The Centers for Medicare & Medicaid Servicesfinalized a rule that reduces maximum allowable provider taxes to 5.5%. 

The rule, which was scheduled to appear in the Feb. 22Federal Register, is similar to the rule first proposed by CMS in March 2007.The previous cap on healthcare taxes was 6%. Nursing homes and other providersbenefit from higher provider tax (or “bed tax”) limits, which allowfacilities to receive more government matching funding. 

CMS also set standards for determining the existence of “holdharmless” arrangements. States must avoid these arrangements, according to theSocial Security Act, CMS explained. States have used the arrangements to collect taxes fromproviders to increase the amount of federal matching funds they receive andthen return the taxes directly or indirectly to providers.