Medicaid’s payment rates have long lacked public visibility, despite evidence showing they frequently fall well below Medicare’s levels. A 2024 study revealed that Medicaid fees for physician services averaged 75% of Medicare rates, a disparity that has contributed to lower provider participation and restricted access for enrollees. New federal rules now seek to address this issue by compelling states to disclose payment data, though the scope of these requirements is narrow, and their real-world impact remains uncertain.
The Centers for Medicare & Medicaid Services (CMS) finalized transparency regulations in 2024 under two distinct frameworks: one for fee-for-service (FFS) Medicaid, where states directly reimburse providers, and another for managed care, where states contract with private insurers to administer services. In fiscal year 2024, 42% of Medicaid spending passed through FFS, while 53% went through managed care plans. The FFS rules, effective since July 2026, now demand that states publish payment details for specific services, compare these rates to Medicare, and update fee schedules monthly.
CMS identified 68 billing codes—primarily for evaluation and management (E/M) services such as office visits—that states must use for comparisons. These codes represent just 2% of noninstitutional FFS spending and 5% of claims, leaving the bulk of Medicaid services outside standardized reporting. While states must publish all FFS rates on their websites by July 1, 2026, the absence of a uniform format has led to significant variation in how data is presented.
The comparative rate analysis, the core of the transparency push, centers on primary care, obstetrics, and mental health services. However, the analysis contains critical limitations. The usefulness of the information will vary by state based on which delivery systems they use and the extent to which FFS payment rates govern the rates paid by managed care organizations.
For states that rely heavily on managed care, the FFS transparency rules provide minimal clarity. In these states, FFS rates govern only a fraction of spending, while managed care organizations set their own payment terms. The new rules require states to submit annual analyses of managed care payments, but these will not be publicly available until 2028, long after FFS data has been published. The usefulness of these analyses depends on whether managed care plans reference FFS rates as benchmarks, a practice that varies by state.
The underlying data for these requirements comes from T-MSIS, CMS’s Medicaid claims database, which tracks noninstitutional services like outpatient care, home health, and lab tests. The 68 E/M codes selected for comparison represent a small fraction of Medicaid’s broader payment structure. Most services remain outside standardized reporting, leaving policymakers and providers with incomplete visibility.
While FFS rules took effect in July 2026, managed care states must submit their first annual payment analyses in 2028, covering rating periods beginning after July 9, 2026. These analyses will compare managed care payments for select services to Medicare rates and benchmark home care payments against state FFS rates.
Methodological Approach to Assessing Medicaid Fee-for-Service Payment Transparency
The analysis relied on the 2023 Medicaid and CHIP Transaction Services Information System (T-MSIS) Research Identifiable Files, which include claims for noninstitutional services such as outpatient care, lab tests, and home health. These files were filtered to exclude Separate CHIP enrollees, identified through specific eligibility and CHIP codes. The dataset encompassed all Medicaid and Medicaid-CHIP enrollees, ensuring a broad but targeted sample for evaluating payment patterns.
