Tara Bannow and Bob Herman , 2025-05-13 17:50:00
House Republicans plan to slash $715 billion from state Medicaid programs over the next decade, but their proposal spares special Medicaid payments hospitals increasingly use to pad their bottom lines.
Hospitals and state governments have devised complicated, murky funding mechanisms in Medicaid under the guise of keeping hospitals whole. In most cases, they end up directing extra cash to those providers with little federal oversight.
Last year, more than $110 billion flowed through about 300 of these so-called state directed payment arrangements, which are funded in part by state taxes on hospitals. The House Energy and Commerce Committee’s plan for cutting Medicaid spending would keep all of the current deals in place, but restrict new ones going forward.
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