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
Planned Parenthood et al v. Kennedy et al3
On July 7, 2025, Planned Parenthood Federation of America (PPFA), Planned Parenthood League of Massachusetts (PPLM), and Planned Parenthood Association of Utah (PPAU) filed suit against HHS, HHS Secretary Kennedy, CMS, and CMS Administrator Oz on behalf of PPFA's Members in the U.S. District Court for the District of Massachusetts, arguing that Section 71113 is unconstitutional.4
In the complaint, the Plaintiffs alleged that Section 71113 was unconstitutional in that it: (1) violated their right to freedom of association; (2) subjected them to a bill of attainder; and (3) infringed on their Fifth Amendment and Due Process rights.
On July 21st, Judge Indira Talwani issued a preliminary injunction blocking the provision of the Act that sought to defund Planned Parenthood.5 In its order, the court emphasized that the law is likely unconstitutional and would immediately harm those on Medicaid.6 Shortly after, on July 28, 2025, Judge Talwani issued an expanded the preliminary injunction, making it applicable to PPAU, PPLM, and "all other members" of PPFA.7
Specifically, the July 28 Preliminary Injunction (a) enjoins HHS, HHS Secretary Kennedy, CMS, and CMS Administrator Oz from "enforcing, retroactively enforcing, or otherwise applying the provisions of Section 71113" against PPAU, PPLM, and "all other members" of PPFA and (b) directs them to "take all steps necessary to ensure that Medicaid funding continues to be disbursed in the customary manner and timeframes" to PPAU, PPLM, and "all other members" of PPFA.8 In refuting the Plaintiffs' allegations, the Government argued that "democratically elected components of the Federal Government collaborated to enact that provision consistent with their electoral mandates from the American people as to how they want their hard-earned taxpayer dollars spent."9
Judge Talwani provided several justifications for the July 28 Preliminary Injunction:
- First Amendment Freedom of Association: Judge Talwani ruled that affiliation with PPFA is a form of protected expression and found that Plaintiffs demonstrated a substantial likelihood of success on their First Amendment claim.10 Judge Talwani noted that the law impermissibly conditions the receipt of Medicaid funds on foregoing the right of associating with PPFA and other members to the extent that Section 71113 may be applied to affiliates who do not provide abortions.11
- Bill of Attainder: The Bill of Attainder Clause prohibits Congress from enacting a law that "legislatively determines guilt and inflicts punishment" on an identifiable party without a judicial trial.12 Judge Talwani concluded that Section 71113 meets the definition of an unconstitutional bill of attainder for four reasons. First, "the law's conjunctive criteria create a narrow class of entities consisting almost entirely of Planned Parenthood Members."13 Second, Section 71113 only attaches this restriction on nonprofits providing elective abortions that are community providers primarily engaged in family planning.14 Third, no entity can change the amount of Medicaid reimbursements they received in the past to escape the effects of Section 71113.15 Lastly, entities would be forced to choose between providing elective abortions and receiving Federal Medicaid funding, a considerable deprivation.16
- Fifth Amendment Equal Protection: Judge Talwani found that Plaintiffs demonstrated a substantial likelihood of success on their equal protection claim for several reasons. Applying the strict scrutiny standard, she found that Section 71113 is not precisely tailored to serve a compelling governmental interest—here, denying taxpayer funds from abortion providers.17 Section 71113 only applies to a small subset of abortion providers, while leaving many others untouched.18Applying the less stringent rational basis review standard, Judge Talwani concluded that there is no rational relationship between the class burdened by Section 71113 and the goal of reducing abortion.19
State of California v. U.S. Department of Health and Human Services (HHS)20
Attorneys General from 21 states21 and the Governor of Pennsylvania filed a complaint on July 29 against the same set of defendants seeking (1) a declaration that Section 71113 is unconstitutional and (2) a preliminary and permanent injunction prohibiting enforcement of Section 71113. Some arguments are similar to those in the Planned Parenthood complaint, but others are unique to this complaint. In arguing that Section 71113 is an unconstitutional exercise of Congress' Spending Clause Power, Plaintiff States specifically allege:
- Section 71113 puts States' Medicaid funding at risk: Plaintiffs argue that Section 71113 requires State Medicaid programs to determine which multi-state entities will meet the definition of Prohibited Entity on October 1, 2025.22 However, State Medicaid programs do not have records of Medicaid payments made by other States' Medicaid programs or know whether those entities provide abortions within their scope of care.23 Therefore, Plaintiffs contend that Section 71113 does not provide clear notice of necessary obligations to access federal Medicaid funding.24
- Section 71113 imposes administrative burdens on Plaintiff States: Plaintiffs argue Section 71113 imposes administrative burdens on many Plaintiff States, which must educate their Medicaid providers about Section 71113 and adjust their claims processing infrastructure to segregate out any claims from reproductive health centers so that those claims are not submitted for federal reimbursement.25
