A new federal proposal effectively proposing new Medicaid taxes could lead to the closure of some skilled nursing units in continuing care retirement communities in 18 states, according to provider advocates.

The Centers for Medicare & Medicaid Services’ plan could “lead to a major financial burden” for CCRCs and residents, said the leaders of LeadingAge and the National Continuing Care Residents Association in a mid-January letter to congressional delegations in the potentially affected states.

The Medicaid Fiscal Accountability Regulation would disallow longstanding provider tax exemptions and discounts for some CCRCs, despite the fact that the “vast majority” of residents pay for care in CCRCs out-of-pocket, the letter said. LeadingAge identified 18 widely scattered states that currently exempt CCRCs from the tax program or levy a discounted tax on the communities. 

CMS announced the so-called MFAR on Nov. 12. Comments were initially due by Jan. 20, but an extension was granted until Feb. 1 at providers’ request.

CCRCs in the affected states may decide to reduce or do away with their skilled nursing beds rather than incur the additional tax burden, believing that it is not financially sustainable to operate a nursing home within their continuum.