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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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  • Family Coverage Under SCHIP Waivers

    Issue Brief

    Currently, eleven states cover parents with SCHIP funds via a federal waiver. This paper examines these programs and considers them within the context of the states' efforts to cover children. Issue Brief (.pdf)

  • Long-Term Service and Supports: The Future Role and Challenges for Medicaid

    Report

    This report examines the structure and impact of Medicaid’s role in long-term care. Based on a roundtable discussion of policy makers and experts and drawn from a body of health services research, the report highlights policy challenges facing the Medicaid program today and identifies issues in providing long-term care going forward. By gathering evidence to address key policy issues, such as integrating services, benefit design, quality monitoring and financing, the report can serve as a…

  • Children’s Health Insurance Program Reauthorization Act of 2007 (CHIPRA):  The revised CHIPRA Bill (H.R. 3963) Compared to the Original Bill (H.R. 976)

    Issue Brief

    Children’s Health Insurance Program Reauthorization Act of 2007 (CHIPRA): The revised CHIPRA Bill (H.R. 3963) Compared to the Original Bill (H.R. 976) The U.S. House and Senate passed a revised version of Children’s Health Insurance Program Reauthorization Act of 2007 (CHIPRA) that was intended to address key concerns of opponents of the original bill vetoed by the President. The State Children’s Health Insurance Program is temporarily funded through December 14 at current levels, but requires…

  • Health Coverage for Children and Families in Medicaid and SCHIP:  State Efforts Face New Hurdles

    Report

    Health Coverage for Children and Families in Medicaid and SCHIP: State Efforts Face New Hurdles The seventh annual 50-state survey of eligibility rules, enrollment and renewal procedures, and cost-sharing practices in Medicaid and SCHIP for children and families reports that nearly two-thirds of states expanded access to Medicaid and SCHIP between July 2006 and January 2008. Executive Summary (.pdf) Report (.pdf)

  • Pulling It Together: Perspectives on State Health Reform

    Perspective

    This Pulling It Together column is the fourth in my new series. All four so far have dealt with different dimensions of health reform. This time I write about one of my favorite topics, the states. As a former head of an umbrella health and social services agency in a big state responsible for about a third of a state budget and workforce, I have a deep appreciation for state government. It's a level of…

  • American Recovery and Reinvestment Act (ARRA): Medicaid and Health Care Provisions

    Fact Sheet

    This fact sheet examines the assistance for Medicaid programs and key health provisions in the American Recovery and Reinvestment Act (ARRA) that President Obama signed into law on February 17, 2009. Subjects covered include the temporary increase in federal matching money for state Medicaid programs, subsidies for COBRA health coverage for laid off workers and funding for health information technology. It includes a breakdown of additional federal allocations to states for Medicaid costs under the…

  • The Diversity of Dual Eligible Beneficiaries: An Examination of Services and Spending for People Eligible for Both Medicaid and Medicare

    Issue Brief

    This issue brief analyzes linked Medicare and Medicaid data to examine dual eligibles' utilization and spending in both programs in 2007. As a group, dual eligibles are costly—with per capita Medicare and Medicaid spending over four times Medicare spending for other beneficiaries. However, a small share of dual eligibles account for most of the group's spending, and dual eligibles who are high cost to the Medicare program are generally not the same individuals who are…

  • A Primer on Dually Eligible Beneficiaries

    Event Date:
    Event

    The nine million dually eligible beneficiaries are generally poorer and sicker than other Medicare beneficiaries, tend to use more health care services, and thus account for a disproportionate share of Medicare and Medicaid spending. Because they often have complex medical and long-term care needs, and must navigate both Medicaid and Medicare benefits and financing, they present a special challenge for those seeking a more efficient and coordinated care delivery system. The panel will address such…

  • Five Key Questions And Answers About Section 1115 Medicaid Waivers

    Issue Brief

    This issue brief provides an overview of what Section 1115 Medicaid waivers are, how they are approved and financed, how states have used them, and how they are impacted by health reform. For many years, Section 1115 waivers have been used by states to test new coverage approaches not otherwise allowed under Medicaid program rules. Some waivers have also raised important policy issues. Since the passage of the health reform law, several states, including California,…