New York’s Hospital Survival Guide: Navigating the OBBB Medicaid Reforms

The One Big Beautiful Bill Act (OBBB), signed into law on July 4, 2025, is projected to fundamentally restructure Medicaid in the state of New York. Changes to eligibility, funding and operations are expected to reverberate throughout the state’s health system, impacting providers and patients alike. 

New York’s state government is working to soften the blow through administrative upgrades and potential state-only funding, but the scale of the federal cuts and operational mandates leaves the state with limited options and a daunting path forward. For the sake of hospital profitability and public health, providers must plan now to cope with near-future changes.

Key Changes and Deadlines

The following key changes are expected to impact New York’s Medicaid system, prompting higher disenrollments and increased uncompensated care statewide.

Work Requirements

Under the OBBB, non-disabled adults ages 19–64 must complete 80 hours/month of work, education or volunteering to retain Medicaid. States must be ready to verify this requirement by the end of 2026.

Exemptions exist, but due to this provision alone, New York estimates 1.2-1.5 million people (more than half its non-disabled adult Medicaid population) could lose coverage, primarily from administrative hurdles and confusion around compliance.

Specific changes and expectations surrounding work requirements include:

• Automated, Data-First Verification: New York will use electronic data from wage reporting, public benefit, and education systems to verify compliance at application and every six months at renewal. The state is not imposing an additional look-back period beyond federal requirements. 
• Self-Reporting: If no data match is found, about 5–10% of enrollees are expected to need to provide manual documentation of their work status.
• No Waiver for Stricter Look-Back: New York is not seeking a waiver to implement a longer or more frequent look-back period. Instead, its approach is to comply with the federal minimum of verification at application and renewal, using automated systems wherever possible. 
• System Modernization: The state is updating the NY State of Health and eMedNY systems to streamline the reporting process, aiming to minimize unnecessary disenrollment due to administrative hurdles. 

Cost-Sharing

New mandatory co-pays (up to $35 per service) and optional premiums for some enrollees will increase out-of-pocket costs. These costs are expected to drive up uncompensated care and prompt more people to forgo needed services.

Mandatory co-pays for non-exempt adults begin January 1, 2026. Prices are set at: 

• $10 minimum for non-emergency ER visits 
• $4 for brand-name drugs with generics available 
• $75 per inpatient stay 
• $5 per outpatient visit 

Eligibility Redeterminations

Redeterminations will now occur every six months (instead of annually), increasing the risk of coverage loss due to paperwork lapses or missed deadlines. 

Provider Tax Caps

The OBBB limits the amount states can use provider taxes to fund Medicaid, cutting off a major revenue source for New York’s Medicaid program. States may charge monthly premiums (capped at 2% of income) for enrollees between 100%–138% of the Federal Poverty Level, with disenrollment for non-payment allowed starting in 2027. Children, pregnant individuals, Native Americans and those in institutional care remain exempt from most co-pays. 

Immigrant Coverage Restrictions

The law restricts eligibility for many immigrants, shifting costs to the state. A five-year waiting period for green card holders is enforced, and federal funds cannot be used for undocumented immigrants. New York plans to use state funds to continue coverage for some undocumented groups, but the cost to the state to shift coverage away from federal funding is estimated at $2.7 billion.

Anticipated Impacts of the OBBB

The changes discussed above are expected to shake things up in New York, impacting both patients and providers. Early analyses anticipate the following:

Coverage and Access 

Massive disenrollment is anticipated, especially among low-income, working-age adults and immigrants. Without ACA tax credits, commercial insurance may become unaffordable. An estimated 224,000 are projected to become uninsured. Additionally, an estimated 506,000 people will shift from the Essential Plan to Medicaid (funded by the state).

Health System and Economic Fallout 

Hospitals and health systems face deep funding cuts, with safety-net and rural hospitals at the highest risk of closure or service reduction. Community health centers and EMS will see reduced funding and increased demand from uninsured patients, straining already limited resources. Counties, too, may face higher costs if the state ultimately shifts more Medicaid expenses to local governments 

Special Populations Coverage

New restrictions mean many lawfully present immigrants and all undocumented individuals lose federal support, with the state constitutionally required to fund some coverage using state-only dollars. Disabled and chronically ill populations face service reductions and increased administrative hurdles, threatening their continuity of care for high-need populations.

New York State-level Response

Governor Kathy Hochul has strongly opposed the bill, citing consequences for patients, providers, and the broader economy. The state is working to mitigate negative impacts by updating systems and considering supplemental benefit programs. 

Meanwhile, hospitals are already responding: Some have begun layoffs and service cuts in anticipation of funding reductions.

Next Steps for Providers

With uncertainty on the horizon, New York providers need more than just a wait-and-see approach. They need systems that allow them to track Medicaid eligibility changes in real time and respond quickly when a patient loses (or regains) coverage.

Medicaid roster monitoring tools are critical as new eligibility rules come into play under the One Big Beautiful Bill. Instead of reacting to coverage gaps after the fact, providers can use real-time data to intervene early, closing gaps and keeping the revenue cycle moving.

Medicaid Roster Monitoring for Providers

Office Ally’s Insurance Discovery solution includes robust Medicaid roster monitoring capabilities. The tool scans for both active and retroactive coverage, flags updates to eligibility and identifies changes in plan type. This allows providers to stay ahead of coverage changes and capture more billable opportunities.

The OBBB’s Medicaid overhaul will cause over a million New Yorkers to lose coverage, slash federal funding by billions and force the state to either absorb massive new costs or allow further coverage erosion. Hospitals, clinics and local governments face financial and operational stress, with ripple effects on jobs, economic activity and public health. 

While New York is working to soften the blow through administrative upgrades and potential state-only funding, the scale of the federal cuts and operational mandates leaves the state with limited options. It’s best for providers to take matters into their own hands and plan for success ahead of the 2026 compliance deadline. 

Take control of eligibility tracking now: Learn more about Office Ally’s Medicaid roster monitoring solutions.