States with the Biggest Potential Reductions in Medicaid Payments to Hospitals Include California, Illinois, Kentucky, Texas, North Carolina, Louisiana, Arizona and Michigan

An estimated $60 billion in federal Medicaid spending in 37 states (including the District of Columbia) would likely exceed new federal limits on state directed payments for hospital services once fully implemented, a new KFF analysis finds.

The 2025 reconciliation law made major changes to Medicaid eligibility and financing, including new limits on how much states can direct Medicaid managed-care organizations to pay for certain services, including hospital care.

The eight states with the biggest potential reductions in Medicaid payments to hospitals account for half of the total: California ($7.4 billion), Illinois ($4.0 billion), Kentucky ($3.9 billion), Texas ($3.5 billion), North Carolina ($3.4 billion), Louisiana ($3.3 billion), Arizona ($3.0 billion) and Michigan ($2.6 billion).

In the past, states were allowed to direct managed care plans to pay hospitals and other providers up to the average commercial rates for such services. Once implemented, the new law limits such payments in most states to Medicare payment rates, which typically are substantially lower than commercial rates. In the 10 states that have not expanded their Medicaid programs under the Affordable Care Act, payments are capped just above Medicare rates.

The Trump administration in June 2025 issued a proposed rule to implement the change but has not yet finalized those regulations. The analysis assesses the scope of federal funding for hospital services that could be affected once the new limits are fully in place, including insights into how the magnitude of the changes will vary by state.

The estimates do not project actual revenue losses for hospitals annually, which would be affected by other coverage changes, provider tax changes as well as state responses to the new limits.

States with state directed payments that exceed the new limit could take a range of actions in response, including increasing base payment rates for hospital services, though their ability to do so may be limited by other new restrictions on financing mechanisms, such as provider taxes. Hospitals’ ability to absorb reduced payment rates also varies and could pose particular challenges for hospitals with low operating margins, including many rural hospitals and hospitals with relatively large numbers of Medicaid patients.

A HRSA-funded publication from the National Governors Association reports on six states (Delaware, Missouri, Alabama, Illinois, Georgia, and North Carolina) making significant investments in maternal and child health through funding from CMS’s Rural Health Transformation Program.

Focus areas include workforce recruitment and retention, technology and regional hubs, and integrated care models.

That’s one of the findings in a newly released report on the impact of Certified Community Behavioral Health Clinics (CCBHC) from the National Council for Mental Wellbeing.

A federal program that provides community-level services for mental health and substance use disorder for anyone who requests it – regardless of their ability to pay – the CCHBC initiative is operated through an HHS partnership across the Substance Abuse and Mental Health Services Administration, the Center for Medicare & Medicaid Services, and the Office of the Assistant Secretary for Planning and Evaluation.  In calendar year 2025, rural CCBHCs reported serving 552,214 individuals, making a 46.2 percent increase in the number of CCBHC clients since becoming a CCBHC.

The Substance Abuse and Mental Health Services Administration (SAMHSA) released findings from the 2025 National Survey on Drug Use and Health, providing updated national data on mental health conditions, substance use disorders, recovery, nicotine vaping, and behavioral health trends.

The survey includes new measures on adolescent self-harm, adult sleep disturbances and chronic pain, offering data that can inform behavioral health program development and policy recommendations for community health centers.

The Pennsylvania Department of Health (DOH) gathered community input for the 2026 Family Health Needs Assessment Survey through April 30, 2026, aimed at improving maternal, child, and family health, removing care barriers, and expanding behavioral health access.

The results will help the Bureau of Family Health identify new and emerging health needs that it should consider as it seeks to advance maternal, child, and family health in communities and networks of care across the state.

This survey is a component of the Bureau of Family Health’s Title V Maternal and Child Health Services Block Grant interim needs assessment.

The Family Health Needs Assessment Survey Summarized 2026 Findings are now available.

Area Agencies on Aging (AAAs) are state-designated public or private non-profit agencies that cover a specified region to provide and coordinate support services for older adults, people with disabilities, and caregivers. Services provided by AAAs include transportation, needs assessment and care planning, homemaking, case management, nutrition, personal care assistance, chore services, home modification and repair, older adult education and programming, and many other essential programs for older adults.

This policy brief examines the needs of older adults living in rural communities who are homebound by sharing findings from a listening session of rural-serving AAAs. 

The Rural Maternity and Obstetrics Management Strategies (RMOMS) 2021 Cohort Final Report summarizes the results of three rural maternal health networks funded by the Health Resources and Services Administration (HRSA), Federal Office of Rural Health Policy (FORHP) from September 2021 through August 2025.

The report describes how networks in Minnesota, Missouri, and West Virginia expanded access to maternity care through telehealth, remote patient monitoring, patient navigation, group prenatal care, doula services, and other innovative strategies designed to address provider shortages and transportation barriers in rural communities. The networks served more than 8,600 women during the implementation period and reported improvements in first-trimester prenatal care, postpartum visit utilization, and infant health outcomes while establishing network models of care intended to continue after federal funding ends. The report also identifies strategies used by RMOMS networks that may help inform efforts to improve maternal and infant health in rural areas.

Visit ruralmaternaldata.org for more resources from the RMOMS program.