Missouri, CMS Reach Agreement on State Hospital Tax, Medicaid Payments

Missouri will be able to keep $2.2 billion in disputed federal matching funds for the state's Medicaid program under an agreement reached with the federal government on Dec. 9, the St. Louis Post-Dispatch reports. At issue is a state tax on hospitals and nursing homes that raises $800 million per year for the state's Medicaid program. CMS has matched funds raised through the tax but maintains the tax is illegal because the state "essentially" guarantees hospitals and nursing homes that they will get back in Medicaid funding what they paid for the tax. Missouri officials have said the tax is legal. CMS Administrator Tom Scully said that the federal government determined that while the "tax was not quite as bad as we feared ... it was not as good as we wanted." Under the agreement with the federal government, the state will be able to keep the tax once it alters the way the revenue is redistributed. In exchange, CMS will get an "unprecendented sneak preview" of the state's Medicaid budget as it is being developed to prevent future disputes over how the state raises funds for Medicaid. Scully said the agreement "will allow us to have a much better system to track what Missouri's doing and to understand their program" (Shesgreen, St. Louis Post-Dispatch, 12/10).