While the Medicaid program provides coverage to many, it still pays far less than other payers. State directed payments (SDPs) help to offset low Medicaid payment rates by requiring Medicaid managed care plans to pay providers according to specific rates that advance state quality and access goals. Because most Medicaid beneficiaries now are enrolled in Medicaid managed care, SDPs have become a critical source of support for essential hospitals and vital tool for supporting state efforts to ensure access to quality care for Medicaid beneficiaries, particularly in rural areas.
To ensure that Medicaid beneficiaries can have access to the same care as others in their community, states can use SDPs to close the gap between Medicaid and the average commercial rates (ACR). The first Trump administration developed this important policy to provide states with the flexibility that they needed to achieve state goals, such as expanding access to care in rural areas.
America’s Essential Hospitals urges Congress to reject cuts to Medicaid state directed payments that serve as a lifeline to patients, states, and essential hospitals across the country.
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