On July 4th, President Trump signed the so-called One Big Beautiful Bill Act (OBBBA) into law, enacting a series of harmful attacks on Medicaid and health care access generally. This is the first in a series of NHeLP blogs that will delve into how this new law will harm access to sexual and reproductive health. It will focus on the provision (Sec. 71113) that targets abortion providers that serve Medicaid patients, which has colloquially been referred to as the abortion provider “defund” provision.
This provision designates a certain type of abortion provider as a “prohibited entity” and forbids them from receiving any payments from the state Medicaid agency that include federal funding for a one year period starting on July 4th (the date of enactment). Medicaid is a state-federal partnership, where states agree to provide mandatory benefits and obey federal requirements and in exchange, the federal government reimburses states for a percentage of their Medicaid costs.
The law outlines four criteria a provider must meet to be considered a “prohibited entity”:
- is a tax-exempt 501(c)(3) organization.
- is an essential community provider that is primarily engaged in providing family planning services, reproductive health, and related medical care.
- provides abortions beyond the narrow exceptions allowed under the Hyde Amendment, which mandates coverage for abortions sought in cases of rape, incest, and life endangerment.
- received more than $800,000 total in federal and state expenditures under the Medicaid program in fiscal year 2023 (Note: this should not include payments for state funded abortions provided to Medicaid enrollees, as these are legally distinct and not considered Medicaid payments).
The law also defines the “entity” in “prohibited entity” to include “its affiliates, subsidiaries, successors, and clinics.” This language is clearly intended to target Planned Parenthood as a whole, including affiliates that do not provide abortion services. However, the broad language and criteria for “prohibited entities” implicates some independent abortion providers as well. It is important to note that a provider must meet ALL of these criteria to be subject to the “defund” provision, which means many abortion providers likely do NOT meet the standard.
The prohibition on receiving federal funding under Medicaid is effective immediately, however, the assessment of which providers are “prohibited entities” will not occur until October 1st. This places providers in the uncomfortable position of having to assess whether or not they believe they are a prohibited entity when the Centers for Medicare and Medicaid Services (CMS) has not yet interpreted or implemented the broad language in OBBBA. If providers determine they do not qualify but CMS reaches a different conclusion in October, those providers could be forced to pay back all the money they received for services rendered after July 4th or even face false claims charges. The confusion is the point – this provision is intended to create a chilling effect and induce providers to pre-comply and stop offering abortion services.
This provision is already being challenged in the courts, as Planned Parenthood Federation of America (PPFA) and Maine Family Planning (MFP) have separately filed lawsuits. Additionally, a coalition of 22 attorneys general and the state of Pennsylvania filed a suit challenging the defund provision as unconstitutional. A federal judge issued a preliminary injunction (PI) in the PPFA case, providing temporary relief to Planned Parenthood health centers by blocking implementation of the “defund” provision. This injunction only provides relief to Planned Parenthood health centers and as of publication, there has been no ruling in the other cases.
In response to the passage of OBBBA and the ongoing litigation, some state Medicaid agencies have released guidance to providers that are likely to be implicated, either instructing those providers to hold their claims or providing clarity on which claims can continue to be submitted. Medi-Cal, the Medicaid program in California, issued guidance clarifying how different providers should approach billing. For providers that are likely to be “prohibited entities” and do not have relief under ongoing litigation, Medi-Cal instructs those providers to hold all claims for services rendered on or after July 4, 2025 until the department can make necessary system edits, at which point those providers can resume submitting state-funded abortion claims only. Providers that have obtained relief under the current preliminary injunction can continue to submit claims for all covered services (until the litigation status changes).
It is simply unsustainable for providers to indefinitely continue to treat Medicaid patients without pay, which means they’ll be forced to stop seeing Medicaid patients or potentially close entirely. Patients will bear the brunt of this provision, as they will either be forced to pay out of pocket if no abortion providers remain in Medicaid or will face long delays (and potentially long travel distances) in order to obtain care at the few Medicaid abortion providers that remain. If abortion providers are forced to close their doors, it will irreparably harm access to reproductive health care in rural areas, medically underserved areas, and areas facing provider shortages. This affects much more than just abortion access, as these health centers are often the only affordable provider with expertise in the full spectrum of sexual and reproductive health care services.
As we turn toward implementation of this provision, many outstanding questions arise about how CMS will approach implementation and enforcement. The National Health Law Program will continue to fight for enrollees’ right to access the full spectrum of sexual and reproductive health care, including abortion. If you have questions or need technical assistance, please reach out to Cat Duffy ([email protected]).
