Federal Medicaid Spending Through State Directed Payments Nears $100 Billion Annually Across 41 States, With New Limits Set to Reduce Funding to States KFF analysis shows hospitals have the most spending through state directed payments Published: Jun 15, 2026

https://www.kff.org/medicaid/federal-medicaid-spending-through-state-directed-payments-nears-100-billion-annually-across-41-states-with-new-limits-set-to-reduce-funding-to-states/ Forty states and DC currently receive $93 billion in annual federal Medicaid spending through state directed payments (SDPs) and may be at risk due to forthcoming limits on these payments, according to new KFF estimates. Annual federal spending on SDPs is highest in California (an estimated $10.6 billion)—followed by Texas ($6.3 billion), North Carolina ($5.2 billion), and Illinois ($5.1 billion).