Today, the Centers for Medicare & Medicaid Services (CMS) released a letter regarding Section 71116 of Public Law 119-21 (which CMS refers to as the "Working Families Tax Cut" (WFTC) legislation). The letter released on September 9, 2025 is rescinded with today's release. Section 71116 directed CMS to revise 42 CFR § 438.6(c)(2)(iii) to reduce the payment limit for the total payment rate for state directed payments (SDP) for inpatient hospital services, outpatient hospital services, nursing facility services, and qualified practitioner services at an academic medical center. Section 71116 also permits a temporary grandfathering period for certain SDPs, and Section 71116 applies to all 50 states and the District of Columbia. CMS acknowledges that this letter is preliminary in nature and policies will be finalized as part of notice and comment rulemaking.
