CMS issues guidance on limits for state-directed payments in Medicaid

Fierce Healthcare – Tuesday, September 9, 2025
By Paige Minemyer

The Trump administration issued new guidance Tuesday outlining changes to state-directed Medicaid payments, citing these outlays as a key issue in the push to root out fraud, waste and abuse.

The Centers for Medicare & Medicaid Services (CMS) said it chose to issue the guidance ahead of final rulemaking to give states additional time to adjust to changes under the One Big Beautiful Bill Act. The new guidelines will take effect for rating periods after July 4, 2025.

The guidance says SDPs for inpatient and outpatient hospital care, skilled nursing and services from a qualified practitioner must be capped at 100% of Medicare rates in states that expanded Medicaid and 110% in non-expansion states.

If a Medicare rate is unavailable, the payments will be based on state Medicaid rates, per the CMS.

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