The Financial Squeeze: What FQHCs & Community Healthcare Centers Need to Know About the One Big Beautiful Bill and CMS Cuts

There’s a lot of info out there about the One Big Beautiful Bill (OBBB) and its impact on Community Healthcare and Federally Qualified Health Centers (FQHCs) have never had an easy job. I put together my thoughts on what’s happening and how we at FrontRunnerHC can help. As we continue to learn more, this will be an ongoing conversation. Please comment with questions or additional ideas.  

Community and FQHCs have never had an easy job.

They’re performing critical work as the safety net for patients who might otherwise go without care. And they do it while juggling razor-thin budgets, high demand, and constant change.

Now, with the U.S. government’s One Big Beautiful Bill (OBBB), also called the Budget Reconciliation Act of 2025, paired with looming Medicare and Medicaid cuts, the financial pressure has only intensified. Every dollar matters more than ever.

Before diving into the impact of the OBBB, let’s review some quick FQHC facts for clarity:

• The majority of Community Healthcare Centers FQHCs operate as non-profits.

• The US government funds them through grants authorized by Section 330 of the Public Health Service Act. FQHCs also receive funding from sources like Medicare, Medicaid, private insurance, and some local grants.
  

• Medicare is federally funded health insurance for people aged 65 or older and some younger individuals with disabilities.
  

• Medicaid is a state-run program for low-income families, pregnant women, among others.

Here’s a visual breakdown of how (approximately) FQHCs are funded:

You can see that most FQHC funding does not come from Federal Section 330, but from Medicaid.

What’s Changing for FQHC’s Now?

The OBBB, signed into law on July 4, 2025, comes with the promise of expanded access and support. However, when it comes to FQHCs, there are still more questions than answers.

While the act does not directly state or impact FQHCs, it does include a significant reduction in Medicaid support. Exact numbers are hard to come by as analysts can only estimate how individual states will manage cuts, but reduction in eligibility, cost-sharing, and enrollment roll-offs are a few of the changes that impact the bottom line.

Here’s what we know regarding OBBB’s impact on healthcare:

The Good (?)

• Nothing in the OBBB explicitly revokes or nullifies existing FQHC grant programs.
  

• The OBBB is not directly cutting grant funding to FQHCs.
  

• To cushion the impact of Medicaid cuts, the OBBB creates a Rural Health Transformation Program for FQHCs that allocates $50B in grants between FY2026 and FY2030.

The Bad

• However, it remains uncertain if funding from the Rural Transformation Program (yes, for rural FQHCs only) will offset Medicaid cuts.
  

• It remains unclear what happens to the significant number of urban FQHCs.
  

• The OBBB grants more power to US states, especially around Medicaid. This may not inherently be bad, so to say, but it again raises more questions and adds more complexity around funding allocation and prioritization.
  

• Additional grant application challenges and tighter restrictions on eligibility (for example, lawfully present non-US citizens meeting work history requirements no longer qualify for Medicare) result in a higher administrative burden placed on an already short-staffed, underpaid, and high churn FQHC employee environment.
  

• [In 2024, over 70% of FQHCs reported shortages due to turnover and staffing gaps.]

The Numbers

• Reports vary, but sources say the OBBB cuts Medicaid funding by between $860 billion up to just over $1 trillion.
  

• Without fast action Medicare funding could reduce by $500 billion between 2026 and 2034.

• The Congressional Budget Office says these cuts will result in an estimated 10 million Americans losing their health care coverage.

In other words, while the OBBB does not necessarily directly attack FQHCs, its halo effect could be devastating to American healthcare, which is already riddled with challenges.

To summarize: Patients who visit FQHCs are under-resourced. These patients, depending on their circumstances, typically cover medical costs with Medicare and Medicaid. If this coverage were to decrease or disappear, these people would be forced to pay medical costs out of pocket. Since they lack the funds to pay (which is why they qualify for these services in the first place), funding cuts severely strain FQHCs.

Why Accuracy is the New Currency

When reimbursements shrink, the cost of mistakes grows. An eligibility error, a missing piece of demographic info, or an unchecked insurance policy can mean thousands left on the table. With margins under siege, “we’ll fix it later” simply doesn’t cut it anymore.

Accuracy on the front end — before a claim ever leaves your system — is what wins when it comes to cost savings.

Now more than ever, FQHCs and Community Healthcare Centers must be able to accomplish the following. Pro tip (and shameless plug): all of this is supported by FrontRunnerHC.

1. Maximize every billable opportunity with insurance discovery, reducing bad debt, and uncovering hidden coverage.
   

2. Uncover accurate demographic info to speed up payments, operations, and eligibility.
   

3. Access advanced eligibility. We don’t want to toot our own horn, but FrontRunnerHC uncovers Medicare Advantage and Medicaid Managed Care Organization (MCO) plans plus a full coordination of benefits.
   

4. Score financial disposition and propensity-to-pay against the Federal Poverty level and HRSA sliding fee requirements, which results in improved forecasting and accurate reimbursement potential.

Looking Ahead

Community Healthcare Centers and FQHCs are resilient. They’ve navigated changing reimbursement models, shifting patient populations, and staffing challenges before. But the OBBB + Centers of Medicare & Medicaid Services (CMS) cuts era demands a new level of precision. Getting paid accurately and on time is the difference between thriving and surviving, or worse.

We’ll be at the Athenahealth Thrive Summit in Nashville, sharing more about how we help FQHCs safeguard every dollar and uncover new revenue opportunities, plus what’s cooking for Q4 and beyond. Come see us! You deserve tools that work as hard as you do.