Featured Stories
Splunk Issues Commentary: Currency of AI - Why Tokenomics is the Next Big Test for Tech Leaders
SAN JOSE, California, June 27 -- Splunk, a Cisco company, issued the following commentary on June 26, 2026, by field chief technology officer Cory Minton:
* * *
The New Currency of AI: Why Tokenomics is the Next Big Test for Tech Leaders
Key takeaways
1. AI is rewriting technology budgets. Consumption-based pricing isn't new, but the token is -- a unit of spend that swings unpredictably with every agent task and stays largely invisible until the bill arrives. The token is the operational currency of the AI software stack.
2. Agentic AI triggers "token inflation." Autonomous agents reason,
... Show Full Article
SAN JOSE, California, June 27 -- Splunk, a Cisco company, issued the following commentary on June 26, 2026, by field chief technology officer Cory Minton:
* * *
The New Currency of AI: Why Tokenomics is the Next Big Test for Tech Leaders
Key takeaways
1. AI is rewriting technology budgets. Consumption-based pricing isn't new, but the token is -- a unit of spend that swings unpredictably with every agent task and stays largely invisible until the bill arrives. The token is the operational currency of the AI software stack.
2. Agentic AI triggers "token inflation." Autonomous agents reason,call tools, and retry tasks, burning tens of thousands to over 100,000 tokens per task versus a few thousand for a standard query. The result: unpredictable, often six-figure surprise bills plus adjacent infrastructure costs the model invoice never shows.
3. Observability makes AI spend visible. Splunk Agent Observability, powered by our acquisition of Galileo, evaluates 100% of agents cost-effectively, surfaces runaway agents on a centralized dashboard, and correlates token cost with output quality.
4. Govern AI like network traffic. Deploy AI circuit breakers, budget by workflow metrics instead of raw token volume, and route each task to the right-sized model.
-
Artificial intelligence is accelerating the pace of software development, customer support, and business workflows. But as organizations rush to infuse AI into their business processes, tech and business leaders are facing a harsh reality: AI is fundamentally changing operating budgets.
This shift isn't simply from licensing or subscription to consumption--a lot of software already bills that way. What's new is the unit itself. The token--the unit of input and output data processed by AI models--swings wildly with usage and is hard to see in real time. It's the operational currency of the AI software stack.
Welcome to the era of AI tokenomics. If your AI systems aren't observable, they aren't just a technical liability; they're a financial liability.
The Token Inflation Problem in Agentic AI
Tokenomics extends far beyond simple generative AI chatbots or basic Retrieval-Augmented Generation (RAG) queries. The primary financial challenge for modern enterprises is the rapid adoption of agentic AI.
At Cisco Live 2026 in Las Vegas, tech leaders highlighted the shock of "token inflation."
Unlike traditional software, agentic AI costs don't scale linearly. Autonomous agents are designed to reason, dispatch sub-agents, search databases, call external tools, verify results, and retry failed tasks. Each of these steps consumes tokens, and a single misdirected agent can compound them quickly--looping, re-querying, and chasing dead ends that burn compute without moving the task forward.
Because the "token meter" runs continuously in the background, organizations face unexpected, high-volume expenditures.
Tokens Consumed by Application Archetype
Application Archetype ... Avg. Turns/* ... Tokens per Task/** ... Source
Simple RAG turn ... 1 ... 2,000-10,000 ... Galileo production-traced sampling
Voice/contact-center agent ... 3-8 ... 5,000-15,000 ... Galileo production-traced sampling
Tool-using ReAct agent ... ~8 ... 20,000-60,000 ... Sierra t-bench 2026
Claude Code SWE-bench ... ~5 ... ~33,000 ... Cognition, SWE-bench
Cursor SWE-bench ... 20-50 ... ~188,000 ... SWE-bench
GAIA research agent ... 10-30 ... 30,000-100,000 ... HAL Princeton, GAIA benchmark
*/ A turn is a single user prompt and the AI's reply.
**/ A task is the goal being solved, which ranges from single-step prompts (one turn) to complex, multi-step agentic workflows.
While a simple RAG turn might use a few thousand tokens, agentic tasks can run from tens of thousands of tokens into hundreds of thousands. And there's no guarantee of completion or accuracy. Because the "token meter" is running continuously and invisibly in the background, organizations are suddenly being hit with surprise six-figure bills.
The Hidden Adjacent Costs of Running AI
Tokenomics isn't just about the LLM API bill. Forward-thinking organizations are realizing they must account for "adjacent costs." Running AI requires underlying infrastructure: GPU utilization, memory consumption, vector databases, and proxy services. The monitoring layer counts too--naive approaches to evaluating and observing agents can consume nearly as many tokens as running the agents themselves. If you're only looking at your model provider's invoice, you're missing the full financial picture.
