Provider tax rule requires alteration, groups say

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Two organizations want the Centers for Medicare & Medicaid Services to reconsider aspects of a rule that would reduce the provider tax ceiling to 5.5% from 6%.

The proposed rule would cut the amount of taxes states could impose on healthcare providers to gain federal matching Medicaid payments. It also would change the standard for determining the existence of a "hold harmless" arrangement. Under this policy, a state collects taxes from providers to receive matching funds from the federal government. It then returns the taxes to providers.

The American Public Human Services Association and the National Association of State Medicaid Directors are urging CMS to work with states to develop objective standards to measure compliance with the hold harmless provisions. The new regulation "infuses a level of obscurity" into the policy, they said in a letter.

See the letter at: http://www.nasmd.org/issues/docs/NPRM_Provider_Tax_Comments_APHSA_NASMD_2007_05_22.pdf.