CMS released the proposed rule “Medicaid Managed Care State Directed Payments and Medicaid Fee-For-Service Targeted Medicaid Practitioner Payments” on May 20, 2026, proposing changes to Medicaid managed care state directed payment (SDP) limits and new limits for certain targeted FFS provider payments.

The proposal would formally implement section 71116 of H.R.1, referred to as the Working Families Tax Cut legislation, and further clarify SDP payment limits, grandfathering, and phase-down policies.

CMS is accepting public comments on the proposed rule for 60 days following publication in the Federal Register before issuing a final rule (period is estimated to close on July 21).

Sellers Dorsey summarized the proposed rule, including key provisions, background information, and more.