Govern AI cost and performance with Splunk Agent Observability
You can't optimize what you can't see. To build reliable, cost-effective, and trusted AI, teams need unified, deep visibility across the entire AI stack.
Splunk Agent Observability, powered by our acquisition of Galileo, gives organizations full visibility into agent costs and performance. With Galileo's AI evaluation and observability capabilities integrated directly into Splunk Observability, teams can strictly govern token usage and costs, confirm that agents behave as intended, and block inaccurate and harmful outputs.
Here is how Splunk helps you manage token costs in practice:
- Cost-effective evaluations: Monitoring an AI agent shouldn't cost as much as running the agent itself. Splunk Agent Observability uses Luna-2, Galileo's small language models (SLMs) purpose-built for AI evaluation. This enables low-latency, cost-effective evaluations that eliminate the need for sampling, allowing engineering teams to observe 100% of their agents within budget.
- Centralized AI Agents Dashboard: Gain a comprehensive view of all agents in the environment. Track total requests, latency, and the exact number of input/output tokens alongside their respective costs. This allows teams to instantly identify and terminate "runaway agents" caught in infinite loops before they cause budget overruns.
- Cost and quality correlation: Cost optimization should be balanced with output quality. Splunk allows teams to view token usage alongside quality metrics (hallucinations, bias, toxicity) and performance metrics (latency, errors). If a cost-effective model achieves the same quality score as an expensive frontier model for a specific task, organizations can confidently route traffic to the more efficient option.
Comprehensive AI Infrastructure Monitoring
Visibility into the application layer must be paired with hardware insights. Splunk Infrastructure Monitoring provides data-dense dashboards for the underlying hardware and services powering AI workloads.
Whether your organization uses NVIDIA NIMs, Milvus vector databases, or pre-validated full-stack solutions like Cisco AI PODs, you can track GPU power consumption and memory utilization alongside tokenomics metrics. This end-to-end visibility is critical for identifying infrastructure bottlenecks that impact both system stability and operational cost.
Strategic Best Practices for AI Cost Management
To shift from passive consumption to active, data-driven management of your AI footprint, implement these operational standards:
1. Deploy circuit breakers: Treat token usage similarly to network traffic. Set dynamic thresholds and build automated "circuit breakers" into agentic systems to terminate processes that exceed predefined cost limits.
2. Transition to workflow metrics: Move away from budgeting based solely on token volume. Measure the cost per process, retry rates, and end-to-end execution time to understand the true ROI of automated tasks.
3. Optimize model routing: Abandon a "one-size-fits-all" model strategy. Match the appropriate model size to the specific task, reserving expensive, high-parameter models strictly for complex reasoning and utilizing smaller models for routine operations.
Conclusion
Maximizing AI's value without runaway costs comes down to disciplined tokenomics. By moving from a narrow technical view to unified observability, tech leaders keep AI a productive, high-ROI asset--not an unmanaged liability.
Ready to manage your AI spend and ensure model performance? Explore Splunk Agent Observability to learn how to evaluate, observe and control the costs and quality of your entire AI stack.
Frequently Asked Questions
What is AI tokenomics?
AI tokenomics is the practice of managing tokens--the units of input and output data an AI model processes--as the operational currency of the AI software stack. Consumption-based pricing isn't new, but the token is a volatile, often invisible unit of spend, so governing token usage is becoming a core financial discipline.
Why is agentic AI more expensive than standard generative AI?
A simple RAG turn uses a few thousand tokens. An autonomous agent reasons, calls tools, verifies results, and retries failed tasks--consuming anywhere from tens of thousands to over 100,000 tokens per task. Because this runs continuously in the background, costs are unpredictable and can scale into six figures.
What are "adjacent costs" in AI tokenomics?
Beyond the model provider's API bill, running AI requires GPU utilization, memory, vector databases, and proxy services--and even the monitoring layer adds cost if it isn't purpose-built for efficiency. Accounting only for the LLM invoice misses the full financial picture.
How does Splunk Agent Observability control token costs?
Splunk Agent Observability, powered by our acquisition of Galileo, delivers cost-effective evaluations across 100% of agents, flags runaway agents on a centralized dashboard, and correlates token cost with output quality, so teams can route tasks to the most efficient model. Take a self-guided tour of Splunk Agent Observability.
What is circuit breaking in AI?
In AI, the term circuit breaking describes a safety mechanism that interrupts a language model the instant it starts generating harmful, illegal, or inaccurate content, cutting off the bad output before it reaches the user. It's similar to circuit breaking in network architecture, where the term means a resilience pattern that stops a system from repeatedly calling a failing service.
