Senate reconciliation bill advances: What happens next?

On Tuesday, July 1, the U.S. Senate passed its version of H.R. 1, the “One Big Beautiful Bill Act,” a sweeping budget reconciliation measure that includes provisions affecting Medicare physician payment, Medicaid, student loans and more. Key provisions impacting the osteopathic profession include:

Medicare physician payment: A one-year, 2.5% increase to the Medicare Physician Fee Schedule (MPFS) for services furnished between Jan. 1, 2026, and Dec. 31, 2026. This is intended to account for “exceptional circumstances” impacting physician practices. While helpful in the short term, this increase is temporary and does not address the long-term instability of the Medicare payment system.

Medicaid reforms: Proposes multiple changes to Medicaid eligibility and payment, including:

Enhanced eligibility redetermination efforts.
A revised home equity limit that could restrict eligibility for long-term care.
Cuts to state Medicaid costs and incentive FMAP funding.
Tighter rules on provider taxes and state-directed payments, potentially limiting how states support safety-net providers.
Requires community engagement (i.e., work requirements) for certain Medicaid enrollees.

Pass-through entity taxes (PTET): The bill would eliminate the federal deduction for state-level PTETs, a move strongly opposed by the AOA. This change would increase the tax burden on small, physician-owned practices, many of which operate as S corporations or partnerships, jeopardizing their financial viability and potentially reducing access to care.

Medical student loan provisions:

Imposes a cap on graduate federal loans and eliminates Graduate PLUS loans, which are critical for financing medical education.
These restrictions could severely limit access to necessary funding for osteopathic medical students, particularly those from disadvantaged backgrounds.
Limits and restructures loan forgiveness and deferment options (Subtitle C), with no enhancements to public service loan forgiveness or training-specific repayment options.

AOA remains deeply concerned that several provisions in this legislation, especially those impacting student loans, small practices and Medicaid, could negatively affect the physician workforce pipeline and patient access to care.

The bill now returns to the House of Representatives, where lawmakers must either approve the Senate’s changes or negotiate a final version through a conference committee. The AOA will continue monitoring the process and advocating to protect physicians and students from harmful provisions.