Health system sees early OBBBA benefits, coming challenges

A seven-state health system has garnered federal rural funding under the 2025 federal healthcare overhaul, even as it prepares for adverse impacts next year.

Nick Olson, executive vice president, CFO and treasurer of Sanford Health, said the health system has garnered $36 million in Rural Health Transformation Program (RHTP) funding to use as startup capital for various rural healthcare access initiatives.

“The opportunity is to make investments we otherwise may not have the margin to make without the program, to demonstrate the clinical, operational and financial case for new approaches and again to build a path to sustain them long after the funding ends,” Olson said in an interview.

Olson said the awards stemmed from about $100 million in RHTP grants for which the health system applied across the seven states in which it operates. Under provisions of the One Big Beautiful Bill Act (OBBBA), states decide how to distribute the $50 billion the law provided for rural healthcare improvements.

“Ultimately the measure of success won’t be how much funding we receive,” Olson said. “It will be whether we use this opportunity to build sustainable models that improve access for rural America, strengthen the workforce in rural America and deliver better outcomes — all while doing so in a financially sustainable way long after the funding ends.”

View on OBBBA

Olson said his fundamental view of OBBBA has not changed in the year since it was enacted and regulators have started to issue its implementation rules.

“The legislation continues to represent a significant change in the healthcare financing environment, particularly for Medicaid,” Olson said.

Although he is still awaiting some important implementation details, “what really has become clearer over the last year is the scale of the operational challenge,” he said.

His focus is to improve access and affordability.

“Consistent with past approaches that we’ve taken and will continue to take is that we’re not just sitting on our heels waiting for these headwinds to hit us,” he said.

One of Sanford’s responses to the law was the launch of its patient access transformation initiative, which aims to change how patients find, access, prepare for and schedule their care across Stanford Health.

“The goal for us is to reduce the friction for those patients, improve the experience for both them and our employees and, quite frankly, to help lower costs and create a more consistent approach across our system,” Olson said.

Uncompensated care

A common concern of health systems is that they could face an increase in uncompensated care in 2027 due to OBBBA provisions.

Sanford Health has projected a $30 million to $50 million annual increase in uncompensated care from both OBBBA provisions and the early 2026 expiration of COVID-era subsidies for the ACA marketplace.

Already, enrollment in the Sanford Health Plan has decreased 10% to 15% from a year ago. Healthier enrollees were the most likely to leave their ACA plans. Its Security Health Plan in Wisconsin lost about 20% to 25% of enrollees since last year.

“That matters because as the individual market gets smaller and the remaining population becomes higher risk, there are implications obviously for our health plan but also for providers like Sanford Health because people are ultimately becoming uninsured or they’re delaying their care altogether,” Olson said.

Their preparation for uncompensated care increases includes improving their ability to help patients access the coverage and financial assistance available. Additionally, Sanford aims to continue transforming its care delivery to improve outcomes and affordability over the long term.

New Medicaid requirements

The health system is preparing for the 2027 launch of both more frequent Medicaid eligibility determination (every six months) and work requirements for the Medicaid expansion population.

The greater patient connectivity ability expected from Sanford’s patient-access initiative also could help its patients meet both types of new Medicaid requirements, Olson said.

“We think that this is going to help ensure that Medicaid patients can retain their coverage by having a more interconnected experience with us, the health system,” he said.

State variation

Since OBBBA gives states some latitude in how its various provisions are implemented, Sanford Health is working with other provider organizations, hospital associations, regulators and political leaders on what those will look like.

“From our perspective, the strongest approaches will make requirements clear and administratively simple, hopefully using existing data wherever possible and minimizing unnecessary coverage disruptions for those patients who have been and should continue to be eligible patients,” Olson said.

State variation in OBBBA implementation also could affect the health system in other ways. For example, 40% of the patients served by its medical center in Fargo, North Dakota live in Minnesota.

“So, we are really focusing on consistency so that the same patient doesn’t get caught up in state-by-state nuances,” he said.

Based on OBBBA requirements that Medicaid expansion patients work, volunteer or go to school for 80 hours each month, Sanford’s priority is ensuring that patients who qualify for an exemption are identified accurately and can maintain their coverage.

For instance, federal regulators have not defined “medically frail,” which would exempt enrollees from work requirements.

“Depending on how states implement the exemption, physicians may need to apply their own clinical judgment within different state requirements to help some of our most vulnerable patients continue to retain that coverage.” Olson said.

States continue to prepare for the six-month redetermination, which begins in 2027, and Sanford also is preparing to help with that. For instance, the health system has started to screen every newly pregnant patient to ensure that they have current coverage and to identify Medicaid patients who may need to complete a redetermination before delivery.

The health system has hired financial advocates who work one-on-one with patients, particularly the uninsured or underinsured, to explore coverage options and help them determine their eligibility for public programs.

“And if they aren’t eligible for those programs are they eligible for our financial assistance charity care policy?” Olson said. “At the end of the day, if a patient needs care, they’re going to receive that care; they don’t want to have the added burden of trying to figure out what kind of insurance coverage they have.”