The Centers for Medicare & Medicaid Services (CMS) issued guidance to state Medicaid offices on implementation of Section 71116 of the One Big Beautiful Bill Act to aid planning efforts until a final rule is announced. Effective July 4, 2025, Section 71116 limits Medicaid State Directed Payments (SDPs) from managed care plans for inpatient hospital services, outpatient hospital services, nursing facility services, or qualified practitioner services at an academic medical center. Some existing SDPs may be grandfathered until January 1, 2028. This policy change may result in lower Medicaid payments to some providers unless the payments meet the criteria for grandfathering. This information is preliminary. Final policies will depend on the contents of a final rule.