NPRM: Managed Care & FFS Payment Arrangements

CMS has issued a Notice of Proposed Rulemaking (NPRM) that would revise Medicaid managed care and FFS payment arrangement policy. The proposal would implement Section 71116 of H.R.1 (OBBBA) by replacing prior average commercial rate-based State-Directed payment (SDP) limits with Medicare-based payment limits for inpatient hospital, outpatient hospital, nursing facility, and certain academic medical center practitioner services. CMS also proposes extending similar payment limits to all other SDP types beginning January 1, 2029, alongside new guardrails related to financing arrangements, provider classes, reporting requirements, and phasedown timelines for existing SDPs. 

The proposed rule would: 

• Cap SDP provider payment rates at 100% of Medicare payment rates for expansion states and 110% of Medicare payment rates for non-expansion states (or 100% of the Medicaid state plan rate if a comparable Medicare rate is not available), consistent with section 71116 of the WFTC legislation and historical Medicaid FFS payment levels, 

• Apply similar limits to certain targeted Medicaid fee-for-service payments, and 

• Establish consistent national standards to improve transparency and accountability. 

CMS estimates the proposal could generate approximately $775 billion in savings over 10 years. Comments are due July 21, 2026.  

FMI: Read the NPRM at https://www.federalregister.gov/documents/2026/05/22/2026-10292/medicaid-program-medicaid-managed-care-state-directed-payments-and-medicaid-fee-for-service-targeted. Read the fact sheet here.