Texas Sues Medicaid Agency for Changing Policy on Provider Taxes

The Centers for Medicare and Medicaid Services unlawfully changed its interpretation of a provision barring states from holding taxpaying health care providers harmless for the cost of taxes used to fund Medicaid, Texas argues in a federal lawsuit.

Texas finances a large share of its contributions to the federal Medicaid program by collecting taxes from health care providers. In February, CMS adopted the view that an agreement between two private health care providers to protect against financial loss is an impermissible hold harmless arrangement.

Texas alleges in the complaint that the federal agency didn’t go through the Administrative Procedure Act’s ...