July 1, 2026

The Impact of the One Big Beautiful Bill Act on Professional Liability Exposures for Healthcare Entities – Webinar Recap

The One Big Beautiful Bill Act, signed into law in July 2025, represents sweeping federal legislation with profound implications for the healthcare industry. Our latest webinar assembled a panel of experts to unpack how these legislative changes are reshaping professional liability exposure. Here are some key takeaways from the discussion including how healthcare organizations and industry professionals can navigate the evolving risk landscape.

Financial and Operational Pressures on Hospitals

Hospitals are expected to face roughly $69 billion in revenue losses over the next two years, driven primarily by Medicaid cuts and declining enrollment. Given the loss of ACA coverage as premium tax credits have expired, more uninsured patients will turn to emergency departments as a last resort, costing approximately 2.5 times more than insured care. Rural and safety net hospitals are most at risk, with around 300 rural hospitals at immediate risk of potential closure, many operating with negative margins. Hospital leaders face difficult decisions around cutting services, reducing staff, or pursuing consolidation and affiliations to remain financially viable. Underwriters are advised to scrutinize audited financials, debt service coverage ratios, payer mix, and whether institutions have credible contingency plans.

D&O, EPL, and Liability Exposures for Healthcare Entities

The financial strain created by the bill significantly elevates directors and officers (D&O) and employment practices liability (EPL) exposures. Leadership teams must make high-stakes decisions on hiring freezes, service terminations, and restructuring that carry fiduciary and reputational risk. On the EPL side, existing staffing shortages, burnout since COVID, higher nurse-to-patient ratios, and potential wrongful terminations tied to clinical errors create fertile ground for claims. Wage and hour violations, hostile work environment allegations, and leadership turnover are additional concerns underwriters should monitor closely, with frequency and severity of D&O claims expected to increase in the coming years.

Payer Dynamics: AI, Innovation, and Regulatory Oversight

For health insurance payers, the bill accelerates the need for innovation, value-based care models, and strategic partnerships to address rising rates of uninsured individuals. Artificial intelligence is emerging as both an opportunity and a liability as payers are investing heavily in AI-driven utilization review, telehealth, and workflow automation, but face litigation over AI-based benefit denials. Publicly traded health plans have already seen regulatory investigations into AI use for claim denials, making “human in the loop” governance essential. The bill also heightens scrutiny around gender-affirming care coverage as well as waste, fraud, and abuse enforcement by DOJ and HHS, and mergers and acquisitions activity, all of which carry managed care E&O and regulatory liability implications for payers.

Senior Care Facilities: Medicaid, Staffing, and Risk Mitigation Strategies

Skilled nursing facilities are uniquely vulnerable given that Medicaid funds approximately 70% of their costs. The bill’s reduction in retroactive Medicaid coverage from 90 to 60 days, more frequent eligibility redeterminations, and overall funding cuts will create significant cash flow volatility and administrative burdens. The delayed federal staffing mandate provides operational flexibility but shifts the responsibility to underwriters to evaluate whether staffing ratios are adequate, especially as facilities may rely on overtime to fill gaps. Facilities are encouraged to diversify payer mix, invest in revenue cycle management, strengthen family communication, and participate in value-based payment programs. Underwriters should probe Medicaid revenue dependency, application process efficiency, staffing models, and whether facilities have stress-tested their finances against these new realities.

Why This Webinar Matters to Professional Liability Professionals

The One Big Beautiful Bill Act matters to professional liability professionals because its sweeping Medicaid and Medicare cuts, totaling over $1 trillion over the next decade, will severely strain hospital and nursing home finances, forcing leadership into high-stakes decisions that create D&O exposure. Staffing shortages will worsen as facilities cut costs, driving EPL claims around wrongful termination, wage and hour violations, and hostile work environments, while overworked staff increase the risk of medical errors and professional liability claims. Payers face their own exposures through increased regulatory scrutiny, AI-driven utilization review litigation, and merger and acquisition activity triggered by the need to adapt to a growing uninsured population. For senior care specifically, with Medicaid funding roughly 70% of nursing home costs, the financial pressure is existential. Facilities that fail to adapt risk closure, corner-cutting on care, and a spike in malpractice claims. Underwriters across D&O, EPL, managed care E&O, and professional liability lines must proactively reassess their healthcare accounts, as claim frequency and severity are expected to increase significantly in the coming years.

To view this webinar recording, log in to the PLUS Learning Center and visit our content library.

If you haven’t done so yet, get exclusive access to PLUS webinars and on-demand recordings with a free membership now.

Become a Member