Analysis of state directed payments (SDPs) were released in a report on December 14 by the Government Accountability Office (GAO), which demonstrated limited CMS oversight, negligible transparency on state share, nominal review of outcomes upon renewal, and poor availability of documents relating to each SDP’s evaluation.

In 2022, Medicaid spent more than $400 billion in managed care arrangements, with another $38.5 billion doled out through SDPs. States are increasingly turning to SDPs in managed care contracts to supplement base rates to hospitals, nursing homes, and other safety net providers. These models range from quality incentive payments to provider taxes.

The report offered recommendations for improving each deficit, with the Centers for Medicare & Medicaid Services agreeing with two of the four.