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Spending on Medicaid State Directed Payments Before New Limits Take Effect

Forty states and DC currently receive $93 billion in annual federal Medicaid spending through state directed payments (SDPs) and may be at risk due to forthcoming limits on these payments, according to new KFF estimates. Annual federal spending on SDPs is highest in California (an estimated $10.6 billion)—followed by Texas ($6.3 billion), North Carolina ($5.2 billion), and Illinois ($5.1 billion).

Forthcoming Policy Changes to Medicaid State Directed Payments

Changes to Medicaid State Directed Payments

The 2025 reconciliation law cut federal Medicaid spending by an estimated $911 billion from 2025 through 2034, some of which stems from new restrictions on Medicaid state directed payments (SDPs) for hospital and other health care services. This issue brief describes SDPs and forthcoming policy changes stemming from the 2025 law and the proposed regulation to implement those requirements and make other changes.

Medicaid Work RequiremEnts

Tracking the 2025 Reconciliation Law’s Medicaid Work Requirements: Data and Policies

To implement Medicaid work requirements, states will need to make important policy and operational decisions, implement needed system upgrades or changes, develop new outreach and education strategies, and hire and train staff, all within a relatively short timeframe. The information tracked here can serve as a resource to understand Medicaid work requirements and state options, gauge readiness, and track implementation of the requirements.

understanding medicaid

Medicaid Financing

Medicaid represents $1 out of every $5 spent on health care in the U.S. and is the major source of financing for states to provide health coverage and long-term care. This brief examines key questions about Medicaid financing and how it works.

Medicaid Program Integrity

This brief explains what is known about improper payments and fraud and abuse in Medicaid and describes ongoing state and federal actions to address program integrity.

Medicaid and Provider Taxes

All states except Alaska cover some state Medicaid costs with taxes on health care providers. This brief uses data from KFF’s 2024-2025 survey of Medicaid directors to describe current practices and the federal rules governing them.

Medicaid and Hospitals

Absorbing reductions in Medicaid spending could be challenging for hospitals, particularly for those that are financially vulnerable. This brief provides data on the reach of Medicaid across hospitals, patients, and charity care.

Medicaid Home Care

This issue brief provides an overview of what Medicaid home care (also known as “home- and community-based services”) is, who is covered, and what services were available in 2025.

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  • Medicaid Spending and Enrollment: State and National Data Update

    Report

    This series of tables provides recent data on state-by-state and national Medicaid spending and enrollment. Using the latest federal information sources available, the first set of tables contains information on Medicaid spending by service using data from the Centers on Medicaid and Medicare Services (CMS) Form 64 for Federal Fiscal Year (FFY) 2004. A second set of tables is based on analysis of a more detailed data source, the Medicaid Statistical Information System (MSIS), which…

  • 2004 State and National Medicaid Spending Data (CMS-64)

    Report

    This set of tables, prepared by the Urban Institute for the Kaiser Commission on Medicaid and the Uninsured, presents the most current state-by-state information on Medicaid spending by services using data from the Centers on Medicaid and Medicare Services (CMS) Form 64 for Federal Fiscal Year (FFY) 2004. CMS-64 data provide a somewhat different measure of spending than does the Medicaid Statistical Information System (MSIS). Please refer to the "Overview of Differences" document below for…

  • 2002 State and National Medicaid Enrollment and Spending Data (MSIS)

    Report

    This set of tables, prepared by the Urban Institute for the Kaiser Commission on Medicaid and the Uninsured, presents state-by-state information on Medicaid enrollment, expenditures, and spending per enrollee for Federal Fiscal Year (FFY) 2002. These tables are based on analysis of data from the Medicaid Statistical Information System (MSIS) and provide a somewhat different measure of spending than CMS-64 data. Please see the "Overview of Differences" document below for more on the features of…

  • An Update on the Clawback: Revised Health Spending Data Change State Financial Obligations for the New Medicare Drug Benefit

    Issue Brief

    An Update on the Clawback: Revised Health Spending Data ChangeState Financial Obligations for the New Medicare Drug Benefit States are obligated to finance part of the new Medicare prescription drug benefit via a monthly "clawback" payment to the federal government. This issue update analyzes the latest data and provides an overview of the state financing of the Medicare drug benefit. Revisions by the federal government due to updated data has resulted in an estimated net…

  • Health Centers Reauthorization: An Overview of Achievements and Challenges

    Report

    This report reviews the role of community health centers in the nation's health care safety net. Today, over 1,000 federally funded and “look-alike” health centers serve 14.3 million people, three-quarters of whom are uninsured or covered by Medicaid. As health centers look toward legislative reauthorization in 2006, they face several policy challenges reviewed in this report, including an increase in the uninsured populations, potential decreases in Medicaid revenue, and a need to increase health centers'…

  • Can States Stretch the Medicaid Dollar Without Passing the Buck? Lessons from Utah

    Report

    With the enactment of the Deficit Reduction Act of 2005, states have gained increased flexibility over benefits and cost sharing for certain currently eligible Medicaid populations without having to obtain a waiver of Medicaid rules. New findings from the Kaiser Family Foundation's 2004 survey of the experiences of Medicaid beneficiaries under Utah's 2002 waiver provide insights into the implications of limited benefits for the low-income population. The results are featured in the March/April edition of…

  • Medicare-Medicaid Policy Interactions

    Issue Brief

    Because over seven million elderly and disabled individuals are entitled to benefits under both Medicare and Medicaid, policy changes in one program not only affect both coverage and spending in the other but also impact access to services by individuals eligible for both programs. This primer summarizes two key policy interactions and includes a quick reference table of the most significant linkages between the two programs. Issue Brief (.pdf)

  • The President’s FY 2007 Budget Proposal: Overview and Briefing Charts

    Report

    This chartpack reviews the President’s FY 2007 budget request to Congress and highlights overall budget assumptions and funding for major health programs. It begins with a description of the federal budget process, followed by summary information on the overall composition of the Administration’s budget. Overall, the budget includes net reductions for Medicare, Medicaid, and other health programs administered by the Department of Health and Human Services. The budget also includes additional expenditures for proposals to…