The One Big Beautiful Bill Act (OBBBA) is here—and with $911 billion in Medicaid cuts looming, you might think the name sounds more ironic than reassuring.
With rough waters and uncertainty ahead, behavioral health leaders must focus on steadying the ship, adapting, and seizing new opportunities.
In a recent episode of the No Notes podcast, host Dr. Denny Morrison sat down with Dominic Miller, LCSW, MPA, Founder and Principal of boutique consulting firm Sotoro LLC and former COO of Southwest Behavioral & Health Services, to unpack OBBBA’s impact on Medicaid, care organizations, and behavioral health providers and clients.
Missed the episode? Listen to the full conversation here.
Or, keep reading for key takeaways and practical strategies to turn OBBBA’s disruption into transformation.
What OBBBA Means for Healthcare
On July 4, 2025—a date coinciding with both America’s birthday and the month Medicaid turned 60—the President signed the One Big Beautiful Bill Act into law.
“It’s a sweeping budget law…that contains tax cuts, border security, and spending policy,” Miller explained. “The interesting thing is that although it wasn’t aimed at healthcare specifically, there’s a ton of implications for healthcare.”
According to the Congressional Budget Office’s latest projections, the bill will:
- Increase the federal deficit by $4.1 trillion,
- Cut Medicaid spending by $911 billion, and
- Result in the loss of healthcare coverage for approximately 10 million Americans.
As Miller shared, these cuts—which reduce federal Medicaid spending by about 15%—will roll out over the next decade via three primary “mechanisms”:
- Tightened eligibility criteria ($250 billion in estimated reductions),
- Additional work requirements ($320 billion in estimated reductions), and
- Caps on several state funding tools ($340 billion in estimated reductions).
While these changes will be staggered over ten years, we’ll feel the first waves almost immediately, as the bill reshapes who qualifies for Medicaid and how states can fund their programs.
Downstream Effects on Behavioral Health
For behavioral health, the stakes are especially high. Medicaid isn’t just another payer—it’s the single largest funder of behavioral health services in the US, paying for roughly a quarter of all mental health and substance use disorder (SUD) treatment.
“While the bill doesn’t aim directly at behavioral health, what we do know is that if Medicaid is reduced, the pie shrinks, [and] less funding is going to go around for us to tap into,” Miller explained.
With Medicaid dollars stretched thinner, behavioral health organizations will have to make tough decisions about resource allocation. As Dr. Morrison noted, “You can’t save enough on paper clips and copiers to make a dent.”
Instead, Miller predicts an uptick in clinician layoffs, program cuts, and merger and acquisition (M&A) activity. That said, he recommends organizations focus less on slashing costs and more on ramping up innovation and efficiency in a way that allows them to serve more people with fewer resources.
Otherwise, we could see more folks delaying treatment until they’re in crisis—leading to more expensive emergency care and worse outcomes.
As Miller warned, for SUD and high-risk behavioral health clients, even one missed therapy session or medication-assisted treatment appointment can derail recovery.
“Folks are in that level of care for a reason, and that disruption could be what makes or breaks their recovery,” Miller said. “So those [are the types of risks] we should really be thinking about and should be top of mind as it relates to how these stages of funding will be cut over the next 10 years.”
Where OBBBA Will Hit Hardest
While the policy changes will touch nearly every corner of behavioral health, some areas will feel the squeeze more than others.
Administrative Burdens
Case managers are often the ones keeping clients on track and making sure all the “i’s” are dotted and “t’s” are crossed with Medicaid paperwork. Under OBBBA’s strict eligibility requirements, that work will become even more complex.
For example, understanding the specifics of adjusted work requirements will be critical. In some cases, organizations may need to build or expand workforce development programs to help clients comply.
“Really think through if more resources should be allocated to folks or employees that are specializing in helping redeterminations and just Medicaid applications in general,” Miller advised.
While this work isn’t billable, it can help prevent clients from losing coverage—and revenue from slipping through the cracks.
Importantly, OBBBA does offer one advantage for behavioral health in particular: new, broader exemptions from work requirements for people who are “medically frail,” which includes those with serious mental illness and substance use disorders.
At-Risk Populations
Under OBBBA, rural hospitals and behavioral health organizations face unique risks. Low patient volumes and high fixed costs already make sustainability a challenge, and further cuts to Medicaid funding and disproportionate share hospital (DSH) payments could push some toward closure.
