One Big Beautiful Bill & Medicaid: What New York Dentists Need to Know

The One Big Beautiful Bill (OBBB) includes major reforms to the Medicaid program. While both pediatric and adult Medicaid dental benefits remain intact, their future in each state—including New York—will depend on how states respond to reduced federal Medicaid funding.

As New York prepares to make tough budget decisions, NYSDA is closely monitoring the situation and proactively engaging lawmakers to emphasize the essential role of dental care in Medicaid.

Key Takeaways

• Adult Medicaid dental benefits are not federally mandated and may be reduced or eliminated as New York and other states respond to funding shortfalls.

• Pediatric dental benefits are protected under the federally mandated EPSDT (Early and Periodic Screening, Diagnosis, and Treatment) benefit. However, reimbursement rates could still be reduced.

• All non-mandated services—including the adult dental benefit—will be re-evaluated as New York’s ability to generate revenue changes.

• Early engagement with policymakers is critical to positioning dental care as a necessary health benefit.

Medicaid Provisions in the OBBB That Affect Dental Services

• Cap on state-directed payments. (Dental schools or university-affiliated clinics affected).
  State-directed payments (SDPs) are a financing mechanism where state Medicaid agencies direct managed care organizations (MCOs) to make specific supplemental payments to providers, either to enhance quality of care or improve provider participation into the Medicaid program. OBBB placed a cap on state-directed payment reimbursements for inpatient and outpatient hospital services or qualified practitioner services at an academic medical center that are no more than Medicare base-rates or, in absence of a Medicare base-rate, the Medicaid State Plan fee (FFS reimbursement). Since dental services do not have a Medicare base-rate for direct services (only for some facility fees), states are only allowed to make state directed payments to MCOs that will reimburse for dental services up to the state Medicaid FFS amount (or 110% of this FFS amount in non-ACA expansion states). This provision is expected to take immediate effect.

• Eliminating states’ ability to create or increase new provider taxes and reducing the safe harbor for provider taxes from 6.0% to 3.5% for ACA expansion states.
  Currently, states (with the exception of Alaska) and the District of Columbia that have implemented provider taxes are mostly charging hospitals and MCOs a certain percentage of their revenues. OBBB eliminated the states’ ability to create new provider taxes, and would also reduce the safe harbor limit (currently 6.0% of revenues) for states that have adopted the ACA expansion by 0.5% annually until they are within a lower safe harbor limit of 3.5%. 22 states will experience reduced safe harbor limits for their provider taxes and will have less revenue available to fund the state portion of Medicaid funding. However, this reduced revenue will likely force states to make difficult decisions, such as reducing reimbursement rates for Medicaid dental services, reducing coverage of some procedures (e.g., dentures), or eliminating the adult Medicaid dental benefit. The first safe-harbor reduction to 5.5% will take effect on October 1, 2026.

• Cost-sharing for Medicaid beneficiaries at 100%-138% of federal poverty level will increase to $35 per visit.

  Starting October 1, 2028, Medicaid beneficiaries at 100–138% of the federal poverty level may face co-pays of up to $35 per dental visit, including preventive services. Exemptions apply to primary care, behavioral health, OB-GYN visits, FQHCs, and rural clinics.

• Community Engagement Provision or “Work Requirements” for Parents with Children over 14 years of age.
  Medicaid participants will have to work, go to school, or volunteer for 80 hours a month to continue receiving Medicaid benefits. There are exceptions within this provision for individuals who are medicallyfrail or disabled, parents for children under 13, veterans who have been deemed disabled, American Indians who are subject to the Indian Health Service Act, persons undergoing substance use treatment, and individuals who are blind. Additionally, there are many penalties for states who try to create “workarounds” for these requirements. This provision will go into effect no later than the first day of the first quarter that begins after December 31, 2026.

• Eligibility determinations every 6 months, not allowed to go onto exchange if kicked off.
  States must reverify Medicaid eligibility every 6 months. Beneficiaries removed from Medicaid will not qualify for a Special Enrollment Period to enter the health exchange. States must perform eligibility checks every 6 months on Medicaid beneficiaries. Additionally, those who are removed from Medicaid rolls are not allowed to use a Special Enrollment Period to enroll in health insurance through the individual marketplace exchanges. This provision will take effect before or on December 31, 2026.