State Medicaid programs have broad flexibility to establish their own payment methodologies and rates for hospital services. Many states direct additional funding to populations, services, and hospitals where Medicaid comprises a disproportionate share of total business, or where there are other access concerns (e.g. rural providers). Actuaries can play a key role in determining where those additional funds would have the most benefit. Hear an overview of policy considerations for designing hospital payment systems for Medicaid programs and then analyze publicly available data sources (including CMS's Healthcare Cost Report Information System (HCRIS) data and the Healthcare Cost & Utilization Project National Inpatient Sample database) to provide context for these policy considerations. We will examine the Medicaid share of business and Medicaid margin (shortfall) by various hospital characteristics, such as year, region, urban versus rural, hospital type, hospital ownership, safety-net versus non-safety-net, teaching versus non-teaching, and star rating. Discuss the implications for states and how actuaries can help improve the distribution of funding to where it would be most impactful.