CMS Proposes Payment Caps on State Directed Payments and Targeted FFS Rates
CMS published a proposed rule on May 22, 2026, that would impose payment limits on additional state directed payments in Medicaid managed care and establish caps on targeted fee-for-service reimbursement rates. The rule draws authority from section 71116 of H.R. 1 (the "One Big Beautiful Bill Act") and presidential directive. States and managed care organizations would face new constraints on supplemental payment arrangements that exceed baseline rate structures. The proposal represents a significant shift in federal oversight of state payment flexibility in both managed care and FFS delivery systems.
Payment caps on state directed payments would directly limit MCOs' ability to receive supplemental payments from states for network providers, potentially affecting provider contracting, network adequacy, and the financial viability of SDP-dependent arrangements.
Managed Care · Finance
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