBA-mandated restructuring — work requirements, accelerated redeterminations, the 100 percent rate cap on Medicare State Directed Payments (SDPs), and the provider tax moratorium — all within a relatively short window.
RAND projects that work requirements alone will drive enrollment reductions exceeding 20 percent in some expansion states by 2034. For CCBHCs and CMHCs that built their operational models around serving a large Medicaid expansion population, the enrollment disruption poses a direct threat to their financial sustainability.
In non-expansion states, the OBBBA doesn’t necessarily make CCBHC leaders’ jobs easier. These states avoid the work requirements and accelerated redetermination provisions (their Medicaid populations were never expanded in the first place). They also face a more favorable 110 percent Medicare SDP rate cap.
However, non-expansion states already operate with thinner Medicaid safety nets. An estimated 2.3 million people across these states fall into the coverage gap, earning too much for traditional Medicaid but too little for marketplace subsidies. These individuals often populate community behavioral health clinics as uninsured patients, and OBBBA does nothing to close that gap. The provider tax moratorium further constrains these states’ options for generating new Medicaid revenue.
CCBHC advantages and limits
CCBHCs now operate in more than 40 states through federal demonstrations, state-established certification programs, or CCBHC-E grants. The Prospective Payment System (PPS) that underpins the CCBHC model provides a meaningful financial floor: cost-based reimbursement insulates certified clinics from the worst state payment cuts in ways that non-CCBHC providers do not enjoy. The Consolidated Appropriations Act of 2024 further strengthened this position by making the CCBHC program a permanent optional state plan benefit under Medicaid.
If the patients generating those payments unenroll, a payment floor won’t help. For CCBHCs in expansion states, enrollment churn from six-month redeterminations and work-requirement compliance is the primary threat to revenue stability — even with PPS protection in place.
For CCBHCs in non-expansion states, the challenge is different but parallel: sustaining operations with a patient population that has limited coverage options in an environment where new state revenue is harder to generate.
The Ensuring Excellence in Mental Health Act (S. 3402), a bipartisan bill introduced in December 2025, would establish CCBHCs as a permanent Medicare provider type and authorize primary care integration. Introduced in December 2025, the bill was referred to the Senate Finance Committee but has not yet advanced.
If enacted, it would open a new revenue stream and enable a whole-person care model that could meaningfully change the CCBHC value proposition. CEOs and other clinic leaders should track progress, and consider whether their billing and infrastructure is positioned to move quickly should the legislation advance.
Practical actions for the next 12 months
A challenge this structural can’t be solved with a single solution. The specifics will vary by state, payer mix, and certification status. From my experience, the clinics best positioned share a few common traits:
- They understand their exposure. Before the January 2027 deadlines arrive, leaders should have a clear picture of what their current Medicaid caseload looks like under the new rules. In expansion states, that means modeling how many patients would be affected by work requirements and how many have historically fallen off during redetermination. In non-expansion states, it means mapping the payer mix in detail and understanding how the provider tax moratorium affects state-level funding projections. These are not complex analyses, but they require intentionality — and the clinics that have done them are making better decisions.
- They treat eligibility retention as an operational function, not an administrative task. The shift to six-month redeterminations means eligibility status needs to be tracked closer to real-time. Clinics that automate eligibility verification and build proactive outreach workflows (contacting patients before a redetermination deadline, not after a coverage lapse) are seeing meaningfully better retention rates. This is an area where the right technology can make a substantial difference. The underlying discipline is operational: someone has to own it, measure it, and be accountable for results.
- They protect their workforce. Approximately 40 percent of the U.S. population lives in a designated Mental Health Care Health Professional Shortage Areas (HPSA). Rural behavioral health clinics are recruiting from an already constrained talent pool. Reimbursement pressures from OBBBA will likely thin it further. Reducing clinician administrative burden through better documentation workflows, streamlined billing systems, and smarter scheduling isn’t a technology initiative — it’s a retention strategy. Every hour a clinician spends on paperwork instead of patient care is an hour that makes them more likely to leave for a less burdened setting.
- They make decisions with data, not intuition. When margins are thin, the ability to answer basic operational questions quickly becomes the difference between proactive management and reactive crisis response. Which services generate the most revenue per clinician hour? Where no-show rates are highest and why? Which patients are at greatest risk of coverage loss? Many community behavioral health clinics lack the ability to access these metrics quickly. Building that capability does not require enterprise-scale investment, but it does require prioritization.
Looking ahead
Artificial intelligence platforms can unlock tremendous benefits for the CEOs and clinic leaders who are willing to embrace them. The range of benefits to community behavioral health clinics spans everything from cleaning up operational inefficiencies, and proactively establishing eligibility for existing patients every six months, to identifying eligible Medicaid enrollees with a disability who have not yet enrolled but could represent a future source of revenue.
The CCBHC model has always been built on the premise that community-based behavioral health care can be clinically excellent and financially sustainable. The OBBBA presents the biggest challenge to that premise yet. As an engineer with more than a decade of experience in the AI space, I see an opportunity.
For many clinics, incorporating digital tools to expedite essential processes is overdue. Long intake processes acting as a major barrier to care. Staffing shortages often force clinicians to step in, pulling them away from billable care.
“When people find out how long the process takes to get to a provider who can help them,” one rural CCBHC executive director said, “they often lose interest or just disappear.”
Now is not the time to panic. The OBBBA presents novel challenges, but the clinics that approach the next 12 months with an emphasis on data-driven analysis, operational discipline, and a willingness to adapt will be better positioned to continue serving the communities that depend on them.
About Loren Larsen
Loren Larsen is the CEO and co-founder of Videra Health, the leading AI-driven mental health assessment platform, and is a pioneer in leveraging video and artificial intelligence to assess and measure mental health. He is skilled in developing technologies that can analyze human emotion and language with astonishing accuracy, which has positioned him as a vanguard in applying AI to empathetic healthcare solutions. Prior to Videra, Larsen was the CTO of HireVue, a trailblazing video job interviewing platform with advanced machine learning algorithms. He also co-founded Nomi Health, a direct healthcare company striving to innovate within the healthcare service and technology space.
