In a letter to the Centers for Medicare & Medicaid Services (CMS) Administrator, Dr. Mehmet Oz, MACPAC commented on a recently proposed rule to amend the indirect hold harmless threshold of health care-related taxes. The proposed rule (1) revises the indirect hold harmless threshold, often referred to as the safe harbor threshold, for determining whether an indirect hold harmless arrangement exists for a health care-related tax, (2) sunsets the second prong of the hold harmless determination, often referred to as the 75/75 test, and (3) creates a new permissible class of providers for health insurers that do not already meet the definition of managed care organization already established in regulation. The Commission has issued prior work, including a related recommendation, on provider taxes.
The Commission supports provisions within the proposed rule to require ongoing reporting of health care-related taxes, including information on the amount of tax collections and what the taxes are used to fund, that align with MACPAC recommendations. In the letter, the Commission asked CMS to collect additional reporting elements, such as provider-level information, that would allow for more comprehensive analyses of how gross and net payments may relate to policy goals of economy, efficiency, access, and quality. The Commission expressed concern that the combination of the newly proposed provider class and elimination of the 75/75 test removes a pathway for states to raise revenues more broadly when the tax revenues have a minimal tie to Medicaid expenditures.