CMS has issued a proposed rule to close what it describes as a Medicaid tax “loophole” that some states have exploited to increase federal payments while minimizing their state financial contributions. The proposed rule aims to ensure that federal Medicaid dollars are used to support vulnerable populations rather than being redirected to fund other state programs, including healthcare coverage for undocumented immigrants.
“States are gaming the system — creating complex tax schemes that shift their responsibility to invest in Medicaid and rob federal taxpayers,” CMS Administrator Mehmet Oz, MD, said in a May 12 news release. “This proposed rule stops the shell game and ensures federal Medicaid dollars go where they’re needed most — to pay for health care for vulnerable Americans who rely on this program, not to plug state budget holes or bankroll benefits for noncitizens.”