Module 3
Provider Payment and Directed Payments
Low base rates drive a huge and fast-growing apparatus of extra payments. What state directed payments are, and why most of the money raises rates rather than rewarding value.
By the end of this module, you will be able to:
- Explain why low Medicaid base rates drive an apparatus of supplemental payments
- Describe what a state directed payment is and what limits now apply to it
- Distinguish directed payments that reward value from those that simply raise rates
- The Medicaid Rate Problem Medicaid pays providers less than other payers, which threatens access and drives a whole apparatus of extra payments. This lesson sets up why. About 4 min
- State Directed Payments Directed payments let states steer how MCOs pay providers. They have exploded in size, and the rules are tightening. This lesson explains the tool. About 5 min
- Directing Payment Toward Value Directed payments can require value-based arrangements, but most of the money goes to raising rates. This lesson covers the promise and the honest reality. About 4 min
Module quiz
Answer all questions to see your score.
1. What core problem do supplemental and directed payments exist to address?
Because base rates are low, roughly two-thirds of Medicare for physicians, states layer extra payments on top to keep providers participating.
2. Under the 2024 final rule, what is the ceiling on a state directed payment?
The 2024 rule set the limit at the average statewide commercial rate, letting states raise Medicaid payment close to what commercial payers pay.
3. In practice, what are most state directed payment dollars used for?
Although value-based purchasing is one permitted form, the dominant use is rate increases, so the tool's value-based potential is largely unrealized.