This week’s graphic highlights the increasing prominence of state-directed payment (SDP) arrangements for Medicaid programs nationwide. Introduced in 2016, these payments were meant to encourage provider participation in Medicaid managed care organizations, thereby improving access for recipients. More than three quarters of states utilized SDP programs in 2022, compared to just 20% of states in 2017, and this growth has only continued. When comparing the 19 months prior to Feb. 1, 2023, to the 18 months following that date, the number of approved, unique directed payment arrangements increased 21% and associated spending rose nearly 60%. Additionally, hospitals now make up a greater share of approved payment arrangements compared to prior years. Thanks to these payments, hospitals are more financially stable and are better equipped to improve Medicaid access. Some prominent not-for-profit health systems put their SDP funds towards initiatives that have substantially improved care outcomes for underserved patients. With CMS finalizing a rule setting the upper limit for an SDP payment to a service’s average commercial rate, hospitals’ will hopefully be able to expand these efforts and provide more critical support for Medicaid beneficiaries.
