The Rising Tide: Preparing Your Medical Practice for an Era of Increased Uncompensated Care

This article is written for:

Physician-owners, practice administrators, and healthcare executives who operate independent or group medical practices and want to understand how recent federal policy changes will affect their patient volumes, payer mix, and financial stability.

This article answers the question:

How will the coverage losses set in motion by the One Big Beautiful Bill Act of 2025 affect medical practices, and what concrete financial and operational steps should practice owners take right now to protect their revenue?

This article is relevant because:

Millions of Americans are projected to lose Medicaid or ACA marketplace coverage over the next several years as new work requirements, eligibility redeterminations, and subsidy changes take effect. For medical practices that serve working-and middle-income populations, the resulting rise in uncompensated care is not a distant hypothetical. It is already beginning, and the practices best positioned to absorb it are the ones doing the financial planning today.

The New Patient Landscape

Picture a mid-sized primary care group operating in one of Kentucky's regional markets. The practice has run profitably for years, built on a stable mix of Medicaid, Medicare, and commercial insurance. Over the first half of 2026, something shifts. The front desk begins seeing more patients arriving with lapsed Medicaid cards. A handful of longtime patients have lost their ACA marketplace coverage and are asking about payment plans. Self-pay encounters, never a large percentage of the schedule, are trending upward in a way that does not feel random. No single day feels alarming, but the direction is unmistakable.

This is not a local anomaly. It is a predictable and already-unfolding consequence of the most consequential federal healthcare legislation enacted in a generation. The One Big Beautiful Bill Act, signed into law on July 4, 2025, set in motion a series of coverage disruptions that will play out across Medicaid and the ACA marketplace over the next several years. For medical practices that serve broad community populations, the financial implications are serious, and the window for proactive preparation is narrowing.

Uncompensated care is not, fundamentally, a charity issue. It is a cash flow issue. It is a payer-mix issue. It is a working capital issue. And every medical practice in Kentucky should be running the numbers right now rather than waiting to feel the impact on the monthly close.

Section 1: Understanding the Coverage Erosion

Before a practice can build a financial response, it needs to understand the mechanics of what is happening. The coverage losses now underway are not the result of a single policy change. They are the cumulative effect of several simultaneous shifts, each affecting a different population of patients who may currently be sitting in your waiting room.

Medicaid Enrollment Disruptions

The OBBBA introduces new "community engagement" requirements that will require certain Medicaid enrollees to document at least 80 hours per month of qualifying activities, including work, education, job training, or volunteer service. These requirements take effect in December 2026, and states must implement systems to verify compliance on a monthly basis. Enrollees who do not satisfy the requirement, or who fail to submit the required documentation, lose coverage.

Equally consequential is the change to redetermination schedules. For Medicaid expansion enrollees, the OBBBA shortens the eligibility review cycle from annually to every six months. This effectively doubles the administrative touchpoints at which coverage can lapse, not because the enrollee is ineligible, but because they failed to return paperwork on time, missed a notice sent to an outdated address, or did not understand what was being asked of them.

Historical experience is instructive here. When Arkansas implemented a similar work reporting requirement, thousands of enrollees lost coverage within the first six months despite being fully eligible. The losses were driven not by non-compliance but by documentation failures. Researchers who studied the program found no meaningful change in employment rates among those who lost coverage, but a significant and immediate reduction in access to care. Kentucky practices with high Medicaid volumes should treat this precedent as a preview, not a worst case.

ACA Marketplace Instability

The enhanced premium tax credits that were introduced under the 2021 American Rescue Plan Act expired at the end of 2025. These credits had substantially reduced the cost of marketplace coverage for millions of enrollees, particularly those earning between 100% and 400% of the federal poverty level, and had drawn a significant number of previously uninsured individuals into the covered marketplace. With the enhanced subsidies gone, premiums for many enrollees have risen sharply, and some are finding that coverage is no longer financially sustainable.

Compounding this pressure, the OBBBA eliminated the repayment caps that previously protected lower-income marketplace enrollees from having to return premium tax credits if their annual income came in higher than projected. Under the prior structure, a patient who underestimated their income and received more in advance credits than they were entitled to faced a capped repayment amount. That protection is now gone. Enrollees who encounter an unexpected income bump during the year may owe substantial amounts when they file, creating financial stress that makes them less likely to maintain coverage the following year.

The Aggregate Projection

The Congressional Budget Office has estimated that the OBBBA's healthcare provisions, taken together, will result in approximately ten million Americans losing health insurance coverage by 2034. That long-term projection can obscure the nearer-term reality: the coverage losses are not spread evenly over a decade. Many of the most significant implementation milestones cluster in 2026 and 2027, meaning the patient-facing impact will be felt well ahead of the CBO's ten-year horizon.

For practices in Kentucky, where Medicaid covers a substantial share of the population and where many counties have limited commercial insurance penetration, the exposure is above the national average. That is not a reason for alarm. It is a reason for preparation.

