Tennessee wins nursing home bed-tax fight with CMS

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The Centers for Medicare & Medicaid Services has lost its fight to recover about $553 million in Medicaid funds from Tennessee, according to an announcement by Gov. Phil Bredesen (D).

CMS has exhausted all of its appeals in its efforts to deny payments to Tennessee and four other states with similar nursing home tax programs. In 1992, Tennessee imposed the annual nursing home tax at a rate of $2,600 per bed as a means to get more federal Medicaid money. The grant program was ended in 2001.

In 2001, CMS notified Tennessee that it would not provide the state with nearly $553 million in Medicaid funds, because Tennessee's tax program, along with similar ones in Hawaii, Illinois, Louisiana and Maine, was not allowed under the provider tax provisions of the Medicaid statute.