Trump HHS Cracks Down on Medicaid Provider Tax Loophole

The Trump administration is taking action to impose curbs on costly supplemental income streams that states use to finance their Medicaid programs.

A final rule (RIN 0938-AV58), released Thursday by the Centers for Medicare & Medicaid Services, updates rules on the acceptable use of provider taxes, which are assessments levied on entities such as hospitals and nursing homes that help states draw in greater federal matching payments.

Under federal law, states may not use funds generated from these taxes to indemnify the original taxpayer. These prohibited agreements are called hold harmless arrangements.

The financing method has been adopted ...