CMS Tightens Rules on Medicaid State Directed Payments

September 10th, 2025

1 min read

What Agents Should Know

On September 9, 2025, CMS released new guidance on Medicaid State Directed Payments (SDPs) — the arrangements states use to set how managed care plans pay providers. Why does this matter? Because these payments influence how provider networks are built, how care is delivered, and ultimately, the options your clients see.

Key Takeaways for Agents

New payment limits: Starting July 4, 2025, certain SDPs (hospital, nursing facility, and AMC practitioner services) can’t exceed 100% of Medicare rates in expansion states or 110% in non-expansion states.
Grandfathering period: Some existing SDPs approved before the deadline can continue temporarily until January 1, 2028, then must phase down.
Why it matters: SDPs shape provider participation. Stricter limits could affect which doctors and hospitals choose to stay in Medicaid networks.

What This Means

Network shifts: As payment rates tighten, some providers may reconsider Medicaid participation. Be prepared for network changes in your clients’ plans.
Client conversations: Clients may ask why certain doctors or hospitals are no longer covered — this policy shift could be the reason.
Stay informed: Knowing these changes helps you explain evolving provider networks and reassure clients that their access to care is still protected.

CMS wants to curb overspending and make Medicaid payments more transparent. For agents, this means keeping an eye on provider networks and being ready to guide clients if access or plan options shift in the coming years.

For more information, you can review the full guidance letter at: https://www.medicaid.gov/medicaid/managed-care/guidance/state-directed-payments

Topics:

Medicare Advantage

Medicare Sales

CMS

CMS Tightens Rules on Medicaid State Directed Payments

What Agents Should Know

Key Takeaways for Agents

What This Means

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