Infographic: 4 Things You Should Know About Medicaid Provider Taxes and Payments

Infographic: 4 Things You Should Know About Medicaid Provider Taxes and Payments

Infographic: 4 Things You Should Know About Medicaid Provider Taxes and Payments. 1. Provider taxes are a longstanding vital funding source for state Medicaid programs for which the Centers for Medicare & Medicaid Services provides oversight. 2. States and providers rely on provider taxes to fund essential services and provide care for Medicaid beneficiaries. States use these funds to support Medicaid coverage, children’s behavioral health services, maternal care, rehabilitative services, and to offset low Medicaid payment rates. In 2023, hospitals experienced a -42% Medicaid margin for inpatient obstetrics care and a -44.9% Medicaid margin for outpatient obstetrics care. These low payments are compounded by the fact that Medicaid pays for over 40% of births nationwide. 3. Federal law already limits the legitimate use of provider taxes. Efforts to further restrict this use would be an enormous strain on state budgets and could put at risk critical hospital and nursing home services for Medicaid beneficiaries and their communities. 4. Even with hospital and health system participation in provider taxes and supplemental payments, there continues to be a significant gap between reimbursement and the cost of serving Medicaid patients. In 2023 alone, Medicaid underpaid hospitals and health systems by $27.5 billion. Medicaid has historically chronically underfunded payments for services. Without supplemental payments, Medicaid fee-for-services payments paid less than 58 cents for every dollar that hospitals spent caring for Medicaid patients in 2023, and Medicaid managed care organizations paid less than 65 cents over the same period. Industry benchmark data provided by Strata Decision Technology.

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