CMS SDP Proposal - Mostly Implementing OBBB Provisions, Add'l FFS Restrictions

Research evidence excerpt

CMS SDP Proposal - Mostly Implementing OBBB Provisions, Add'l FFS Restrictions

TD SECURITIES (USA) LLC SECTOR NOTE

May 21, 2026

■Health Care Facilities & Services CMS SDP Proposal - Mostly Implementing

OBBB Provisions, Add'l FFS Restrictions

Ryan Langston THE TD COWEN INSIGHT

646 562 1418

CMS published a proposal yesterday (here) regarding Medicaid supplemental payments.

ryan.langston@tdsecurities.com

Our reading of the rule suggests largely a reiteration of the OBBB SDP reductions with new

William Spivack (but much smaller) FFS reductions starting in 2029. Our industry checks suggest a similar

202 868 5302 understanding to ours, but this could amplify investor concerns of this administration's

william.spivack@tdsecurities.com

unfavorable view towards SDPs and Medicaid.

Christian Borgmeyer, CFA

646 562 1430 What Happened, What Is New? CMS proposed a rule aimed at adding restrictions to Medicaid

christian.borgmeyer@tdsecurities.com SDPs and certain fee-for-service (FFS) supplemental payments. The proposal caps Medicaid

Gary Taylor SDPs at 100% of Medicare rates in expansion states and 110% in non-expansion states, this is

646 562 1450 the implementation of the provision that was passed as part of the OBBB (more background

gary.taylor@tdsecurities.com here). The 10% phase-down beginning in 1/1/2028 and grandfathering provisions were also

part of the proposal.

What appears new is the proposal to apply similar limits to certain targeted Medicaid FFS

payments that would go into effect in January 2029, as well as some transparency standards.

Regarding the proposed FFS supplemental payment limits, CMS states that this limit would

apply for all payments for services not subject to an existing limit (for example, IP hospital

services upper payment limit).