CMS Proposed Rule Would Cut $31B From Virginia Medicaid Over 10 Years
A proposed Centers for Medicare and Medicaid Services rule would reduce Virginia’s Medicaid funding by $31 billion over the next decade, according to the Virginia Hospital and Healthcare Association. Public comment on the rule closed this week.
The cuts go beyond what Congress authorized in H.R. 1, the reconciliation law signed by President Trump last summer and later renamed the Working Families and Tax Cuts Act. H.R. 1 caps what are called state-directed payments, but the CMS rule adds restrictions that align Medicaid payment rates more closely with the lower Medicare reimbursement rates and limits supplemental payment arrangements outside standard managed care.
“As written, it goes well beyond the statutory language of H.R. 1 by imposing deeper funding cuts and more restrictive policy provisions than what Congress established in the law.”
Julian Walker, spokesman, Virginia Hospital and Healthcare Association, July 2026
A Presidential Memo, Not a Congressional Vote, Drives the Extra Cuts
The additional restrictions in the proposed rule trace to a June 2025 presidential memo in which Trump directed federal agencies to curb Medicaid payments exceeding Medicare rates. CMS administrator Dr. Mehmet Oz framed the rule as “ensuring taxpayer dollars support patients, not payment schemes.” Congress never voted on these specific rate alignment policies.
Georgetown University professor Edwin Park said regulatory rulemaking like this attracts less public scrutiny than legislation. That gap, he said, is why “CMS has taken this as an opportunity to make the cuts harsher.”
Cutting Fraud Oversight Would Cost Virginia More Than It Saves
The administration has cited waste, fraud, and abuse as justification for Medicaid reductions. It has already withheld Medicaid funding from California and Minnesota over abuse allegations and revoked money for Hawaii’s Medicaid fraud unit. Virginia’s Medicaid Fraud Control Unit, housed in the Office of the Attorney General, investigated nearly 7,000 fraud cases last year.
Of those nearly 7,000 investigations, 11% were substantiated. Cutting funding that supports fraud detection would remove the mechanism that catches the very abuse the administration cites as justification. Park called that approach “counterintuitive.”
Payment changes under H.R. 1 are scheduled to phase in during 2027, 2028, and 2029, giving Virginia hospitals a short window to contest the rule before implementation begins.
What You Can Do Now
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Call your Virginia senators at (202) 224-3121. Tell Senators Mark Warner and Tim Kaine to demand CMS withdraw the Medicaid rule changes that exceed H.R. 1’s statutory language. The payment cuts begin in 2027, leaving limited time to act.
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Contact the House Virginia delegation. Virginia’s representatives sit on committees that oversee CMS. Find your representative at house.gov/representatives/find-your-representative and ask them to hold an oversight hearing on whether the rule exceeds congressional authority.
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Submit a comment directly to CMS. Though the primary comment window closed this week, CMS rules can still receive public input during the review period. Check regulations.gov for the docket and submit your opposition to the Medicaid rate alignment provisions.
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Contact the HHS Office of the Secretary at (202) 690-7000. Ask HHS to release a legal analysis comparing the rule’s specific payment rate provisions against the text of H.R. 1, Section by section.
Sources
Virginia Mercury: Virginia hospitals warn of $31B Medicaid loss if CMS rule passes
KFF: Medicaid State-Directed Payments Explained
Georgetown University Center for Children and Families: Edwin Park Medicaid Policy Analysis
Congress.gov: H.R. 1, Working Families and Tax Cuts Act, 119th Congress
Virginia Department of Social Services: Medicaid Fraud Control Unit Annual Report