In short, it's a guardrail that keeps AI systems reliable and safe under pressure.
* * *
As Field CTO for Splunk, Cory Minton leads strategy and innovation alignment with Splunk's largest customers, analysts and the industry. Cory also leads the technical strategy for Splunk's partnership with McLaren's F1 and Esports Teams. Previously, Cory was a Principal Engineer and Field CTO at Dell, focused on emerging AI and Big Data technology research. Cory is also known as the "Big Data Beard" from the eponymous podcast he leads. Cory splits time between BHM and SLC with his wife and two children who share his crippling addiction to travel.
* * *
Original text here: https://www.splunk.com/en_us/blog/artificial-intelligence/ai-tokenomics-govern-agentic-ai-costs-with-splunk.html
[Category: BizComputer Technology]
Ogilvy Brings Home Network of the Year at the 2026 Cannes Lions International Festival of Creativity
NEW YORK, June 27 -- Ogilvy, an advertising, marketing and public relations agency, issued the following news:
* * *
Ogilvy Brings Home Network of the Year at the 2026 Cannes Lions International Festival of Creativity
CANNES, FRANCE - On the final day of the 2026 Cannes Lions International Festival of Creativity, Ogilvy won top honors as Network of the Year, claiming the prestigious title for the third time in five years. This achievement captures Ogilvy's creative power and influence on a global scale, and celebrates the incredible impact the network drives for client brands and businesses
... Show Full Article
NEW YORK, June 27 -- Ogilvy, an advertising, marketing and public relations agency, issued the following news:
* * *
Ogilvy Brings Home Network of the Year at the 2026 Cannes Lions International Festival of Creativity
CANNES, FRANCE - On the final day of the 2026 Cannes Lions International Festival of Creativity, Ogilvy won top honors as Network of the Year, claiming the prestigious title for the third time in five years. This achievement captures Ogilvy's creative power and influence on a global scale, and celebrates the incredible impact the network drives for client brands and businessesaround the world. For the entire festival, 36 offices contributed to a total of 81 Lions, including 3 Grand Prix, 13 Gold, 22 Silver and 43 Bronze as well as 137 shortlists, across such categories as Creative Data, Social & Creator, Direct, Entertainment, Digital, and Health & Wellness.
Laurent Ezekiel, Ogilvy Group's Global Chief Executive Officer, said: "In my first year as Global CEO of The Ogilvy Group, I have seen the unmatched creative power and impact we bring our clients across our global network and I could not be more proud of being named Cannes Network of the Year. This honor recognizes our creativity in all forms and crafts --from creative storytelling and advertising to social content, influence, PR, innovation and activations -- and celebrates the integrated teams across our network who continue to push boundaries and bold ideas for our clients. It's a great privilege to share this moment amongst our clients, teams and partners and to continue setting the creative standard for our industry."
Liz Taylor, Ogilvy's Global Chief Creative Officer, said: "We come to Cannes with one goal in mind: to proudly take the stage each night with our clients and celebrate the power of creativity in every corner of the world. To affirm their belief in ideas to solve any problem, overcome any challenge, and drive the impact they aspire to create. I am incredibly proud of Ogilvy's performance this week, but more than anything, I'm proud of how we continue to show up for and with the biggest and boldest brands. To shape culture, inspire communities, reimagine entire categories, and to chart the future that we're all, always, stepping into."
Ogilvy's Network of the Year win was led by three Grand Prix awards.
"Uva Uva Bombon" for Uva App by de la Cruz Ogilvy won the Grand Prix in Direct. The campaign turned the most-watched Super Bowl Halftime Show performance ever into immediate consumer action. Once Bad Bunny sang the lyric "Uva Uva Bombon" during the show's opening number "Titi Me Pregunto", delivery platform UVA instantly triggered a real-time activation, unlocking a curated selection of in-app products that were on sale for $1 until inventory ran out.
DAVID New York's "Copycats Welcome" for Clash Royale took home the Grand Prix in Entertainment - Gaming for inviting players of copycat games to convert their progress in those games into rewards in the real Clash Royale. The campaign targeted players in online communities with a film calling out the copycats, directing them to a site where they could upload their progress and currency from those games and turn it into Clash Royale currency.
The Ogilvy network's third Grand Prix was earned by Circus Grey for their BCP Bank campaign, "SOS POS", which won for Creative Data. With "SOS POS," BCP Bank turned terminals in small businesses all across the country into places where customers could block their bank accounts instantly with no calls or apps in the event that their phone was stolen and they had no way to quickly alert the bank.
Also during Friday's awards show, DAVID New York was named Agency of the Year - Entertainment. Earlier in the week, Ogilvy earned three Regional Network of the Year honors, earning the designation in Asia, Latin America, and North America.
A selection of Ogilvy's Cannes Lion-winning work can be found at Ogilvy.com.
* * *
About Ogilvy
Ogilvy has been creating impact for brands through iconic, culture-changing, value-driving ideas since the company was founded by David Ogilvy more than 75 years ago. It builds on that rich legacy through Borderless Creativity--innovating at the intersections of its advertising, public relations, relationship design, consulting, and health capabilities with experts collaborating seamlessly across more than 120 offices spanning 90 countries. Ogilvy currently ranks as the #1 global agency network for creative excellence and effectiveness by WARC, signifying its ability to deliver creative solutions that drive unreasonable impact for clients and communities. Ogilvy is a WPP company (NYSE: WPP). For more information, visit Ogilvy.com, and follow us on LinkedIn, X, Instagram, and Facebook.
* * *
Chris Celletti is the Global Editor for Ogilvy and is based in New York.
* * *
Original text here: https://www.ogilvy.com/ideas/ogilvy-brings-home-network-year-2026-cannes-lions-international-festival-creativity
[Category: BizAdvertising]
Hyatt Place Jiaxing Nanhu Celebrates Official Opening
CHICAGO, Illinois, June 27 [Category: BizTravel] -- Hyatt Hotels Corp., a hospitality company, issued the following news release:
* * *
Hyatt Place Jiaxing Nanhu Celebrates Official Opening
*
241-room Hyatt Place hotel debuts in the historic water town of Jiaxing, China
CHICAGO (June 27, 2026) - Hyatt Hotels Corporation (NYSE:H) today announced the official opening of Hyatt Place Jiaxing Nanhu, marking the debut of the Hyatt Place brand in one of China's most historic water towns. The opening expands the brand's presence in the Yangtze River Delta region while offering guests and World of
... Show Full Article
CHICAGO, Illinois, June 27 [Category: BizTravel] -- Hyatt Hotels Corp., a hospitality company, issued the following news release:
* * *
Hyatt Place Jiaxing Nanhu Celebrates Official Opening
*
241-room Hyatt Place hotel debuts in the historic water town of Jiaxing, China
CHICAGO (June 27, 2026) - Hyatt Hotels Corporation (NYSE:H) today announced the official opening of Hyatt Place Jiaxing Nanhu, marking the debut of the Hyatt Place brand in one of China's most historic water towns. The opening expands the brand's presence in the Yangtze River Delta region while offering guests and World ofHyatt members a new stay option that seamlessly blends comfort, convenience and local inspiration.
Nestled along the scenic shores of Jiaxing's iconic South Lake, Hyatt Place Jiaxing Nanhu offers guests an immersive experience of the city's picturesque lakefront setting, rich cultural heritage and distinctive urban charm. Just steps from Nanhu Place-a vibrant lakeside destination where heritage architecture meets contemporary retail and dining-the hotel enjoys convenient access to major Yangtze River Delta cities, including Shanghai, Hangzhou and Suzhou, all within approximately one hour by car. High-speed rail and air connections further enhance accessibility, making the hotel an ideal base for both business and leisure travelers exploring Jiaxing and the surrounding region.
Drawing inspiration from Jiaxing's rich cultural heritage, Hyatt Place Jiaxing Nanhu blends the graceful charm of Jiangnan's water towns with modern, functional design. Clean lines, warm natural materials and inviting spaces create a comfortable lakeside setting, while Hyatt Place signature amenities-including Cozy Corners with sofa sleeper beds, 24-hour dining options and complimentary Wi-Fi-help guests stay productive, relax and make the most of their stay.
Hyatt Place Jiaxing Nanhu offers guests:
* 241 spacious guestrooms and suites featuring floor-to-ceiling windows with garden or city views, premium mattresses, and Cozy Corners with sofa sleeper beds. Select room types offer private courtyards, and pet-friendly accommodations are available for guests traveling with pets.
* The Kitchen, an all-day dining venue offering a relaxed setting where global classics meet authentic Jiaxing flavors, along with a waterside terrace for al fresco dining.
* F itness C enter equipped with modern cardio and strength-training equipment, and abundant natural light from expansive floor-to-ceiling windows.
* The Market, open 24-7, offering a curated selection of snacks, beverages, and travel necessities.
* A VIP room designed for meetings, small workshops, or executive training sessions, complete with advanced audiovisual technology.
* Free Wi-Fi throughout the hotel, seamlessly connecting business needs with the comforts of daily life.
"We are delighted to welcome guests to Hyatt Place Jiaxing Nanhu and introduce the Hyatt Place brand to Jiaxing, a city known for its rich cultural heritage, scenic waterways and vibrant local character," said Katharine Li, General Manager of Hyatt Place Jiaxing Nanhu. "From the beauty of South Lake to the charm of Yuehe Historic District, Jiaxing offers visitors a unique blend of history, culture and modern energy. With thoughtfully designed guestrooms, flexible social spaces and amenities that support both work and relaxation, we look forward to welcoming guests and helping them make the most of their stay."
World of Hyatt Gives Members More Reasons to Stay Somewhere New
To provide World of Hyatt members even more ways to be rewarded, World of Hyatt is offering members the opportunity to earn 500 Bonus Points for qualifying nights at Hyatt Place Jiaxing Nanhu, from June 27 to September 30, 2026, part of World of Hyatt's new hotel member offer. Additional participating hotels and their offer stay periods can be found at worldofhyatt.com/newhotelbonus. No registration is required and members can earn on top of other offers.
For more information or to book a reservation, please visit www.hyattplacejiaxingnanhu.com
The term "Hyatt" is used in this release for convenience to refer to Hyatt Hotels Corporation and/or one or more of its affiliates.
About Hyatt Place
Hyatt Place hotels combine style, innovation and 24/7 conveniences to create an easy to navigate experience for today's multi-tasking traveler. Guests can enjoy thoughtfully designed guestrooms featuring distinct zones for sleep, work and play, and free flowing social spaces that offer seamless transitions from work to relaxation. With more than 450 locations globally, Hyatt Place hotels feature convenient dining options, a 24/7 fitness center, and a hot breakfast served every morning. For more information, please visit hyattplace.com. Join the conversation on Facebook and Instagram, and tag photos with #HyattPlace.
About Hyatt Hotels Corporation
Hyatt Hotels Corporation, headquartered in Chicago, is a leading global hospitality company guided by its purpose - to care for people so they can be their best. As of March 31, 2026, the Company's portfolio included more than 1,500 hotels and all-inclusive properties in 83 countries across six continents. The Company's offering includes brands in the Luxury Portfolio, including Park Hyatt (r), Alila (r), Miraval (r), Impression by Secrets, and The Unbound Collection by Hyatt (r); the Lifestyle Portfolio, including Andaz (r), Thompson Hotels (r), The Standard (r), Dream (r) Hotels, The StandardX (r), Breathless Resorts & Spas (r), JdV by Hyatt (r), Bunkhouse (r) Hotels, and Me and All Hotels ; the Inclusive Collection, including Zoetry (r) Wellness & Spa Resorts, Hyatt Ziva (r), Hyatt Zilara (r), Secrets (r) Resorts & Spas, Dreams (r) Resorts & Spas, Hyatt Vivid (r) Hotels & Resorts, Bahia Principe Hotels & Resorts, Alua Hotels & Resorts (r), and Sunscape (r) Resorts & Spas ; the Classics Portfolio, including Grand Hyatt (r), Hyatt Regency (r), Destination by Hyatt (r), Hyatt Centric (r), Hyatt Vacation Club (r), and Hyatt (r); and the Essentials Portfolio, including Caption by Hyatt (r), Unscripted by Hyatt, Hyatt Place (r), Hyatt House (r), Hyatt Studios (r), Hyatt Select, and UrCove. Subsidiaries of the Company operate the World of Hyatt(r) loyalty program, ALG Vacations(r), Mr & Mrs Smith, Unlimited Vacation Club(r), Amstar(r) DMC destination management services, and Trisept Solutions(r) technology services. For more information, please visit www.hyatt.com.
CONTACT:
Jean Miu
Hyatt - ASPAC
jean.miu@hyatt.com
***
Original text here: https://newsroom.hyatt.com/Hyatt_Place_Jiaxing_Nanhu_Celebrates_Official_Opening
Hooper, Lundy and Bookman Issues Commentary: Proposed Rule Implementing Medicaid Financing Limitations Under Section 71116
LOS ANGELES, California, June 27 -- Hooper, Lundy and Bookman, a law firm, issued the following commentary on June 26, 2026, by founding partner Lloyd A. Bookman, partner Katrina A. Pagonis and associate Erin R. Sclar:
* * *
Proposed Rule Implementing Medicaid Financing Limitations Under Section 71116
The Centers for Medicare & Medicaid Services ("CMS") proposed the most significant changes to Medicaid financing in several years, which, if finalized, could substantially reduce supplemental payments made to safety-net providers and other providers that depend on Medicaid reimbursement. On May
... Show Full Article
LOS ANGELES, California, June 27 -- Hooper, Lundy and Bookman, a law firm, issued the following commentary on June 26, 2026, by founding partner Lloyd A. Bookman, partner Katrina A. Pagonis and associate Erin R. Sclar:
* * *
Proposed Rule Implementing Medicaid Financing Limitations Under Section 71116
The Centers for Medicare & Medicaid Services ("CMS") proposed the most significant changes to Medicaid financing in several years, which, if finalized, could substantially reduce supplemental payments made to safety-net providers and other providers that depend on Medicaid reimbursement. On May22, 2026, CMS published its proposed rule on Medicaid Managed Care State Directed Payments ("SDP") and Medicaid Fee for Service ("FFS") Targeted Medicaid Practitioner Payments ("Proposed Rule"). The Proposed Rule, if finalized, would restrict the use of SDPs and these targeted payments. Public comments on the Proposed Rule close on July 21, 2026.
Background
The Proposed Rule would implement section 71116 of H.R.1 (Pub. L. 119-21), the budget reconciliation bill that President Trump signed into law on July 4, 2025 (formerly known as the One Big Beautiful Bill Act, and referred to by CMS as the Working Families Tax Cuts legislation). Section 71116 limits the total payment rate for each SDP for four services: (1) inpatient hospital services, (2) outpatient hospital services, (3) nursing facility services, and (4) qualified practitioner services at academic medical centers. However, as discussed below, CMS proposes additional SDP limits beyond those set forth in section 71116 as well as limits on targeted Medicaid FFS payments. CMS states that these additional limits are intended to align the rulemaking with the June 6, 2025 Presidential Memorandum entitled Eliminating Waste, Fraud, and Abuse in Medicaid.
CMS frames its overarching goal in the Proposed Rule as addressing its concerns that states are utilizing Medicaid financing mechanisms like SDPs and targeted FFS payments in ways that could obscure fraud, waste, and abuse and threaten Medicaid's overall financial solvency. CMS particularly highlighted its concern with providers--instead of states--funding the non-federal share of Medicaid payments through provider taxes and intergovernmental transfers ("IGTs"). This framing, however, is in tension with the wide use of these Medicaid financing mechanisms, which allow states to maintain the stability of their Medicaid programs--one of the largest categories of general fund spending in state budgets--despite fluctuations in state general funds. Moreover, the Proposed Rule does not identify any evidence of fraudulent activities that are enabled by these financing mechanisms.
SDPs
SDPs allow states to direct specific payments to providers through Medicaid managed care plans to implement initiatives designed to improve access and quality of care for Medicaid beneficiaries. Since 2024, the total payment rate for each SDP has generally been limited to 100 percent of the average commercial rate.
Payment Limits on SDPs
The Proposed Rule would implement the cap on the total payment rate for each SDP at 100 percent of the "specified total published Medicare payment rate" in states that expanded Medicaid and 110 percent of this rate in non-expansion states and establishes a deadline of the first rating period on or after January 1, 2029. Where no Medicare rate is available, states are directed to use the Medicaid state plan base rate.
In the Proposed Rule, CMS would extend the payment limit to all services covered by SDPs and all SDPs that are not otherwise grandfathered--not just SDPs for the four services specified in section 71116 and not just SDPs that require prior written approval from CMS. The Proposed Rule also would extend the payment limit to SDPs in U.S. territories in addition to all states and D.C. The Proposed Rule's application of the payment limit to services beyond the four specified in section 71116 means that some services, like home and community based services, will be capped at the Medicaid rate, effectively wiping out any enhanced payment for these services through SDPs.
Importantly, the specified total published Medicare payment rate would be calculated at a service or discharge specific level, as opposed to an aggregate level using an upper payment limit-like approach. So, for example, inpatient discharges would be calculated based on the Medicare diagnostic related group rate including, but not limited to, payment adjustments such as the area wage index and quality adjustments--however, the Proposed Rule is silent as to others like disproportionate share hospital payments.
CMS further proposed that providers reimbursed on a cost-based methodology, like critical access hospitals, certain cancer hospitals, and freestanding children's hospitals, submit their most recent and complete Medicare cost report to serve as the basis for the applicable payment limit. CMS noted that it considered alternative methodologies for providers reimbursed on a cost-basis, including to apply the State plan approved rate or the published Medicare payment rate. CMS declined to propose either of those options because they are lower than cost-based payments, but CMS specifically requested comments on this issue.
Grandfathering of Certain SDPs
Section 71116 also established a grandfathering period to phase down the total amount of certain SDPs over time, beginning with the first rating period on or after January 1, 2028. Grandfathered SDPs are those that exceed the payment limit, and meet these three criteria:
1. The SDP requires written prior approval and is for inpatient hospital services, outpatient hospital services, nursing facility services, or qualified practitioner services at an academic medical center.
2. The SDP is for a rating period that includes any business days between October 11, 2024, through July 3, 2025, or between July 5, 2025, and March 27, 2026. These periods are 180 business days before or after the date section 71116 was enacted on July 4, 2025.
3. The state submitted a completed preprint for the SDP to CMS before July 4, 2025. The preprint must include an eligible rating period and documented total dollar amount. CMS also describes certain "statuses" that could qualify, including where written prior approval was made (or a good faith effort to receive approval was made) for SDPs other than for rural hospitals before May 1, 2025, and for rural hospital SDPs before July 4, 2025.
For grandfathered SDPs, the total payment for each SDP would be initially limited to the grandfathered total dollar amount, and this limit would decrease by 10 percentage points each year until the limit reaches either 100 or 110 percent of the specified total published Medicare payment rate, as applicable. The Proposed Rule does not specify how the 10-percentage point reduction would interact with the proposal to apply the specified total Medicare payment rate limit on a service-by-service basis, raising questions about how calculations would be made in practice. Under this proposal, phase down time will vary for SDPs depending on how far above the limit the SDP started.
CMS specifically flagged that its proposed temporary grandfathering framework would allow states to transition away from uniform increase SDPs, noting its concern that states typically fund these types of SDPs with IGTs or provider taxes.
Targeted Practitioner/Provider Payment Limits
The Proposed Rule would also cap the total Medicaid FFS payment rate (including base and supplemental payments) for practitioners and providers receiving targeted payments at the same caps established for SDPs--100 percent of Medicare rates in Medicaid expansion states and 110 percent of Medicare rates in non-expansion states, where a reasonable Medicare-equivalent payment rate exists. Payments are considered targeted when they are directed to a subset of providers otherwise furnishing the same service. For example, a targeted payment would include an add-on payment available to public, but not private, providers of ground emergency medical transportation services. Under the Proposed Rule, the cap would be applied as a provider-specific limit, as opposed to an aggregate upper payment limit. The Proposed Rule would require compliance with the caps by the start of the first State fiscal year that begins on or after January 1, 2029.
Impact
If finalized, the Proposed Rule would overall reduce Medicaid payments to a broad range of health care providers that rely on this funding, amplified by other Medicaid reductions in section 71116 and expected in upcoming CMS rulemaking on provider taxes. CMS predicts that the Proposed Rule would cut Medicaid spending by about $775 billion over 10 years--a figure that is over five times larger than the savings estimated by the Congressional Budget Office based on the as-enacted language in section 71116. CMS acknowledged that hospitals would bear the brunt of these reductions, and also recognized that nursing facilities, physicians, academic medical centers, and emergency medical transportation providers would be subject to reimbursement reductions. Impacts could be seen more broadly, including at health systems and counties that rely on Medicaid supplemental payments to support their operations.
Moreover, CMS specifically highlighted its position that payments exceeding the limits imposed would be overpayments subject to the 60-day report and return requirements under section 1128J(d) of the Social Security Act.
For more information or assistance on these issues, please contact Katrina Pagonis, Lloyd Bookman, Paul Garcia, Kelly Carroll, Mark Reagan, Claire Ernst, Erin Sclar, or your regular Hooper, Lundy and Bookman, P.C. contact.
* * *
Professionals
Erin R. Sclar
Associate
San Francisco
415.875.8512
esclar@hooperlundy.com
* * *
Katrina A. Pagonis
Partner
San Francisco
Washington, D.C.
415.875.8515
kpagonis@hooperlundy.com
* * *
Lloyd A. Bookman
Founding Partner
Los Angeles
310.551.8185
lbookman@hooperlundy.com
* * *
Original text here: https://hooperlundy.com/proposed-rule-implementing-medicaid-financing-limitations-under-section-71116/
[Category: BizLaw/Legal]
Dinsmore Represents 3CDC in Financing Milestone for Cincinnati Convention Headquarters Hotel
CINCINNATI, Ohio, June 27 -- Dinsmore and Shohl, a law firm, issued the following news release:
* * *
Dinsmore Represents 3CDC in Financing Milestone for Cincinnati Convention Headquarters Hotel
Dinsmore has represented Cincinnati Center City Development Corporation (3CDC) in connection with the financing of the new $540 million Marriott convention hotel in downtown Cincinnati, a major milestone in one of the region's most significant economic development projects.
"Dinsmore is dedicated to supporting transformative projects that create lasting economic opportunity for our communities," said
... Show Full Article
CINCINNATI, Ohio, June 27 -- Dinsmore and Shohl, a law firm, issued the following news release:
* * *
Dinsmore Represents 3CDC in Financing Milestone for Cincinnati Convention Headquarters Hotel
Dinsmore has represented Cincinnati Center City Development Corporation (3CDC) in connection with the financing of the new $540 million Marriott convention hotel in downtown Cincinnati, a major milestone in one of the region's most significant economic development projects.
