AHA Urges CMS to Scale Back Medicaid State-Directed Payment Limits in Proposed Rule
The American Hospital Association submitted comments July 21, 2026, opposing portions of a CMS proposed rule implementing reconciliation-mandated changes to Medicaid state-directed payments. The rule proposes new limits on targeted fee-for-service payments and SDP design that exceed statutory requirements. CMS projects the rule would reduce Medicaid payments by $510.1 billion over 10 years—more than triple the Congressional Budget Office estimate of $149.4 billion. AHA argues the cuts would reduce care access, worsen workforce shortages, and threaten hospital financial viability, urging CMS to rescind provisions beyond what Congress required and mitigate SDP reductions.
Managed care organizations should anticipate significant downward pressure on provider contracting rates and network stability if CMS finalizes SDP limits stricter than Congress intended, potentially forcing MCOs to renegotiate capitation rates or increase direct provider payments to maintain network adequacy.
Managed Care · Finance
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