Financing Medicaid Payments: Past, Present, and Future After the OBBBA
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Hello and welcome to the AHLA podcast. My name is Kat Kirkland. I'm a partner at King and Spaulding and was one of the presenters at this year's AHLA Medicare and Medicaid Institute in Baltimore for the 2026 conference. I helped present with my co-presenter who will introduce himself shortly on Medicaid financing. So we talked about the past, present, and future of Medicaid financing.
Thanks, Kat. Hi everybody. Uh my name's Baxter Morgan. I'm senior counsel with Hush Blackwell in Austin, Texas. And worked with CAP for a number of years, and both of us have spent a long time in the Medicaid payment and finance space working on these issues. And this is, you know, as as much as uh as being a Medicaid nerd, as much as as it sounds like being a Medicaid nerd, this is a very exciting time for Medicaid law in the United States because of the developments through the One Big Beautiful Bill Act and the letters and and now rulemaking that started uh from CMS in this process. So Glad to be with you here today, Kat, to talk about the presentation we did back in March and then kind of where these things are now and where they're going.
Absolutely. I feel like we have had so many updates since we last talked about this just because there's been more rulemaking, there's been more kind of informal guidance from CMS regarding. the programs that are financed by Medicaid, but also provider taxes and implications of the one big beautiful bill. We've had, you know, a flurry of proposed rules in the past week that implicate so much of what we do. So we have a lot of ground to cover and and talk about today.
Yeah. I guess do do you want to start maybe with sort of the the high level of like how we got here? I mean, I kind of kick off like what I'm thinking and then throw it over to you, like You know, the Medicaid is a state and federal partnership. And so the idea is that the federal government is more than willing to put in a majority in most cases of the cost of covering indigent patients' healthcare services in the United States. But they expect states to put in a share as well. And so that non-federal share of each Medicaid payment, demonstrating the expenditure. uh by the state or unit of government uh towards treating Medicaid beneficiaries and the other, you know, folks in that community.
What is the historical background of Medicaid financing and the federal‑state partnership?
Uh, that's a critical part of this. And so when You know, over the years this there there have been sort of evolving fights over what that means. You know, where can you get these sources of funds? There but there have been some kind of constant threads throughout that that it really is a partnership and operating within the boundaries uh that CMS has established over the years, you know, they're more than willing to to finance large portions of these services, but they're expecting this to be a true partnership and not uh a mechanism for states to just rely on Medicaid as an extra funding source and draw down funds that that the government, the federal government really doesn't think is are tied to treating the indigent.
And so, you know, the two main ways that we see uh Medicaid payments get financing. Well, three really. The biggest one is obviously um general revenue from the the state legislatures. But because each state has a balanced budget requirement, um, generally states are not able to put in as much money as they might want uh because, you know, healthcare is expensive. And when states are looking at their expenditures either from a fee for service basis or on a managed care side, there's just a limit to what they can put in. And so that's where a lot of payments on the supplemental side come in. You know, if it's from the Medicaid dish program, it's from uncompensated care programs, UPL programs, waiver programs, direct to payment programs like we see today.
Um, all of those require that non federal share. And so that was what the the presentation that Kat and I did in March focused on.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:05–2:47
2
What is the historical background of Medicaid financing and the federal‑state partnership?
2:47–12:07
3
How do provider taxes work and why were they a primary source of Medicaid financing?
12:07–20:03
4
What changes did the One Big Beautiful Bill Act (OBBBA) introduce to provider taxes?
20:03–24:43
5
How are expansion‑state versus non‑expansion‑state tax caps being reduced under the OBBBA?
24:43–39:34
Speakers
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