U.S. Healthcare Facilities & Managed Care: CMS Proposes Expansion of Supplemental Medicaid Payment Cuts

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U.S. Healthcare Facilities & Managed Care: CMS Proposes Expansion of Supplemental Medicaid Payment Cuts

Equity Research

U.S. Healthcare Facilities & Managed Care

21 May 2026

CMS Proposes Expansion of

Supplemental Medicaid Payment

U.S. Healthcare Facilities & Managed CareCuts

NEUTRAL

Limits on FFS supplemental payments are the most notable U.S. Healthcare Facilities & Managed

Careunanticipated element and would reduce supplemental

payments to certain practitioners by ~11-14%. Andrew+1 212 526Mok,5496CFA

andrew.mok@barclays.com

BCI, USCMS Proposes Supplemental Payment Policy Changes: On Wednesday (5/21), CMS released a

proposed rule that would implement the changes to state directed payment (SDP) policies Thomas Walsh

previously outlined in the 2025 reconciliation bill (not new) and set new limits on certain fee-for- +1 212 526 5096

service (FFS) supplemental payments (new). Note CMS is applying policy changes to all SDPs thomas.walsh@barclays.com

BCI, USregardless of service line, while the reconciliation bill only specified limits for those

supplementing IP/OP hospital, nursing facility, and certain qualified practitioner services — a Tiffany Yuan

new but anticipated development. Our first impression of the proposed rule is that it is +1 212 526 5568

consistent with how we expected SDP policies to be implemented and a neutral or slightly tiffany.yuan@barclays.com

BCI, USnegative development for hospital stocks (HCA, THC, UHS, CYH). New limits on certain FFS

supplemental payments are the most notable unanticipated element and would reduce such Mingchuan Song

payments for physician, medical transport, and dental practitioners by ~11-14%, driving a ~$2.4 +1 212 526 9787

bn reduction in Medicaid payments from 2029-35. mingchuan.song@barclays.com

BCI, US