Medicaid state directed payments (SDPs) are a new option to help states close gaps in payment between Medicaid and other payers by requiring health plans to pay providers according to state-specified rates and methods. This brief examines how SDPs relate to other types of Medicaid payments and illustrates how states are using this authority to improve access to care for Medicaid beneficiaries.
In fee-for-service (FFS) payment systems, states can make supplemental payments to providers to directly offset low payment rates. But in Medicaid managed care, states have historically lacked control over how managed care organizations pay providers. Because most Medicaid beneficiaries now are enrolled in managed care, low managed care payment rates are an increasing threat to the financial stability of safety net providers — including essential hospitals, which are committed to serving all people, regardless of income or insurance status.
The brief describes how SDPs that pay essential hospitals the same rate as other payers enable these hospitals to invest in initiatives to improve access and quality. It features profiles of essential hospital initiatives in Ohio, Kentucky, California, and Georgia to reduce infant and maternal mortality, bolster access to care in rural communities, expand cancer screening, reduce avoidable emergency department visits, and improve care quality, value, and access in other ways.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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