CMS Tweaks Medicaid Payment Formulas for States
Published Date: 5/22/2026
Proposed Rule
Summary
This proposed rule changes how states can pay Medicaid managed care plans and certain doctors to make sure payments are fair, efficient, and encourage enough providers to offer quality care. It affects states, Medicaid managed care organizations, and targeted Medicaid practitioners, aiming to keep payments balanced and services available. Comments on these changes are open until July 21, 2026, so stakeholders have time to weigh in before it’s finalized.
Analyzed Economic Effects
3 provisions identified: 1 benefits, 0 costs, 2 mixed.
New Limit on State-Directed Payments
The rule implements a limit on the total payment rate for State directed payments (SDPs) for four service types: inpatient hospital, outpatient hospital, nursing facility, and qualified practitioner services at an academic medical center. This limit is to take effect with the first rating period beginning on or after July 4, 2025.
Grandfathering and Phase-Down Timeline
The statute provides a temporary grandfathering period for certain SDPs and requires a phase down beginning with the first rating period that starts on or after January 1, 2028. That phase-down schedule will apply to SDPs covered by the limit described above.
Limit on Fee‑for‑Service Targeted Practitioner Payments
CMS proposes to set a limit for certain targeted Medicaid practitioner payments made in Medicaid fee‑for‑service. The proposal is based on CMS's authority under section 1902(a)(30)(A) to ensure payments are consistent with efficiency, economy, and quality and are sufficient to enlist enough providers.
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Key Dates
Department and Agencies
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