Overview

The President signed H.R. 1, the One Big Beautiful Bill Act (the “Act”), into law on July 4, 2025. In Section 71113, the Act restricts the flow of Federal Medicaid funds to certain “Prohibited Entities” for the one-year period following its enactment.

Section 71113 puts forth a set of specific criteria. The prohibition applies to any entity—and its affiliates, subsidiaries, successors, and clinics—that: 

• As of October 1, 2025:
  • Will be an “essential community provider,” as defined by 45 C.F.R. § 156.235, that is primarily engaged in family planning services, reproductive health, and related care;
  • Will be structured as a 501(c)(3) nonprofit organization; and
  • Will provide abortions (except cases involving rape or incest or if the woman’s life is endangered); and
• Received more than $800,000 in Federal and State Medicaid payments in fiscal year 2023.

The structure of Section 71113 has created considerable uncertainty. The restriction went into effect on July 4, 2025, but requires both a forward-looking assessment of the services a provider will provide as of October 1, 2025, and a backward-looking assessment of how much a provider received in Medicaid payments in 2023. This ambiguity has led to two separate legal challenges in the weeks following the Act’s enactment. As of July 28, 2025, the U.S. Department of Health and Human Services (“HHS”), HHS Secretary Kennedy, the Centers for Medicare and Medicaid Services (“CMS”), and CMS Administrator Oz are enjoined from enforcing, retroactively enforcing, or otherwise applying the provisions of Section 71113 against all Planned Parenthood health care providers pursuant to a preliminary injunction issued by the U.S. District Court for the District of Massachusetts.[1] On July 29, 2025, twenty-one state attorneys general and the Governor of Pennsylvania also filed suit regarding the constitutionality of Section 71113 in the U.S. District Court for the District of Massachusetts.[2]