Wednesday, February 16, 2005
N.M. Fights Federal Order; State Won't Repay Medicaid Funds
By Winthrop Quigley
Journal Staff Writer
The state of New Mexico will fight a federal government order that it repay $4.2 million in Medicaid funds, officials said Tuesday.
The Centers for Medicaid and Medicare Services demanded the state return funds it paid last year under a now-disallowed bed tax plan designed to generate $22 million in federal funding.
Last year, the state Legislature imposed a tax on occupied beds at nursing homes and other facilities. Most of the beds, taxed about $8.80 on average, are occupied by patients covered by Medicaid.
The tax became a cost of providing Medicaid services that the facility operator could bill to the state.
The federal government pays New Mexico about $3 for every dollar the state incurs in Medicaid expenses.
So the state would in turn ask the Centers for Medicaid and Medicare Services to pay $3 for every dollar New Mexico paid to compensate operators for the bed tax.
At the same time, the Legislature enacted a tax credit for non-Medicaid patients to offset any bed tax the facilities passed on.
The Centers for Medicaid and Medicare Services told the state last September that the tax credit rendered the bed tax an "impermissible provider tax." Now CMS wants the money it already paid.
Human Services Secretary Pamela S. Hyde said that the tax and credit should be permissible because the credit goes to patients, not to nursing homes and other providers. She said the state will appeal the CMS decision.
The Legislature is considering a bill that would repeal the tax credit and make the tax acceptable to CMS.
Such tax schemes are standard practice among states, but federal officials recently warned states against using "accounting gimmicks" to shift the burden to the federal government.