Opening The Black Box Of Medicaid Physician Payment: Medicaid Managed Care And State-Directed Payments Authors: Diane Alexander dealexa@wharton.upenn.edu, Molly Frommer, and Eric T. Roberts

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2026.00382?utm_campaign=november+2026+issue&utm_medium=email&_hsenc=p2ANqtz--FJb41VMaVVCtMlju4C3J9YlnDdxRrt8uARJzm3Wmpp-d_3I59XlqyAgZOMS7xN4FRFTJu5Ww_cvFvvM8J9bobQLZr_Q&_hsmi=445751573&utm_content=ahead+of+print&utm_source=hasu Provider payment rates in Medicaid are often assessed by comparing Medicaid fee-for-service rates with Medicare rates. However, this approach may poorly approximate payments in Medicaid managed care, where most enrollees receive coverage. State-directed payments (SDPs)—requirements that managed care plans increase Medicaid payments—have become a major means of increasing provider payment in Medicaid managed care. We used Centers for Medicare and Medicaid Services preprints from the period 2023–25 to estimate Medicaid managed care payments for primary care services and professional services at academic medical centers. For primary care services not performed in academic medical centers, most SDPs raised Medicaid managed care payment levels toward Medicare rates. In contrast, SDPs for services performed at academic medical centers varied widely across states and often raised payments well above Medicare rates, placing them above the caps established by the One Big Beautiful Bill Act. These patterns suggest that SDPs are being used both to bolster primary care payment and to deliver large supplemental payments to academic medical centers, underscoring a need for monitoring and policy guardrails to align SDPs with access and value in Medicaid.