May 20, 2026regulatory actionMedicaidhealthcare accessfederal regulationhospital fundinghealthcareMedicaidfederal regulation
CMS proposes capping Medicaid state-directed payments near Medicare rates to save a projected $775 billion
The Centers for Medicare and Medicaid Services published proposed rule CMS-2449-P on May 20, 2026, capping Medicaid state-directed payments at 100% of Medicare rates in expansion states and 110% in non-expansion states. CMS projected $775 billion in 10-year savings, implementing and expanding Section 71116 of the One Big Beautiful Bill Act. State-directed payments had grown from two states in 2016 to 41 states by 2024, reaching $107 billion in annual spending. A 60-day public comment period opened with a July 21, 2026 deadline.
Sources
CMS Moves to Rein In Misused Medicaid Dollars and Reward Quality CareFederal Register: CMS-2449-P — Medicaid Managed Care State Directed Payments NPRMGAO: Medicaid Managed Care — Rapid Spending Growth in State Directed PaymentsRural Hospitals and Communities Feeling Impact of H.R. 1 Medicaid CutsTrump wants to expand Medicaid cuts, building on tax cut bill