The Medicaid program is jointly funded by the federal government and states. The federal government pays states for a specified percentage of program expenditures, called the Federal Medical Assistance Percentage (FMAP). States must ensure they can fund their share of Medicaid expenditures for the care and services available under their state plan.
States can establish their own Medicaid provider payment rates within federal requirements, ans generally pay for services through fee-for-service or managed care arrangements. To change the way they pay Medicaid providers, states must submit a State Plan Amendment (SPA) for CMS review and approval.