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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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  • Express Lane Eligibility: How to Enroll Large Groups of Eligible Children in Medicaid and CHIP

    Report

    This issue paper explores the potential for increasing enrollment in children's health insurance programs through "Express Lane Eligibility." Express Lane Eligibility is the accelerated enrollment of low-income uninsured children already participating in other income-comparable publicly funded programs, such as WIC or school lunch, into Medicaid or CHIP. The paper reviews Express Lane Eligibility's potential impact on Medicaid and CHIP enrollment, analyzes different models, discusses key challenges with implementation, and suggests steps states and localities can…

  • The Olmstead Decision: Implications for Medicaid

    Issue Brief

    In June, 1999, the Supreme Court rule in Olmstead v L.C. that states were required to provide services to persons with disabilities in community settings rather than institutions, if certain conditions were met. This Policy Brief provides an overview of the Olmstead case, including the facts, the court ruling, and the disposition of the case. In addition, the brief describes the issues surrounding implementation and the implications this ruling could have for state Medicaid programs.…

  • Low-Income Parents’ Access to Medicaid Five Years After Welfare Reform

    Issue Brief

    This policy brief examines health coverage for low-income parents after the 1996 welfare law broke the historical connection between Medicaid coverage and welfare. Many states have altered their rules and some have expanded coverage for low-income working parents. Policy Brief

  • Prescription Drug Discount Card Programs: Implications for Medicare Beneficiaries

    Report

    This testimony was delivered by Tricia Neuman, a vice president of the Kaiser Family Foundation, at a Senate Finance Committee hearing on the Bush Administration's Proposals for Medicare Modernization. The statement, which draws upon a report prepared for the Foundation by Health Policy Alternatives, Inc., provides an overview of existing prescription drug discount card programs, describes some of the features of the Administration's recently released proposal for a Medicare-endorsed discount card program, and raises some…

  • The Financing of Pharmacy Plus Waivers: Implications for Seniors on Medicaid of Global Funding Caps

    Issue Brief

    This policy brief describes Pharmacy Plus waivers being considered by some states for their Medicaid program and their implications for Medicaid financing. These waivers offer an opportunity for prescription drug coverage for low-income seniors, but they also include a major change in the financing of care for all seniors on Medicaid -- a cap on federal Medicaid funding for all services provided to seniors on Medicaid. Policy Brief