States may use “state directed payments” (SDPs) to require MCOs to pay providers certain rates, make uniform rate increases, or to use certain payment methods.
A 2024 rule on access to care in Medicaid managed care codified that the upper limit for SDPs is the average commercial rate for hospitals and nursing facilities, which is generally higher than the Medicare payment ceiling used for other Medicaid fee-for-service supplemental payments.
Under H.R. 1, the total payment rate will be capped at Medicare rates for states which have expanded Medicaid under the ACA, and at 110% of Medicare rates for non-expansion states.
States with existing arrangements will have to start reducing their payment rates down 10% per year starting in 2028.
Many others, however, were scheduled to kick in starting today, January 1st, 2026.
In addition, there are other changes to the ACA which aren’t included in H.R.1 but which were instead made via regulatory changes via the so-called “Integrity Rule” put into place by RFK Jr. & Dr. Oz at the Centers for Medicare & Medicaid Services (CMS).
Here’s the changes which went into effect as of today:
(note: thanks to KFF for the quoted descriptions)
EXPIRATION OF ENHANCED ACA TAX CREDITS:
If you’ve been reading my work (or if you haven’t been in a coma, for that matter), you know what a Big F*cking Deal this is and how devastating it will be to ~24 million ACA exchange enrollees (and, indirectly, to up to 1.8 million Basic Health Plan enrollees).
I don’t need to post another lengthy description here, but it’s gonna be ugly as hell.
ELIMINATION OF FINANCIAL INCENTIVE TO ENCOURAGE NON-EXPANSION STATES TO EXPAND MEDICAID:
The American Rescue Plan Act (ARPA) added a financial incentive for states that newly adopt expansion. To date, only two states have taken up this funding (Missouri & Oklahoma). It would provide anywhere between $70 million - $5.0 billion to the remaining 10 states if they expanded Medicaid under the ACA.
Under H.R. 1, that funding is now gone (not that any of the remaining states have been tempted so far anyway).
ELIMINATION OF TAX CREDITS FOR LAWFULLY-PRESENT IMMIGRANTS UNDER 100% FPL:
Under current law, U.S. citizens and lawfully present immigrants are eligible to enroll in ACA Marketplace coverage and receive premium subsidies and cost-sharing reductions. Lawfully present immigrants with incomes under 100% of the federal poverty level (FPL) who do not qualify for Medicaid coverage due to their immigration status also are eligible for ACA Marketplace coverage.
Under H.R. 1, “lawfully present immigrants” has been reduced to LPRs/green card holders, COFA migrants, “certain immigrants from Cuba & Haiti” which means many other groups are screwed including refugees, asylees & those with TPS starting in 2027.
However, it also eliminates all federal subsidies (APTC) for “lawfully present immigrants” with incomes below 100% FPL starting January 1, 2026.
This basically means that recent documented immigrants who aren’t eligible for Medicaid because they’ve lived here for less than 5 years also aren’t eligible for ACA subsidies if they earn less than 100% FPL whether they live in an expansion state or not.
ELIMINATION OF SPECIAL ENROLLMENT PERIOD FOR ENROLLEES EARNING LESS THAN 150% FPL:
People in states that use Federally-Facilitated Marketplaces (FFM) and make no more than 150% of the federal poverty level can apply for a year-round SEP to sign up for coverage. Some state-based exchanges also offer SEPs that are based on the relationship of people’s income to the poverty line.
Nearly half of all ACA exchange enrollees on the federal exchange earned less than 150% FPL this year.
The CMS rule eliminates the < 150% FPL Special Enrollment Period.
ENROLLEES VIA NON-QLE SEPs BARRED FROM RECEIVING APTC OR CSR:
Bars any consumer who enrolls in a plan via a non-QLE SEP from receiving either premium tax credits or CSRs.
QLE = Qualifying Life Experience (ie, losing existing coverage; getting married/divorced; giving birth/adopting; getting out of prison; turning 26; etc)
SEP = Special Enrollment Period (ie, a time window during which you’re allowed to enroll in an ACA exchange plan & receive financial help if eligible outside of the official Open Enrollment Period)
Under the ACA, Native Americans and Alaska Natives are eligible to enroll via a year-round Special Enrollment Period...but, as my colleague Louise Norris noted, technically “being a Native American/Alaska Native” isn’t a Qualifying Life Experience, so it’s possible that they may not be eligible for federal subsidies if they enroll outside of the official Open Enrollment Period.
PAPI FORMULA CHANGE RESULTING IN HIGHER MOOP:
CMS is finalizing updates to the methodology for calculating the premium adjustment percentage to establish a premium growth measure that captures premium changes in both the individual and employer-sponsored insurance markets for the 2026 plan year and beyond. CMS is also finalizing the plan year 2026 maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage using the finalized premium adjustment percentage methodology.
Maximum out of Pocket (MOOP) is the maximum amount that any ACA plan enrollee has to pay in deductibles, co-pays or coinsurance combined for in-network care over the course of the year.
Via my colleague Louise Norris:
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The 2025 Maximum Out of Pocket cap: $9,200 for an individual or $18,400 for the household
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Under the old rule: 2026 MOOP would be $10,150 / $20,300 (10.3% higher)
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Under the new rule: 2026 MOOP is $10,600 / $21,200 (15.2% higher)
In other words, under the old formula the MOOP would increase by $950 or $1,900 this year, which would be bad enough...but under the new formula, it just went up by an additional $450 person / $900 per household.
ELIMINATION OF EXCESS APTC RECAPTURE LIMITS REGARDLESS OF INCOME:
Currently, if an enrollee receives excess premium tax credits because their estimated income was lower than their actual income, they must repay the excess. However, for most enrollees, there is a repayment cap that varies based on household income.
For enrollees with household incomes over 400% of the federal poverty level (FPL), there is no limit. They must repay the entirety of their excess tax credit.
Other repayment limits vary from $375 for a single person with an income that is less than 200% FPL to $3,150 for families with an income between 300%-400% FPL.
Under H.R. 1, all premium tax credit recipients will now have to repay the full amount of any excess, no matter their income.
This won’t impact enrollees who earn more than 400% FPL...but then again, they’re already about to be screwed by having all APTC subsidies eliminated anyway.
However, it’s gonna be a nasty surprise for some enrollees who earn between 100 - 400% FPL who misjudged their income & thought they’d only have to pay back a few hundred bucks only to find they have to pay back thousands of dollars to the IRS.
The only silver lining (no pun intended) here is that I’ve received reliable confirmation that this will not impact folks who receive APTC but end up earning less than 100% FPL, thank God.
There are a bunch of other provisions of either the Big Ugly Bill or the CMS “Integrity Rule” which either won’t go into effect until later this year or which have had a hold put on them by a federal judge, but all of the ones listed above are now in force.
Happy New Year, everyone.
