From Oct. 1, 2026, the federal government will cover between 50% and 77.32% of most Medicaid service costs in each of the 50 states, and each state pays the rest. Those shares are set in the fiscal 2027 matching-rate notice that the Department of Health and Human Services published in the Federal Register on Nov. 28, 2025.
That split pays for Medicaid's community services for people with intellectual and developmental disabilities, from a Medicaid waiver to care in an ICF/IID. This brief explains where the money comes from, which Medicaid programs carry it, and how it reaches a provider agency, under federal rules as of September 2026.
The federal match, known as FMAP
Medicaid is paid for jointly. For each dollar a state spends on covered services, the federal government pays a share called the Federal Medical Assistance Percentage, or FMAP.
The formula is in section 1905(b) of the Social Security Act. It compares each state's income per person with the national figure, so states with lower incomes get a larger federal share. The law sets a floor of 50% and a ceiling of 83%. HHS recalculates the rates every year.
Fiscal 2027 rates for some states:
| State | Federal share (FMAP) | State share |
|---|---|---|
| California, New York and 8 other states | 50.00% | 50.00% |
| Virginia | 50.02% | 49.98% |
| Florida | 55.43% | 44.57% |
| Pennsylvania | 57.41% | 42.59% |
| Texas | 58.54% | 41.46% |
| North Carolina | 64.16% | 35.84% |
| Ohio | 65.12% | 34.88% |
| Mississippi | 77.32% | 22.68% |
The 10 states at the 50% floor are California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Washington and Wyoming. Mississippi has the highest rate among the states. The District of Columbia's rate, 70%, is set in federal law rather than by the formula.
In practice, a 50% state puts up half of every dollar spent on a waiver service. In Mississippi, the state puts up about 23 cents.
Some costs get a different match. Most administrative costs, such as running the program, are matched at 50% (42 CFR 433.15). States that offer Community First Choice, a state plan option for attendant services under section 1915(k), get 6 extra percentage points of federal match on those services.
Where the state share comes from
The state's part must be public money. Federal rules allow funds appropriated to the Medicaid agency, or transferred or certified by other public agencies, and generally bar using other federal funds as the match (42 CFR 433.51).
Most of it comes through the state budget, which is why legislative sessions matter so much to providers. States can also raise part of their share through taxes on health care providers, under rules at 42 CFR 433.68. The 2025 reconciliation law limits those taxes; see our coverage of CMS's first guidance on the new provider tax limits.
Virginia shows how the match plays out when rates rise. An October 2025 rate study prepared for the state's Medicaid agency projected that its proposed rates for 11 developmental disability waiver services would raise spending from $657.5 million to $839.9 million a year. Because Virginia's blended match for state fiscal 2027 is 50.1%, the state's own cost would rise by about $91.0 million. The report noted that actual rates depend on what the state appropriates.
Which Medicaid programs pay for I/DD services
States use several federal authorities, often more than one at a time:
| Program | What it pays for | Key limit |
|---|---|---|
| 1915(c) waiver | HCBS for people who need an institutional level of care | States cap enrollment; average cost per person can't exceed institutional care (42 CFR 441.302(e)) |
| State plan services, such as personal care | Services the state offers to everyone eligible | No waiting lists for eligible people |
| 1915(k) Community First Choice | Attendant services and supports | 6 extra points of federal match |
| Section 1115 demonstration | Services under an approved experiment | Terms set in each approval |
| ICF/IID | 24-hour facility care with active treatment | Facilities must meet federal conditions of participation |
KFF's 2025 survey of state Medicaid officials found 1915(c) waivers in use in 47 states, personal care as a state plan benefit in 33, section 1115 waivers in 15 and Community First Choice in 10. For how waivers work, see What is an HCBS waiver? For how waivers compare with facility care, see HCBS vs. ICF/IID.
How the money reaches a provider
- Authorization. A supports coordinator or case manager builds the person-centered service plan, which lists the services and amounts authorized.
- Service and billing. The agency delivers the service, documents it and bills in units, such as 15 minutes or a day, at the state's rate. Under fee-for-service, the state sets that rate in a fee schedule.
- Managed care, in some states. Here the state pays a health plan a set fee for each enrollee, often called a capitation payment, and the plan pays providers. KFF found that all but 11 states use managed care for at least some home care. Of the 39 that do, 20 said their fee-for-service rates set the minimum plans must pay providers.
- Federal match. The state pays the claim and draws federal funds at its FMAP rate.
Rates themselves are set by each state. Federal law requires that they be consistent with efficiency, economy and quality of care and high enough to attract enough providers (section 1902(a)(30)(A)). States had to post their fee-for-service rates on a public website by July 1, 2026, and must keep them current (42 CFR 447.203(b)). For how a rate is built, see our brief on how rate studies build a rate.
The 2024 federal Access Rule also added a requirement, set to apply from July 9, 2030, that 80% of payments for homemaker, home health aide and personal care services go to worker compensation (42 CFR 441.302(k)). A CMS proposed rule now under federal review could revise parts of the 2024 rule.
Pressure on the system
- Federal cuts ahead. KFF, citing the Congressional Budget Office, says the 2025 reconciliation law is estimated to reduce federal Medicaid spending by $911 billion over a decade. See our coverage of H.R. 1's passage.
- Rates are the main workforce tool. In KFF's 2025 survey, 48 states said they had raised payment rates to address home care worker shortages.
- Matches shift every year. Because the formula follows income, a state's FMAP can move up or down each October, changing how much the state must spend to keep services level.
Why this matters for providers and DSPs
- Pay starts with a state budget vote. Medicaid is often the only payer for waiver services, as Virginia's rate study notes, and rates generally rise only when a legislature funds the state share. That is why raises for DSPs are usually won or lost in budget season.
- The match changes the math. In a 50% state, every dollar of state money for a raise brings one federal dollar. In a higher-match state, the same state dollar brings in more. Knowing your state's FMAP helps when agencies and advocates make the case for funding.
- Documentation is what gets paid. The federal share flows only for services that were authorized, delivered and documented. Clear, accurate service notes from DSPs and supervisors protect the agency's revenue and hold up in audits.
- Rate changes are public. Waiver amendments that change rates typically go out for public comment, as Illinois's September 2026 notice did, and fee-for-service rates are now posted online. Agencies and staff can read, and comment on, the numbers that set their pay.