New Medicaid Payment Transparency Rules: Requirements and Limitations for Fee-for-Service Rates

New federal transparency requirements that took effect in July 2026 reveal that the specific billing codes mandated by the Centers for Medicare & Medicaid Services to track state Medicaid payment rates cover only 2% of noninstitutional fee-for-service spending, according to a brief published by the Kaiser Family Foundation.

Key Clinical Takeaways:
• CMS specified 68 evaluation and management billing codes for state comparative rate analyses, representing just 5% of noninstitutional claims.
• Children account for 31% of enrollees using the selected services, compared to 22% of all fee-for-service enrollees, while enrollees with chronic conditions make up 66% of users.
• States face varying implementation hurdles because CMS does not prescribe a standard format for posting fee schedules online.

State Flexibility and the Push for Medicaid Payment Transparency

States hold broad flexibility in determining how they pay medical providers under Medicaid. Previous research cited in the Kaiser Family Foundation brief found that Medicaid fees for selected physician services hovered at roughly 75% of Medicare rates, leaving physicians significantly less likely to accept patients covered by Medicaid compared to other insurance types. Prior to the new rules, detailed information on these payment structures remained limited.

The federal push for transparency aims to simplify rate comparisons across states and payers, helping officials shape payment policies that support provider participation and patient access. These objectives contrast with broader federal initiatives focused on exposing healthcare prices to lower overall consumer costs, given that Medicaid already incorporates substantial out-of-pocket protections for low-income enrollees. In fiscal year 2024, 42% of Medicaid spending was processed through fee-for-service structures, while 53% ran through managed care organizations.

Reporting Requirements Under the 2024 Final Rules

The Centers for Medicare & Medicaid Services finalized separate reporting frameworks in 2024 for fee-for-service arrangements and managed care systems. Under fee-for-service rules that became active on July 1, 2026, state agencies must publish all provider payment rates on publicly accessible websites and update them within a month of any modification. States are also required to disclose average hourly wages paid for personal care, home health aides, homemakers, and habilitation services every two years.

Managed care rules require states to submit annual analyses comparing managed care plan payments to Medicare benchmarks and evaluating home care rates against state fee-for-service baselines. According to the Kaiser Family Foundation report authored by Heather Saunders, Alice Burns, and Robin Rudowitz, these managed care analyses apply to rating periods starting on or after July 9, 2026, with formal submissions required six months after each rating period closes in Network Adequacy and Access Assurances Reports. Reports submitted starting January 1, 2028, must incorporate these new evaluations.

Selected Billing Codes Capture Minimal Spending

To standardize fee-for-service comparisons, CMS designated 68 evaluation and management billing codes covering primary care, obstetrical and gynecological care, and outpatient mental health and substance use disorder services. However, data analyses using 2023 T-MSIS Research Identifiable Files indicate that these 68 codes capture just 2% of noninstitutional fee-for-service spending and 5% of related claims.

Children represent 31% of enrollees using the tracked codes, compared to 22% across all fee-for-service enrollees. Enrollees managing chronic conditions also utilize these services heavily, accounting for 66% of users compared to 35% of the overall fee-for-service population.

State Reporting Differences Complicate Nationwide Comparisons

Substantial differences in how state agencies organize and publish fee schedules complicate nationwide comparisons. While states like Rhode Island and Virginia maintain searchable databases, others such as Nebraska, Washington, and Kentucky provide downloadable files in PDF or Excel formats. Some provider types—including clinical social workers, psychologists, and counselors—may not bill using evaluation and management codes in every state.

The utility of these disclosures also depends heavily on a state’s chosen delivery model. In states relying primarily on fee-for-service or a hybrid model, published rates govern a substantial portion of care. In states dominated by managed care, fee-for-service schedules may apply to very few services, offering a limited view of actual provider reimbursement unless those fee schedules serve as direct benchmarks for managed care organization payments.

Methodological adjustments required by data constraints included the exclusion of Illinois from the analysis due to duplicate line records and unusable procedure codes identified in the DQ Atlas for institutional files. Separate CHIP enrollees were similarly excluded from the fee-for-service evaluations.

Disclaimer: The information provided in this article is for educational and scientific communication purposes only and does not constitute medical advice. Always consult with a qualified healthcare provider regarding any medical condition, diagnosis, or treatment plan.