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CMS Provider Tax Guidance Impacts Medicaid MCOs

The Centers for Medicare & Medicaid Services (CMS) issued guidance July 25 that will impact the treatment of certain taxes or assessments applied to Medicaid managed care organizations (MCOs).

The guidance clarifies that a tax will, in some cases, be considered “health care related” and, therefore, subject to the strict requirements of the Medicaid provider tax rules, even if it applies broadly to non-providers. In particular, CMS is concerned about arrangements in which a state applies a tax of general applicability, such as a gross receipts tax, to a subset of health care providers, such as Medicaid MCOs, rather than to all health plans. CMS said such arrangements will be evaluated under the provider tax rules and can impact federal matching payments if they are found to be non-compliant. CMS will allow a state until the end of its next regular legislative session to make changes that ensure compliance with the guidance.

Contact Beth Feldpush, senior vice president of policy and advocacy, at bfeldpush@essentialhospitals.org or 202.585.0111 with questions.

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About the Author

Matt Buechner is the policy and advocacy associate for America's Essential Hospitals.

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