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flag CMS closes Medicaid loophole allowing states to shift costs to federal taxpayers, saving $78B over 10 years.

flag The Centers for Medicare & Medicaid Services has finalized a rule closing a longstanding Medicaid loophole that let states use taxes on providers to draw down federal funds, effectively shifting costs to federal taxpayers. flag The practice, which cost over $24 billion annually and raised the federal share of Medicaid spending from 57% to 64.5% between 2012 and 2024, is now prohibited under new rules that block higher taxes on providers and close indirect tax pathways. flag CMS says the change will save $78 billion over 10 years, restore fairness to the federal-state partnership, and ensure funds are used for patient care. flag States must comply by fiscal year 2028, with phased deadlines based on when tax structures were enacted.

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