After weeks of committee meetings, negotiations with Republican holdouts, and finalizing legislative text, the U.S. House of Representatives passed the “One Big Beautiful Bill Act” (H.R. 1) on May 22 by a vote of 215 to 214. The sweeping tax and spending package cuts taxes, provides additional funding to the military and immigration enforcement, but reduces spending on healthcare (especially Medicaid), nutrition, education, and clean energy programs. According to estimates by the Congressional Budget Office (CBO), the bill would add more than $2 trillion to the U.S. national debt over the next 10 years.
Here are the main provisions that AAO-HNS is tracking.
Medicare Physician Payment Update
At the request of the GOP House Doctors Caucus and with the support of Republican leaders in the House and on the Energy and Commerce Committee, an additional $9 billion investment was made to increase future Medicare physician payments by introducing an ongoing, inflation-based adjustment to the payment baseline.
Under current law, starting in 2026, there will be two different conversion factors (CFs). There will be a lower rate for those in fee-for-service and a higher rate for those participating in Advanced Alternative Payment Models. If H.R. 1 is enacted, there would be a single CF that will equal 75% of annual inflation based on the Medicare Economic Index (MEI), followed by 10% of MEI in each subsequent year.
However, H.R. 1 does not reverse the payment cut that took effect on January 1, 2025, nor will it fully restore rates to prior levels until at least 2027.
While this is not the comprehensive Medicare payment reform AAO-HNS has been seeking, the bill’s introduction of an annual, inflationary update represents a meaningful first step toward long-term modifications the Academy wants to establish that will ensure financial stability and predictability for Medicare providers.
Medicaid Eligibility and Financing
H.R. 1 includes strict new work requirements for childless adults without disabilities to remain Medicaid eligible. These individuals would have to document 80 hours per month of work, education, or service (or otherwise prove they qualify for an exemption). The new rules must be implemented by the end of 2026, though states could adopt them earlier.
Additional provisions include:
- Mandatory co-payments for a wide range of services for Medicaid adults above the poverty line.
- A 10% reduction in Medicaid funding to states that use their own tax revenues to provide health coverage to undocumented immigrants.
- Prohibition on new or increased provider taxes.
CBO projected that more than seven million Americans could become uninsured by the end of the decade, although this estimate may shift due to last-minute legislative changes. AAO-HNS will continue monitoring these estimates as the legislation makes its way through the legislative process.
Federal Student Loans
H.R. 1 significantly alters how federal student loans are awarded and repaid:
- Loan calculations would be based on the median cost of all similar programs, rather than the actual cost to attend the specific school (median cost methodology remains unclear).
- Undergraduate loans capped at $50,000; professional program loans (including medical school) capped at $150,000 beginning July 2026.
- Eliminates Federal Direct PLUS Loans for graduate students and parents starting July 2026.
- Replaces existing repayment options with a fixed standard plan or a new income-based Repayment Assistance Plan (RAP).
H.R. 1 does include a modified version of the Academy supported “Resident Deferred Interest (REDI) Act,” allowing deferment of loan repayment with no interest accrual for up to four years during residency. However, given the duration of training for otolaryngologist-head and neck surgeons, AAO-HNS continues to advocate for interest deferment throughout the full duration of residency.
AAO-HNS and other physician specialty organizations expressed strong concerns in a letter to Speaker of the House Mike Johnson (R-LA) and House Minority Leader Hakeem Jeffries (D-NY) about the potential consequences of these changes.
SALT Deduction and Pass-Through Entity Taxes
The bill makes changes to the tax code that could impact physician-owned private practices. It would:
- Increase the itemized deduction for state and local income taxes (SALT) from $10,000 to $40,000.
- Eliminate the ability of specified service trades or businesses (SSTBs), like physician practices, to use the pass-through entity tax (PTET) structure.
This change creates an additional federal tax disadvantage for small physician-owned practices compared to corporations, which retain deductibility, and could increase the federal tax burden on these practices making it harder for them to sustain independent operations.
AAO-HNS and its coalition partners raised concerns in a letter to House leadership prior to the bill’s passage, and we will continue to advocate for the inclusion of all pass-through entities in the deduction framework.
What Now?
H.R. 1 must still be considered by the U.S. Senate, where further changes and amendments are expected. Any revisions would require a second vote in the House before the bill could be sent to the president.
Bottom Line
This is the first step in a long, legislative process. The AAO-HNS federal advocacy team in Washington, D.C., supported by our grassroots advocacy network, will continue working— individually and with coalition partners—to push for improvements to H.R. 1. Our goal remains to ensure current and future otolaryngologist-head and neck surgeons can choose how they practice while providing the highest quality of care to patients.
If you want to stay informed of the latest updates on this legislation and what the Academy is doing to advocate on your behalf, sign up for the ENT Advocacy Network! You will receive the latest updates on federal and state priorities and be given opportunities to make your voice heard.
