Bill attempts to preserve Medicaid tax for providers

A new bill could have a major impact on long-term care providers’ Medicaid revenues.

The House Appropriations Committee this week passed a bill with an amendment that would prohibit the administration from reducing Medicaid tax provisions for providers. The president’s proposed fiscal year 2007 budget calls for decreasing the allowable provider tax rate to 3% from 6%. Bush’s proposal would reduce Medicaid payments to nursing operators by more than $1.5 billion, according to one analysis. Slashing this tax rate would cut $2.1 billion overall in federal Medicaid spending over five years.

While reducing the tax rate might sound like a win for providers, many actually benefit from a higher tax rate. Thirty-three states use these tax payments as a way to leverage higher matching amounts back from the federal government.