On July 21, 2026, AFP submitted a public comment letter to the federal Medicaid agency in support of the Trump administration’s proposed Medicaid Program Integrity Rule, one of the most significant Medicaid integrity reforms in decades.
The proposed rule would implement a provision of President Trump’s Working Families Tax Cut Act that cracks down on a state spending gimmick known as “state-directed payments” (SDPs). Under this gimmick, states use laundered money to pay Medicaid providers at far-above-adequate rates, needlessly driving up program costs and wasting scarce resources.
The proposed rule would reduce Medicaid spending by an estimated $774.8 billion from 2026 through 2035, of which $510.1 billion would accrue to federal taxpayers. These savings would in turn reduce the amount of taxing, borrowing, and debt service needed to finance the gimmicks, along with the deadweight loss and economic drag such impositions create.
Congress enacted the Medicaid reforms in the Working Families Tax Cut to end an unacceptable status quo that is burdensome to taxpayers and unfair to vulnerable patients. The proposed rule would implement that important mandate, benefitting patients and taxpayers alike.
Read the Public Comment Letter below:
