State Directed Payment and Provider Tax Proposed Rule

In this session, staff presented a summary of two proposed rules from the Centers for Medicare & Medicaid Services to implement statutory limits on state directed payments (SDPs) and health care-related taxes (provider taxes) pursuant to the 2025 Budget Reconciliation Act. The proposed SDP rule implements the Medicare-based payment limit applicable to new SDPs. In addition, it extends the Medicare-based payment limits to all SDPs and certain targeted Medicaid fee-for-service practitioner payments. The provider tax proposed rule revises the indirect hold harmless threshold. In addition, it would sunset the second prong of the hold harmless determination, often referred to as the 75/75 test, and creates a new permissible class of taxable providers for health insurers.