Section 2: Diagnosing Your Practice's Exposure

Strategic response begins with honest assessment. Before a practice can decide what to do, it needs to know precisely where it stands. The following four-step diagnostic is designed to give practice owners and their financial advisors a clear picture of their current vulnerability and their capacity to absorb change.

1. Step 1. Audit your current payer mix with specificity. Pull the past twelve months of adjudicated claim data and categorize collected revenue by payer: Medicare, Medicaid (noting expansion versus traditional enrollees where your system allows), commercial insurance broken out by carrier, and self-pay or uninsured. The aggregate Medicaid percentage matters, but the expansion Medicaid percentage matters more, because expansion enrollees are the population most directly affected by the new work requirements and accelerated redetermination cycles. Any practice where Medicaid and self-pay together represent more than 30% of revenue should treat this as a high-exposure scenario requiring immediate action.
2. Step 2. Assess your current self-pay collection performance. What does your practice actually collect from self-pay patients, expressed as a percentage of charges? Most practices without a structured financial counseling process collect between ten and thirty cents on the dollar from uninsured patients. The gap between your charge amount and your actual collection rate on self-pay encounters represents the upper bound of financial exposure if Medicaid patients begin converting to uninsured status without your practice having a system to manage them. If that number is uncomfortably large, the operational changes in Section 3 are your priority.
3. Step 3. Stress-test your revenue assumptions using two scenarios. In the first, model a 10% reduction in insured patient encounters as coverage lapses occur across your panel. In the second, model a 20% reduction. For each scenario, calculate the impact on monthly cash collections, then determine how many months of current operating expenses your available cash and accessible credit could sustain. If the answer is fewer than three months in either scenario, that gap is the single most urgent financial risk facing your practice, more urgent than any efficiency initiative or technology investment you may be considering.
4. Step 4. Identify high-risk patient segments within your active panel. Work with your billing and scheduling teams to flag patients who are enrolled in Medicaid expansion, who hold ACA marketplace plans with subsidy levels that may no longer be adequate, or who have recently experienced the kind of income disruption, job change, or housing instability that correlates with coverage lapses. Proactive outreach to these patients, connecting them with enrollment assistance resources before they lose coverage, is simultaneously a patient retention strategy, a care continuity strategy, and a financial protection measure.

This diagnostic process is not a one-time exercise. Practices that build it into their quarterly financial review cycle will be better positioned to detect trends early and adjust before they become crises.

Section 3: Building the Operational Response

With a clear picture of the exposure, the operational response can be organized around three parallel workstreams. These are not sequential. They should be pursued simultaneously, because each addresses a different dimension of the financial risk.

Financial Infrastructure

The most immediate priority for most practices will be strengthening the financial cushion that allows them to weather short-term revenue disruption without operational compromise. This means addressing several structural gaps that many profitable practices have allowed to persist precisely because they have never needed them.

• Establish a formal financial counseling process at the point of scheduling or registration. Every uninsured or self-pay patient should have a brief, structured conversation with a trained staff member before their appointment, not after. The conversation should assess eligibility for state programs, premium assistance options, practice payment plans, or hospital charity care where applicable. Practices that wait until a claim fails to collect and then pursue the patient retroactively collect a fraction of what they could recover through proactive engagement.
• Review and formalize your sliding-scale fee policy. If your practice does not have one, this is the moment to build it. A transparent, documented sliding-scale policy creates a structured, legally defensible pathway for patients who cannot pay the standard rate, and it signals to your team that these situations are handled by a process rather than ad hoc negotiation at the front desk.
• Open or increase a revolving line of credit with your banking partner. Access to liquidity is not a sign of financial distress; it is a sign of financial sophistication. A practice with a $250,000 line of credit that it uses sparingly, or never, is far more stable than one that waits until a difficult month to begin a borrowing conversation. Lines of credit are infinitely easier to establish from a position of financial health than from one of need.
• Review your operating reserve levels with your accountant or CFO. The widely cited benchmark for a financially healthy medical practice is 60 to 90 days of operating expenses held in accessible, liquid accounts. Many practices are materially below this threshold, having reinvested available cash into equipment, compensation, or facility improvements. Rebuilding reserves, even modestly, over the next two to three quarters is a concrete risk mitigation strategy.
• Accelerate the claims submission cycle. Every day between the date of service and the date of claim submission is a day of free financing extended to the payer. Practices with average claim submission lags above 48 hours have room to improve, and the financial impact compounds across thousands of encounters annually.
• Audit your denial management process with specificity. What percentage of denied claims is your practice successfully appealing and recovering? What is your average time-to-resolution on denials? Practices that allow denials to age past 60 days without action are, for practical purposes, writing off revenue they have already earned. If denial follow-up is inconsistent or under-resourced, this is a high-return area for investment in staff training or outsourced revenue cycle support.
• Review and update your fee schedules. Many practices have not conducted a systematic fee schedule review in several years, resulting in charge amounts that sit below what contracted payers would actually reimburse. An outdated fee schedule is a structural drag on every insured claim submitted. Even a modest correction, applied across a high-volume practice, can represent tens of thousands of dollars annually in recovered revenue.
• Scrutinize prior authorization workflows. CMS strengthened Medicare Advantage prior authorization protections effective January 1, 2026, including tighter rules on denials and a clearer appeals process. Practices that have historically allowed prior authorization failures to result in uncollected revenue without a systematic appeal process are leaving recoverable money behind.
• Conduct a credentialing audit to confirm that your practice is appropriately enrolled with all commercial payers active in your geographic market. Practices in Kentucky's regional and rural markets are sometimes under-credentialed relative to the commercial payers that cover their potential patient population, leaving volume on the table that would otherwise offset Medicaid exposure.
• Evaluate whether value-based care contracts are available and appropriate for your specialty and patient population. Medicare Shared Savings Program participation, Medicare Advantage value-based arrangements, and similar models can provide revenue that is partially insulated from individual coverage changes, because payment is based on attributed population performance rather than individual encounter reimbursement.
• Consider whether supplemental revenue streams, such as chronic care management billing, remote patient monitoring, or expanded ancillary services, could contribute meaningfully to the revenue base without requiring proportional increases in clinical volume. These services are frequently under-utilized by practices that have the infrastructure to provide them.

