2026 Provider Payment Outlook:
Navigating Uncertainty with Clarity

Nicholas Caddell, Senior Product Manager at The SSI Group

August 21, 2025

With industry changes on the horizon, health system leaders face a volatile mix of policy change, reimbursement disruption, and shifting payer landscapes. The One Big Beautiful Bill Act (OBBBA), evolving Medicaid dynamics, and Medicare uncertainties are poised to squeeze margins, shift payer mixes, and intensify financial risk. Anticipatory, data-driven strategies are essential.

1. OBBBA Sets the Stage for Financial Volatility

The OBBBA stands to introduce over $1 trillion in federal spending cuts, profoundly affecting Medicaid and Medicare funding streams. Provisions like automatic sequestration and redetermined eligibility criteria could drastically reduce coverage and payment predictability.

• Medicaid cuts are projected at around $900 billion over ten years, disproportionately affecting vulnerable populations facing new eligibility barriers. ¹
• Medicare will face approximately $500 billion in cuts via PAYGO mechanisms in 2026, amplifying pressure across the revenue cycle. ²

Hospitals – especially rural and safety-net institutions – are already bracing for sharp declines in reimbursement and heightened financial stress. ³

2. Medicaid Expansion States: The Unenrollment Tsunami

In expansion states, a wave of Medicaid redeterminations will likely push formerly insured individuals into uninsured status, elevating uncompensated care and bad debt.

• Continued lapses in eligibility screening are expected to increase self-pay burdens – particularly risking margins in rural hospitals with high Medicaid volumes. ⁴

Effective provider outreach and payment estimation strategies will be critical to turning this challenge around.

3. Medicaid Non-Expansion States: ACA Coverage Erosion

Without Medicaid expansion, many residents rely on ACA marketplace plans – now threatened by OBBBA-linked subsidy reductions.

• Losing subsidies could push many individuals out of coverage, especially in rural and underserved areas. ⁵

The financial implications for hospitals in these areas are acute: increased uninsured rates mean reduced collections and more charity cases.

4. Medicare & MA Strategy: When 110% Isn’t Enough

OBBBA doesn’t just reduce funding – it shifts payer dynamics too. In Georgia, for example, the Disproportionate Share Hospital (DPP) program caps Medicare Advantage (MA) reimbursements at 110% of Medicare, even though Medicaid patients are paid at regular commercial rates. ^{6, 7}

In contrast, national benchmarks reveal that commercial insurers typically pay around 196% of Medicare FFS in 2025. ⁸ For hospital services specifically, this average can be closer to 246% of Medicare, making Georgia’s MA cap deep below typical market expectations. ⁹

Rough math shows that 110% of Medicare amounts to just 73% of the national commercial average, representing a 25-30% drop in revenue if providers shift from commercial to MA contracts. This squeeze could hit budgets hard, particularly if MA enrollment grows.

5. Stakes Are High Across Reimbursement Channels

These shifts – Medicaid disenrollment, shrinking ACA support, capped MA pay, and increased sequestration – combine to heighten uncertainty in provider revenue cycles.

• Medicare underpayments remain a systemic issue: AHA reports show that Medicare and Medicaid underpayments cumulatively cost hospitals approximately $130 billion annually, and millions of inpatient days continue to rely on these payers. ¹⁰
• Commercial payers remain the primary source for margin rescue – but these contracts are now more critical than ever.

Leading states and systems are preparing now, deploying advanced financial forecasting and scenario modeling to buffer against these rising risks.

Take Control with SSI: Payment Insights & PBE

In such a turbulent environment, visibility equals resilience. SSI brings two powerful tools to the fight:

Payment Insights

This AI-powered solution transforms historical claims and remittance data into forward-looking payment forecasts. With Payment Insights, your team can:

• Forecast daily payer cash flow and detect slowdowns before they disrupt operations
• Model scenario-based financial outcomes tied to OBBBA, subsidy cuts, or reimbursement caps
• Stay ahead of budget shocks with predictive foresight

Pre-Billing Eligibility (PBE) Edits

As hospitals face fluctuating payer dynamics, eligibility-related denials can cost millions annually – often from preventable slip-ups.

SSI’s Pre-Billing Eligibility Edits (PBE) act as a vital “last line of defense” before claims hit payers. By comparing claim data with 270/271 eligibility responses, PBE catches coverage mismatches early – reducing rejection risk, hardcore denials, and payment delays.

When combined with robust front-end checks, PBE offers a seamless, integrated approach that keeps reimbursement moving and prevents eligibility-related revenue leakage.

Summary

With major policy and payment changes looming there is only one assurance in the years ahead – financial turbulence. But with SSI’s Payment Insights and PBE tools at your side, you’ll be empowered to forecast, prevent, and prevail in an unpredictable market.

Request a demo today.

1. org Fact Sheet: Majority of Hospital Payments Dependent on Medicare or Medicaid. May, 2024.
2. org Fact Sheet: Majority of Hospital Payments Dependent on Medicare or Medicaid. May, 2024.
3. org Fact Sheet: Majority of Hospital Payments Dependent on Medicare or Medicaid. May, 2024.
4. Cris Villalonga-Vivoni. com Explaining Medicaid, Connecticut’s HUSKY program and what’s next. July, 2025.
5. Cris Villalonga-Vivoni. com Explaining Medicaid, Connecticut’s HUSKY program and what’s next. July, 2025.
6. com Client Alert: State-Directed Payments
   CMS Final Rule: Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality (CMS-2439-F). April, 2024.
7. Scott Hulver, Alice Burns, and Jessica Mathers. KFF.org Reconciliation Language Could Lead To Cuts in Medicaid State-Directed Payments to Hospitals and Nursing Facilities. June, 2025.
8. Spencer Marshall, Danjie Zhou, and Charlie Mills. Milliman.com Commercial reimbursement benchmarking 2025. July, 2025.
9. Briana Contreras. InsuranceNewsNet.com Some Hospitals Charge Commercial Insurers Much More Than Medicare. July, 2025.
10. org Fact Sheet: Majority of Hospital Payments Dependent on Medicare or Medicaid. May, 2024.

Get Started

Make your move toward stronger financial performance.

Contact Us