NAMD Comments on Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes

On September 21, NAMD submitted comments on CMS’ proposed rule for Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes.

NAMD understands and appreciates the importance of the federal, state, and territory role in appropriately stewarding public resources to ensure the fiscal sustainability of Medicaid and CHIP and safeguard access to high-quality services to the over 70 million Americans these programs serve. We offer these comments to enhance CMS’s efforts in balancing these objectives. Key themes include:

• Support for CMS’s proposed definitions of “enacted” and “imposed” health care-related taxes as of July 4, 2025
• Need for additional regulatory clarity and appropriate transition time for the proposed “health insurers other than MCOs” class to allow Medicaid agencies and other units of state government to more accurately assess impact and a transition period of at least three state fiscal years for states to adjust existing tax arrangements, in the event that CMS chooses to finalize this new class.
• Support for either:
  • Allowing the continued use of prospective methodologies to assess indirect hold harmless thresholds rather than shifting to a retrospective compliance framework reliant on actual tax revenue and net patient revenue data; or
  • If CMS elects to move forward with the retrospective compliance framework, utilizing compliance actions that limit disallowances to the amount in excess of the retrospectively calculated indirect hold harmless threshold.
• Maintain the 75/75 test as federal law continues to authorize it and sunsetting it would have adverse implications for states that use the method.

NAMD appreciates CMS’s consideration of Medicaid agencies’ perspectives on these matters. We remain committed to serving as a trusted partner to CMS and look forward to continued collaboration on behalf of all Medicaid agencies.

Read NAMD’s full comments here.