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CMS Advises States on Directed Provider Payments in Managed Care

The Centers for Medicare & Medicaid Services (CMS) issued an informational bulletin (CIB) about states’ ability to enact requirements for plans that make specific payments to specific providers under Medicaid managed care contracts.

Under the Medicaid managed care final rule issued in 2016, states are permitted to require such “directed payments” for the purposes of implementing:

  • value-based purchasing models;
  • delivery system reform or performance improvement initiatives; or
  • minimum fee schedules or rate increases.

The CIB provides additional information for states on enacting these payment arrangements under the final rule, including:

  • the process and criteria for gaining approval for state-directed payment arrangements;
  • the potential for multiyear approval of state-directed payment arrangements; and
  • how directed payments differ from pass-through payments and other payment arrangements not subject to approval under these rules.

In addition to the CIB, CMS posted an appendix with examples of approvable state-directed payment arrangements. CMS also shared a preprint that states must submit to request approval for specific directed payment arrangements. The agency has generally committed to a 90-day review process.

Contact Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Rachel Schwartz is a former policy associate at America's Essential Hospitals.

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