MedicaidAdministrativeMedium impact
Revised Processing for State-Directed Payments
Kentucky Medicaid·KY·Provider Letter
Effective date
Jul 1, 2026
We identified it
Jun 20, 2026
Summary
Kentucky Medicaid is changing how hospitals receive State Directed Payments (SDP) starting July 1, 2026. Instead of receiving a single payment through the Kentucky Hospital Association, hospitals will receive separate payments directly from each of the five Managed Care Organizations (MCOs).
Action Required
By July 1, 2026: Billing and revenue cycle teams must prepare to receive and process State Directed Payment (SDP) payments from all five Kentucky Medicaid MCOs (Aetna, Humana, United, Molina, Wellcare) instead of a single payment from Kentucky Hospital Association. Update payment processing workflows, banking procedures, and revenue recognition systems to handle multiple MCO payments. Monitor for additional implementation details from DMS.