"Dinsmore is dedicated to supporting transformative projects that create lasting economic opportunity for our communities," saidJohn Merchant, who led the firm's representation of 3CDC.
Atlanta-based Portman Holdings closed on financing for the 700-room hotel on June 23, clearing the way for construction to begin. The hotel is expected to strengthen Cincinnati's convention and tourism economy while serving as a catalyst for continued investment in the city's urban core.
Dinsmore attorneys worked cooperatively with 3CDC, the City of Cincinnati, Hamilton County, and the Port of Greater Cincinnati Development Authority throughout the transaction, advance a project years in the making. 3CDC has coordinated development of the hotel, which will complement the recently transformed convention center district and further position downtown Cincinnati as a premier destination for meetings and events.
The hotel is expected to open in late 2028 or early 2029 following approximately 30 months of construction.
* * *
Original text here: https://www.dinsmore.com/news/dinsmore-represents-3cdc-in-financing-milestone-for-cincinnati-convention-headquarters-hotel/
[Category: BizLaw/Legal]
Dinsmore & Shohl: Joshua Lorentz Featured in Law.com on the Future of Law Firm Recruiting
CINCINNATI, Ohio, June 27 -- Dinsmore and Shohl, a law firm, issued the following news release:
* * *
Joshua Lorentz Featured in Law.com on the Future of Law Firm Recruiting
Dinsmore Managing Partner Joshua Lorentz is featured in a recent Law.com article examining how midsize law firms are adapting as the legal industry's recruiting landscape continues to evolve.
In the article, Josh discusses Dinsmore's proactive approach to attracting top talent, highlighting the firm's national platform, early relationship-building with law schools, and commitment to giving summer associates meaningful exposure
... Show Full Article
CINCINNATI, Ohio, June 27 -- Dinsmore and Shohl, a law firm, issued the following news release:
* * *
Joshua Lorentz Featured in Law.com on the Future of Law Firm Recruiting
Dinsmore Managing Partner Joshua Lorentz is featured in a recent Law.com article examining how midsize law firms are adapting as the legal industry's recruiting landscape continues to evolve.
In the article, Josh discusses Dinsmore's proactive approach to attracting top talent, highlighting the firm's national platform, early relationship-building with law schools, and commitment to giving summer associates meaningful exposureto sophisticated work across multiple practice areas.
He also explains how Dinsmore is responding to increased competition by moving quickly on strong candidates while maintaining high return-offer and post-graduation acceptance rates.
Josh's insights underscore Dinsmore's continued investment in recruiting exceptional attorneys and developing the next generation of legal talent.
Read the article here (https://www.law.com/pro-mid-market/2026/06/25/midsize-firms-working-to-keep-up-with-big-law-on-the-trail-for-summer-recruits/).
* * *
Original text here: https://www.dinsmore.com/quotes-mentions/joshua-lorentz-featured-in-law-com-on-the-future-of-law-firm-recruiting/
[Category: BizLaw/Legal]
Dinsmore & Shohl: Bloomberg Talks With Dan Zinsmasters About Utah AI Programs
CINCINNATI, Ohio, June 27 -- Dinsmore and Shohl, a law firm, issued the following news release:
* * *
Bloomberg Talks with Dan Zinsmasters About Utah AI Programs
Dinsmore Healthcare Partner Dan Zinsmaster shares his thoughts with Bloomberg Law on Utah's pilot programs that will utilize artificial intelligence to expedite prescription refills.
In January, Utah announced it would partner with AI "doctor" startup Doctronic to automate prescription refills with physician oversight for nearly 200 drugs.
The programs are being administered by the state Office of Artificial Intelligence Policy and
... Show Full Article
CINCINNATI, Ohio, June 27 -- Dinsmore and Shohl, a law firm, issued the following news release:
* * *
Bloomberg Talks with Dan Zinsmasters About Utah AI Programs
Dinsmore Healthcare Partner Dan Zinsmaster shares his thoughts with Bloomberg Law on Utah's pilot programs that will utilize artificial intelligence to expedite prescription refills.
In January, Utah announced it would partner with AI "doctor" startup Doctronic to automate prescription refills with physician oversight for nearly 200 drugs.
The programs are being administered by the state Office of Artificial Intelligence Policy andhave added fuel to the debate about AI regulation.
Zinsmaster, who advises healthcare clients on compliance matters, highlighted the potential risks that could come from these types of programs without proper oversight.
Read the article here (https://news.bloomberglaw.com/health-law-and-business/utahs-ai-doctor-prescription-pilot-spurs-oversight-concerns).
* * *
Original text here: https://www.dinsmore.com/quotes-mentions/bloomberg-talks-with-dan-zinsmasters-about-utah-ai-programs/
[Category: BizLaw/Legal]