Additionally, high-need or complex Medicaid populations—like those with both intellectual developmental disabilities (IDD) and behavioral health and/or SUD diagnoses—especially if they rely on home health services—are at greater risk under the new legislation.
A Few OBBBA Bright Spots
Even in the face of so much turbulence, “It’s not all doom and gloom,” Dr. Morrison pointed out.
First, legal challenges could still alter parts of the bill.
“We recently saw some senators introduce technical legislation that would reverse some of the cuts to Medicaid, for example, that are in the current version of the bill,” Miller shared.
He went on to explain that because the bill moved forward without the usual reconciliation process between the House and Senate, the Senate’s version became law in full. That increases the likelihood of small errors or oversights surfacing later and prompting corrective follow-up legislation.
Furthermore, Miller described the phased approach of the cuts as “a win.” The changes won’t all go into effect at once, which gives behavioral health organizations time to plan ahead.
Other “bright spots” Miller highlighted include:
- Zero copays for behavioral health and SUD services,
- Broad exemptions for people deemed “medically frail” or undergoing SUD treatment, and
- The removal of a proposed ban on gender-affirming care.
Miller also emphasized that these changes open the door to greater innovation and creativity.
Where Technology Can Help
OBBBA amplifies the call for behavioral health and SUD providers to do more with less—while simultaneously adding to their administrative plate. Miller and Dr. Morrison agreed that with challenges like these, technology must be part of the solution.
Here’s how:
1. Free clinicians to focus on care.
As Miller noted, AI-powered tools like ambient scribes can save providers 7–10 minutes per note. Over time, those minutes add up.
In fact, providers who use Eleos report cutting documentation time by more than 70%, reclaiming valuable hours for client care and other critical tasks.
“These technologies really can be beneficial,” Morrison said. “And I would argue they might become crucial to successfully managing the future.”
That’s why Eleos recently launched the OBBBA AI Scanner—the first real-time tool that uses ambient AI to detect potential changes to Medicaid eligibility during client sessions.
By alerting providers to life events or status changes that could jeopardize coverage, the scanner helps safeguard treatment continuity and protect revenue at a time when every dollar—and every session—matters.
2. Protect revenue with compliance automation.
Miller emphasized that the industry has moved far beyond the “experimental” stage of AI. With these new Medicaid eligibility risks on the horizon, he urged leaders to explore emerging tech solutions now—and seriously consider automating certain processes.
Ambient scribes like Eleos Documentation are just the beginning. Truly forward-looking organizations are looking beyond AI-powered scribing tools and infusing AI technology into as many administrative areas as possible.
Take Eleos Compliance, for example. By automatically scanning 100% of clinical notes across six key domains of compliance, Eleos Compliance flags potential issues before they result in denials or clawbacks. And with fewer manual audits, quality teams can prioritize high-risk areas, provide targeted clinician training, and make proactive compliance improvements that protect revenue.
3. Support advocacy efforts with better data.
Beyond operational efficiency, Miller highlighted another benefit of tech automation: advocacy. Using AI solutions to track data points, such as save rates and cycle times, gives leaders hard numbers that tell a compelling story to lawmakers—one that connects policy decisions to real-world outcomes.
Explore how Eleos can help your organization navigate change while keeping your teams focused on care.
Proactive Preparation Without Panic
More than anything, Miller emphasized that for behavioral health leaders, OBBBA is a call to action—not a cause for alarm.
“Don’t panic, but pivot,” Miller advised.
He described OBBBA as a “forcing event”—one that will compel organizations to make critical decisions and prepare strategically for what’s ahead.
And all this planning shouldn’t happen in a vacuum. Dr. Morrison encouraged leaders to connect with their state associations, peers in other organizations, and even technology partners to see how others in the space are navigating these policy shifts.
The key is to start that outreach now—while you still have the space to weigh all your options and thoughtfully chart your path forward.
“It’s not all doom and gloom if you take the time to roadmap your strategy,” Miller said. “We have to continue our work. What we do is so important. We’re the experts in our space. And we want to make sure that we weather the storm and [are] prepared for the next one.”
OBBBA might feel like a massive dark cloud on the horizon, but even the worst storms often lead to new growth. The organizations that emerge stronger on the other side will be those that see this moment as an opportunity to future-proof their approach to operations and care delivery.
Ready to see how Eleos helps behavioral health organizations do more with less—without sacrificing care quality? Request a demo of our purpose-built AI platform now.
