AAMC Responds to Proposed Rule on SDPs and Other Supplemental Payments

The AAMC issued a May 21 statement opposing provisions of a proposed rule issued by the Centers for Medicare & Medicaid Services (CMS). In the statement, the association outlined concerns about the rule’s negative impacts on access to care and urged the agency to withdraw the proposed provisions that go beyond the statutory framework established in the One Big Beautiful Bill Act (OBBBA, P.L. 119-21, PDF). 

In the May 20 proposed rule related to Medicaid managed care state directed payments (SDPs) and fee-for-service (FFS) supplemental payments, the CMS seeks to implement Section 71116 of the OBBBA [refer to Washington Highlights, July 3, 2025]. The OBBBA reduces the total payment rate for new SDPs, while grandfathering payment rates for existing SDPs until 2028. This rule builds on the CMS’ most recent guidance from February [refer to Washington Highlights, Feb. 6]. 

The proposed rule goes beyond what was originally required by the OBBBA in several ways, proposing additional limits on SDPs and on targeted Medicaid practitioner payments used in Medicaid FFS. In the rule, the agency proposes to extend the OBBBA’s restrictions on SDPs to all services, as opposed to the four main categories outlined in the law. Further, the rule proposes to eliminate the use of uniform rate increases as a permissible type of SDP, beginning Jan. 1, 2028. The rule also proposes to extend the OBBBA’s new limits on SDPs, set at 100% of the Medicare rate for Affordable Care Act (ACA) expansion states and 110% in ACA non-expansion states, to additional types of Medicaid supplemental payments, including targeted Medicaid practitioner payments under FFS. 

The rule will be open for a 60-day comment period with comments due on July 21.