H.R. 10729: Long-Term Rural Health Investment Act of 2026

This bill would change certain Medicaid financing rules, especially those involving state directed payments in Medicaid managed care, and would repeal some recently enacted limits related to provider taxes.

What it would do

• Sets a new cap on certain Medicaid managed care payments. For payment arrangements that begin on or after January 1, 2030, the total payment rate for a covered service would be limited to 200% of the published Medicare rate for that service. If there is no published Medicare rate for the service, the cap would instead be based on the state’s average commercial rate.
• Phases in reductions for some existing payment arrangements. If a state had already sought approval, or made a good-faith effort to seek approval, before July 1, 2028, or had submitted a completed preprint before the bill is enacted, the bill would not cut those payments all at once. Instead, starting with the first rating period on or after January 1, 2030, the payment would be reduced by 10% each year until it reaches the new cap.
• Allows more flexibility in how states structure these payments. Beginning January 1, 2028, states could base certain directed payments on utilization and services delivered outside the rating period, and could require payments to be reconciled against actual utilization during the rating period.
• Lets states set aside part of managed care payments separately. Also beginning January 1, 2028, states could withhold part of a managed care plan’s capitation payment and pay certain directed payment amounts separately, or require plans to hold back part of the capitation rate for that purpose.
• Requires new reporting from states. Starting January 1, 2027, states that use state directed payments would have to submit detailed data to the federal government within one year after each rating period. The required data would include:
  • total spending on the directed payments,
  • identifiers for enrollees, providers, and plans,
  • amounts paid to individual providers,
  • amounts collected by the state to fund the non-federal share,
  • procedure and diagnosis codes, and
  • amounts allowed, billed, and paid for the related services.
• Temporarily restores older federal rules. From the date the bill is enacted until January 1, 2030, the Secretary of Health and Human Services would have to apply the Medicaid managed care rule that existed before Public Law 119–21 changed it.
• Repeals some provider tax provisions. The bill would repeal sections 71115 and 71117 of Public Law 119–21 and treat the Medicaid provider tax rules as if those sections had never been enacted. It would also rescind funds that had been appropriated under one of those repealed sections.

Overall effect

In practical terms, the bill would rework how states can use Medicaid managed care payment arrangements, require more reporting and oversight of those payments, and undo some of the provider tax changes that were previously enacted. It would affect the way states finance Medicaid, especially in managed care programs and in arrangements that rely on state-directed payments.

Relevant Companies

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