New Federal Rule Will Cut Medicaid Reimbursements for Doctors and Hospitals in 30 States

New federal regulations will compel about three dozen states to slash Medicaid reimbursements for doctors and hospitals, amounting to a reduction of more than $50 billion in yearly spending. The policy targets the 17 states with the most generous provider rates, mandating cuts ranging from 10% to 25% of their Medicaid budgets. Researchers note that this could lead hospitals and certain nursing facilities to curtail the number of Medicaid patients they accept.

Medicaid already pays less than private insurers and Medicare, and many providers already limit Medicaid participation. The rule follows a tax and spending measure signed by President Donald Trump in July 2025 that caps state-directed payments and requires incremental rate reductions beginning in 2028. Critics argue the cuts will deepen the disparity between Medicaid payments and care costs, while providers may seek higher rates from commercial insurers to offset losses. The analysis identifies fifteen states, including Nebraska, Louisiana, and Florida, that will face the steepest reductions.