Health Care Policy Update: Health Care Policy Weekly Update and Outlook

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Health Care Policy Update: Health Care Policy Weekly Update and Outlook

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Health Care Policy Update

Health Care Policy Weekly Update and

Outlook

Government Regulations

CMS Releases Proposed Medicaid SDP Regulation 26 May 2026

On May 20, CMS released a proposed rule on Medicaid Stated Directed Payment (SDP)

High Yield Creditregulations implementing OBBBA provisions. CMS projects that its proposed regulations

United Stateswill reduce federal Medicaid SDP payments by $510 billion over the next 10 years, which

Washington Healthcareis significantly larger than earlier estimates from the Congressional Budget Office (CBO)

last July when Congress passed the OBBBA. The proposed regulation implements

Table of Contentsphased-in reductions of SDP payments for expansion states down to 100% of Medicare

rates – reducing payments by 10% per year beginning January 1, 2028. Non-expansion Health Care Policy Events for the Week 2

States will also see a 10% per year reductions phased-down to 110% of Medicare rates.

These reductions apply to inpatient, outpatient hospital services, nursing facility

services, and qualified services at academic medical centers. CMS also proposes Andrew B. Bressler, CFA

Research Analyst

expanding payment limits to other providers receiving SDP, reducing to either 100% or BofAS

110% of Medicare for all services beginning January 1, 2029. The rule also codifies +1 202 442 7454 andy.b.bressler@bofa.com

grandfathering of existing SDP programs through 2028. CMS also proposes establishing

an additional rate limit for all Medicaid fee-for-service payments equal to 100% (or

110%) of Medicare. This limit applies to all services not subject to an existing limit (for Abbreviations

example, an inpatient hospital services upper payment limit).