Second Provider Tax Rule Issued Under OBBBA
Under a proposed rule implementing aspects of the One Big Beautiful Bill Act (OBBBA) Medicaid reductions, state-directed payments would be capped at 100% of Medicare rates in states that expanded Medicaid and 110% in non-expansion states. The rule saves more than $775 billion over 10 years, including $510 billion in federal savings.
Another rule that was finalized in April ends states’ ability to use certain provider taxes to generate additional federal Medicaid matching funds. That rule bans states from imposing higher tax rates on Medicaid business than on non-Medicaid business and blocks indirect tax structures designed to bypass those limits.
The proposed rule would apply to hospital inpatient and outpatient services, skilled nursing facility services, and qualified practitioner services at academic medical centers. The policy would be expanded to all services in 2029. Certain payments are temporarily grandfathered, although they will be reduced by 10% a year starting in 2028 until they reached Medicare rates.
CMS also proposes to eliminate uniform payment increases. States could establish minimum or maximum fee schedules beginning in 2028 as long as they do not exceed the Medicaid rate limit without CMS approval. Such payments rose considerably after the Biden administration set the upper limit to average commercial health insurance reimbursements for hospitals and nursing facilities.
CMS said provider taxes generate more than $24 billion annually for state budgets, with one state bringing in more than $13 billion.
In other news, Democratic lawmakers in the Senate and House introduced resolutions that seek to roll back new Medicare prior authorization requirements under the Wasteful and Inappropriate Service Reduction (WISeR) model.
Further, Senate Democrats unveiled a policy roadmap calling for increased access to affordable long-term care services, including a proposal to establish a home care guarantee for people with Medicare. Medicare currently only has short-term nursing facility stays. Medicaid covers long-term chronic care but is usually only for the lower income.
Additional articles: https://www.fiercehealthcare.com/regulatory/legislators-introduce-resolution-seek-congressional-disapproval-cms-wiser-ai-prior-auth and https://www.fiercehealthcare.com/payers/democratic-senators-share-plans-medicare-home-care-benefit-long-term-care-reform and https://www.modernhealthcare.com/politics-regulation/mh-cms-medicaid-state-directed-payments/ and https://www.healthcaredive.com/news/senate-democrats-roll-back-medicare-ai-prior-authorization-pilot-wiser/820728/ and https://www.beckershospitalreview.com/finance/cms-to-cap-state-medicaid-payments-to-save-775b-7-things-to-know/ and https://www.beckerspayer.com/payer/democrats-ramp-up-efforts-to-repeal-medicare-prior-authorization-pilot/
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#medicaid #providertaxes #obbba #medicare #priorauthorization #homecare
— Marc S. Ryan
