CMS Proposes Major Changes to Provider Tax Rules That Could Cut Federal Medicaid Spending by $246 Billion

CMS has proposed replacing the current 6% indirect hold harmless threshold for health care-related taxes with state-specific thresholds, implementing provisions from federal budget reconciliation legislation. The rule would phase down thresholds for expansion states starting in 2028, add health insurers as a new permissible tax class, eliminate the 75/75 test, and create new reporting requirements. With an estimated $246 billion reduction in federal Medicaid spending over ten years, this proposal has significant implications for how states finance their Medicaid programs and could affect MCO premium rates and overall program funding.

Finance · Managed Care

This is outside commentary from Sellers Dorsey, not part of Medicaid Monitor's independently scored news coverage.

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