- Section 71113 imposes economic harm and burdens public health: Plaintiffs argue Section 71113 will force Plaintiff States to either use states funds to keep Planned Parenthood health centers operating and forgo matching federal funds or exclude the Planned Parenthood health centers from any state Medicaid program and lose critical healthcare infrastructure.26
- Section 71113 is an impermissibly retroactive condition on Medicaid: Plaintiffs argue Section 71113, in targeting certain family planning providers for their constitutional, legal activities outside of the Medicaid program, is not the type of condition that States could, and should, have expected when they agreed to participate in the Medicaid program.27 This provision instead "surprises" states with a new condition on Medicaid funds beyond what a state could have anticipated as part of their participation in the program,28 in violation of the "clear notice" requirement under the Spending Clause.29
- Section 71113 fails to provide clear notice: Plaintiffs argue Section 71113 is ambiguous about the timing for enforcement of its prohibitions on federal Medicaid funding for Prohibited Entities in violation of the Spending Clause.30 Section 71113 requires that Prohibited Entities stop receiving federal Medicaid funding as of July 4, 2025.31 But the definition of Prohibited Entity turns on whether an entity satisfies all four criteria as of "the first day of the first quarter beginning after the date of enactment of th[e] Act," which is October 1, 2025.32 Section 71113 also fails to identify which authority (the states or CMS, for example) is to determine which healthcare providers are Prohibited Entities.33
State Agency Reactions
California and North Carolina's health care divisions have issued guidance to their state Medicaid plans in response to the preliminary injunction. For instance, the California Department of Health Care Services instructed its Medi-Cal managed care plans to continue submitting claims if they meet the definition of a "Prohibited Entity" and sought relief under the preliminary injunction.34 Similarly, North Carolina Medicaid stated it will continue to issue payments to Planned Parenthood until further court guidance has been issued.35
Key Takeaways
- Public Health Impacts: For decades, Federal law has prohibited the use of Federal funds for abortions except in narrow circumstances (i.e., where the pregnant person's life would be endangered by carrying to term, or where the pregnancy is the result of rape or incest). Section 71113 would further restrict the use of Federal funds to provide coverage for additional services, including preventive sexual and reproductive health care services, such as STI testing and treatment and contraceptive services. The July 28 Preliminary Injunction notes that Section 71113 threatens adverse health outcomes for patients, as care may be disrupted or discontinued.
- Current Status: The July 28 Preliminary Injunction prevents the Government from enforcing Section 71113's funding restrictions as to all Planned Parenthood Federation Members. On August 5, the Government appealed the July 28 Preliminary Injunction to the First Circuit Court of Appeals. At this time, Section 71113 is still enforceable as to the small number of other entities that meet the definition of "Prohibited Entity."
- Practical Impacts: State Medicaid agencies, providers, and Medicaid Managed Care Organizations ("MCOs") alike are left to grapple with determining whether entities are eligible to receive Federal Medicaid funds and face the potential consequences of reaching the wrong conclusion. Information sharing between relevant stakeholders will be critical in assessing the scope of the prohibition, and stakeholders will also need to closely track ongoing litigation regarding Section 71113.
Footnotes
1. Planned Parenthood Fed'n of Am., Inc. v. Kennedy, No. 1:25-CV-11913-IT, 2025 WL 2101940 (D. Mass. July 28, 2025).
2. State of California v. U.S. Dep't of Health & Human Servs., 1:25-cv-12118 (D. Mass. July 29, 2025).
3. Planned Parenthood Fed'n of Am., Inc. v. Kennedy, No. 1:25-CV-11913-IT (D. Mass. July 7, 2025).
4. Id.
5. Planned Parenthood Fed'n of Am., Inc. v. Kennedy, No. 1:25-CV-11913-IT, 2025 WL 2040123 (D. Mass. July 21, 2025).
6. Id. at 8, 16.
7. Planned Parenthood Fed'n of Am., Inc. v. Kennedy, No. 1:25-CV-11913-IT, 2025 WL 2101940, at *28–29 (D. Mass. July 28, 2025).
8. Id.
9. Id. at *1.
10. See id. at *14.
11. See id.
12. Nixon v. Adm'r of Gen. Servs., 433 U.S. 433 U.S. 425, 468 (1977).
13. Planned Parenthood Fed'n of Am., Inc. v. Kennedy, No. 1:25-CV-11913-IT, 2025 WL 2101940, at *17 (D. Mass. July 28, 2025).
14. See id.
15. See id. at *18.
16. See id. at *19.
17. See id. at *23.
18. See id. at *22.
19. See id. at *24.
20. State of California v. U.S. Dep't of Health & Human Servs, 1:25-cv-12118 (D. Mass. July 29, 2025), ECF No. 1.
21. California, Connecticut, Delaware, District of Columbia, Hawai'i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.
22. See State of California, supra note 20 at 41.
23. See id. at 41-42.
24. See id. at 75.
25. See id at 42.
26. See id. at 52.
27. See id. at 73.
28. Id.
29. Id. at 75.
30. See id.
31. See id. at 74.
32. Id.
33. See id.
34. California Dep't of Health Care Services, Important July 31, 2025, Update: H.R. 1. – Federal Payments to Prohibited Entities, (2025).
35. NC Medicaid Division of Health Benefits, Updated Guidance for NC Medicaid Payments to Planned Parenthood – July 29, 2025, (2025).
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