Attorney General Clark Joins Challenge to Trump Administration’s Proposal to Cut Medicaid Payments to Healthcare Providers

Attorney General Clark today joined a coalition of 14 attorneys general in submitting a comment letter opposing a proposed rule by the U.S. Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) that would severely limit an important tool used by state Medicaid programs to increase access to care. State-Directed Payments and supplemental payments under fee-for-service Medicaid (referred to in the letter as Healthcare Affordability Payments) help states support hospitals and other healthcare providers, including those serving rural, urban, and underserved communities, where Medicaid payments often fall short of the cost of providing care. The proposed rule, intended to implement the One Big Beautiful Bill Act, would sharply restrict these payments beyond what Congress authorized and fails to consider the devastating harms to patients and providers that will flow from further Medicaid cuts.

In the comment letter, Attorney General Clark and the coalition argue that the proposed rule:

• Imposes cuts beyond those required by the One Big Beautiful Bill Act to arbitrarily cut Healthcare Affordability Payments for services Congress spared, like mental healthcare and rehabilitation care, as well as extending to reach fee-for-service supplemental payments.

• Undermines Medicaid expansion under the Affordable Care Act (ACA). Medicaid expansion, pioneered by the ACA, is a crucial tool to counter the cost-of-living crisis and language in the proposed rule's preamble appears intended to coerce states into abandoning Medicaid expansion. To date, 41 states have expanded Medicaid under the ACA.

• Arbitrarily penalizes large, dynamic urban regions. Specifically, CMS's narrow definition of "geographic region" could unfairly disadvantage large, interconnected urban areas and communities where residents routinely live, work, and receive healthcare across county or municipal boundaries.

• Increases uncompensated care costs for hospitals. Hospitals may have to raise prices on other consumers to compensate for these funding losses, and some may be forced to reduce services, merge, or shutter completely.

Medicaid is a federal program that helps states provide health insurance and long-term care for about 80 million Americans - about 1 in 5 people in the United States. Medicaid provides funding for key services like primary care, mental healthcare, children's hospitals, nursing facility services, outpatient services, and more. The many harmful provisions under the One Big Beautiful Bill Act are already projected to explode the uninsured rates, but further changes may raise that by expanding costs and related attacks on states' healthcare safety net.

In sending this letter, Attorney General Clark joins the attorneys general of California, Arizona, Colorado, Delaware, Hawai'i, Illinois, Massachusetts, Michigan, New Mexico, New York, Oregon, Rhode Island, and Washington.