$60 Billion In Federal Medicaid Hospital Payments Across 37 States Exceeds New Payment Limits

At least 37 states, with the count including the District of Columbia, have Medicaid state-directed payment (SDP) arrangements for hospitals that exceed new federal payment limits beginning to phase in in 2028. An estimated $60.1 billion in current annual federal Medicaid spending for hospital SDPs is above the new limits, representing 77% of federal hospital SDP spending included in the analysis, according to KFF.

The limits were enacted as part of H.R. 1 of 2025, the One Big Beautiful Bill Act. Existing SDPs that qualify for temporary grandfathering will begin phasing down on January 1, 2028, with . . .