AOTA, state associations respond to Medicaid concerns in Idaho and Washington

When President Trump signed H.R. 1 (commonly known as the One Big Beautiful Bill Act) into law last summer, it signaled a dramatic shift in how the federal government and state governments partner to support social safety net programs— in particular Medicaid. Established in 1965, Medicaid is a health insurance program that provides coverage for low‑income individuals and is jointly funded by state governments and matching federal funds. H.R. 1 codified into law two major provisions that impact the states: (1) over a period of several years, it reduces states’ ability to draw matching funds to support their Medicaid programs, and (2) it increases the administrative burdens that fall on states to run their Medicaid programs by implementing community engagement requirements and more frequent eligibility checks.

As a result, governors were left with tough decisions to make when it came to putting together their budgets, and state legislatures were left with equally hard choices as they convened earlier this year for their regular legislative sessions. If the state was projected to have a budget deficit because of the cuts in H.R. 1, does the state cut Medicaid coverage of health care services? Does it spread the budget cuts across other non–health care related budget line items or pull money from those areas? Does it find new sources of revenue through increased taxes or fees?

Because occupational therapy is an optional benefit for adults under traditional Medicaid (it is a mandated benefit for children and those enrolled in Medicaid under the expansion authorized by the Affordable Care Act), AOTA was concerned that states could propose cuts to such non-mandatory benefits in their Medicaid programs. AOTA State Affairs staff warned occupational therapy practitioners (OTPs) to be watchful of state actions that could impact access to occupational therapy through Medicaid (https://bit.ly/4cC8B6b). Since summer of 2025, when H.R. 1 was signed into law, AOTA has been monitoring state discussions and actions related to Medicaid, in partnership with our affiliated state associations (https://bit.ly/493DrDR).

One of the first notable actions taken by a state that impacts occupational therapy services was in Idaho when the state Department of Health and Welfare implemented a 4% reduction in all Medicaid reimbursement rates, effective September 1, 2025 (https://bit.ly/4cpind9). In January 2026, the Department also implemented a 20-visit cap for occupational therapy, physical therapy (PT), and speech therapy (https://bit.ly/4cD8WWt). Also in January, Governor Brad Little provided the state legislature with a list of potential health care services to cut entirely to fill the Medicaid budget deficit. Occupational therapy, PT, and speech therapy were included in that list, along with Home and Community-Based Services (HCBS) benefits, adult prosthetics and orthotics, and case management support.

The Governor’s announcement was timely. The Idaho Occupational Therapy Association (http://id-ota.org) (IOTA), along with APTA-Idaho (http://aptaidaho.org) (APTA-ID) and the Idaho Speech, Language, Hearing Association (http://idahosha.org) (ISHA) had already scheduled a “Rehab at the Rotunda” advocacy event in the state capitol weeks later. They were able to obtain news media coverage of the event and have many productive conversations with state legislators (https://bit.ly/4u1OGF5). A public hearing on the proposed cuts in February saw testimony from 500 people in opposition (https://bit.ly/489T3Wc). IOTA, ISHA, and APTA-ID also partnered for a Defend Medicaid Town Hall event in February, in which AOTA State Affairs participated (https://bit.ly/4cocfls). IOTA spread the word about the negative impact of the proposed cuts on its social media, encouraging OTPs to contact their state legislators in opposition.

In the end, the state legislature spared cuts to therapy services and instead spread the budget cuts across various state agencies, instead of focusing only on Medicaid. However, severe cuts were made to adult habilitation services, and the 4% rate reduction announced last year remained in place.

“Despite the emotional rollercoaster and massive level of uncertainty, the IOTA has witnessed inspiring unity and a fighting spirit amongst our practitioners at the capitol building and at townhall meetings across the state,” said IOTA President-Elect Meredith Chandler, OTR/L. “Though we have pushed back to secure our capped Medicaid-funded services and delay the proposed managed care model to 2030, we continue to encourage OTPs and advocates for our profession to remain vigilant as legislators revisit managed care and additional budget cuts that will inevitably impact our practice."

While Idaho practitioners were working against cuts in their state, the Washington Occupational Therapy Association (http://wota.org) (WOTA) informed AOTA that their Governor had also proposed to cut adult occupational therapy, PT, and speech therapy services from Medicaid. WOTA sprang into action and mobilized the largest state advocacy campaign in decades. They recruited 28 OTPs to testify at a budget hearing scheduled less than 24 hours after the proposed cuts were announced, had 1,874 emails sent to legislators, and compiled a document with OTPs’ stories about how the proposed cut would impact their practice. WOTA also helped organize a letter opposing the cuts, which 163 organizations signed. AOTA supported these efforts by sending out an alert through our Legislative Action Center to all members in Washington state encouraging them to contact their legislators in opposition. The alert resulted in several hundred messages being sent to legislators, including personalized stories explaining how the cuts would impact the occupational therapy clients in Washington.

Fortunately, state legislators heard our voices and were able to fill the Medicaid budget gap without moving forward with Medicaid cuts. It is likely that cuts could be proposed again in the future due to a projected multi-year budget deficit in the state (https://bit.ly/3Ov3H39).

“When proposed federal Medicaid cuts threatened occupational therapy, PT, and speech therapy services in Washington state, WOTA partnered with AOTA and our PT and speech therapy colleagues to mobilize the largest state advocacy campaign in decades. Medicaid funding was preserved, but the experience reinforced critical lessons for states nationwide: maintain strong coalitions, keep member mobilization systems ready for rapid action, and closely monitor budget proposals that may target rehabilitation services,” said David Cacanindin, OTD, OTR/L, Chair of the WOTA Legislative Committee.

Although these advocacy efforts are great examples of interprofessional cooperation and grassroots mobilization, OTPs must remain vigilant no matter where they live or practice. Some provisions of H.R. 1 have not gone into effect yet, but when they do, it is expected that more states will have budget deficits to fill and will be targeting discretionary line items, such as occupational therapy, to cut costs. AOTA has numerous Medicaid resources on our website as well as information on how to keep up with Medicaid policy changes that could impact occupational therapy (https://bit.ly/4cWtRoC). The newest resources include the Guide to Tracking State Medicaid Activity (https://bit.ly/4ezZCFi), which briefly explains what Medicaid is and how OTPs can advocate to Medicaid officials; and Medicaid Essentials for Occupational Therapy, an AOTA member exclusive deeper dive into how Medicaid policy impacts the provision of occupational therapy services.

Need help with a Medicaid-related or state policy-related question? Reach out to us at state@aota.org.

Kristen Neville is AOTA’s Manager of State Affairs.