Revenue Cycle Improvements

In an environment of margin compression, the speed and efficiency with which a practice collects what it is owed on insured encounters matters more than at any point in recent memory. Uncompensated care is, to a meaningful degree, a problem that can be partially offset by recovering more of the revenue that is already being earned.

Payer Diversification

A practice that depends heavily on one or two payers for the majority of its revenue faces concentrated exposure that is independent of the Medicaid question. Diversification is a sound principle in any financial environment, and the current environment makes it urgent for practices that have allowed payer concentration to develop.

Section 4: The Bigger Strategic Question

The practices that will manage this period most successfully are not simply the ones that execute the operational checklist above. They are the ones that use this moment to examine the longer-term positioning of their practices and make deliberate choices about what kind of organization they want to be. The coverage disruptions now underway will favor certain practice models and challenge others. Understanding which side of that divide your practice is currently on, and whether you want to change it, is the most important strategic question of the next 18 months.

Two genuine paths are available, and each involves real trade-offs that deserve honest consideration.

The Consolidation and Commercial Focus Path

Some practices will choose to tighten their payer mix deliberately, reducing or eliminating Medicaid participation where it is economically unsustainable, and concentrating clinical capacity on higher-reimbursing commercial and Medicare patients. This path maximizes near-term financial stability and simplifies revenue cycle operations. It is a rational response to the economics of the current moment, and many well-managed practices will choose it.

The trade-offs are real, however, and they should be evaluated honestly. Reducing Medicaid participation in markets where commercial alternatives are limited may mean effectively excluding a significant portion of the community from access to the practice. For practices that have positioned themselves as community anchors, the reputational implications of this shift can be lasting, and the competitive implications in markets where health systems actively recruit the Medicaid population are worth modeling.

The Community Anchoring with Financial Discipline Path

Other practices will choose to maintain a broad payer mix while building the financial infrastructure to absorb higher uncompensated care loads without compromising the health of the organization. This path is more demanding operationally, but it is achievable for practices that are willing to invest in the revenue cycle capabilities and financial reserves described in Section 3.

Practices that pursue this path successfully also tend to pursue complementary structural strategies: formal Federally Qualified Health Center designation or look-alike status, which carries enhanced Medicaid reimbursement; Rural Health Clinic certification, which provides cost-based reimbursement for eligible practices; or participation in the CMS Access to Care model, which launched in late 2025 and provides alternative payment structures for chronic condition management. Each of these pathways has its own eligibility requirements and administrative demands, but for practices serving the patient populations most affected by the OBBBA coverage changes, they represent a legitimate financial offset that deserves serious evaluation.

Making the Choice Deliberately

Neither path is inherently correct, and the right answer will differ based on geography, specialty, patient mix, and the long-term goals of the physician-owners involved. What is not acceptable is drifting into one path by default because the practice never stopped to examine the choice. The practices that suffer most in coverage-disruption environments are typically the ones that neither consolidated their payer mix nor built the financial infrastructure to handle a broader one. They are caught in the middle: too financially exposed to absorb the losses, and too slow to restructure to avoid them.

Closing: The Accountant's Role in Building a Resilient Practice

The financial picture facing medical practices in 2026 and beyond is complex. Payer mix modeling, revenue cycle benchmarking, reserve analysis, entity structure review, and evaluation of alternative payment models all require the kind of analytical depth and healthcare-specific experience that most practice administrators are not positioned to bring on their own.

Baldwin CPAs has specialized expertise with medical practices and healthcare organizations across Kentucky. The practices that are best positioned right now are the ones that have already completed the diagnostic in Section 2, already know their self-pay collection rate and days in accounts receivable, and are already in active conversations about their payer mix strategy. The practices that will struggle are the ones that wait for the numbers to look bad before treating the situation as urgent.