California & Illinois Have Largest Dollar Exposure To New Medicaid Hospital State-Directed Payment Limits

California and Illinois have the largest estimated dollar amounts of federal Medicaid hospital state-directed payment (SDP) spending above new federal payment limits, at $7.4 billion and $4.0 billion, respectively. However, the states with the largest dollar exposure may not have the largest proportional exposure. KFF said comparable state-level Medicaid hospital spending data for 2025 and 2026 are not yet available, making it difficult to determine the affected SDP spending as a percentage of each state's total Medicaid hospital spending.

Eight states account for more than half of the estimated federal hospital SDP spending above the . . .