WASHINGTON, D.C. – The Association for Behavioral Health and Wellness (ABHW) today submitted comments to the Centers for Medicare & Medicaid Services (CMS) on its proposed rule implementing changes to Medicaid health care-related provider taxes under H.R. 1.
Health care-related taxes are an important source of Medicaid financing for states. H.R. 1 makes significant changes to these financing arrangements that could place additional pressure on state Medicaid programs. For behavioral health, these pressures could affect states’ ability to address workforce shortages, expand access to mental health and substance use disorder (MH/SUD) treatment, and sustain critical services.
As CMS implements the new requirements, ABHW urged the agency to provide states and Medicaid managed care organizations (MCOs) with sufficient flexibility, minimize unnecessary administrative burden, and protect the stability of Medicaid programs.
“States and Medicaid managed care organizations are implementing several significant Medicaid changes at the same time,” said Debbie Witchey, President and CEO of ABHW. “CMS should implement these new financing requirements in a way that provides states and health plans with flexibility, avoids unnecessary administrative burden, and preserves stability for the millions of people who rely on Medicaid for their health care.”
In its comments, ABHW recommends that CMS:
- Continue allowing reasonable estimates and projections when states demonstrate compliance with provider tax requirements, rather than requiring reliance exclusively on actual tax collections and net patient revenue.
- Streamline new reporting requirements and use information already available to CMS and states wherever possible.
- Protect actuarially sound Medicaid managed care rates by addressing changes resulting from provider tax compliance prospectively through capitation rates, rather than through retroactive reductions to previously approved MCO rates.
- Provide targeted transition relief for existing provider taxes that were enacted and collected as of July 4, 2025, giving states a time-limited opportunity to bring existing assessments into compliance.
“Changes to state Medicaid financing can have downstream consequences for managed care rates, provider payments, and ultimately the Medicaid program,” Witchey said. “Clear federal guidance and a workable transition are essential to avoiding unintended disruption for states, health plans, providers, and the people they serve.”
ABHW supports appropriate oversight of Medicaid financing and encourages CMS to implement H.R. 1 in a manner that balances program integrity with operational feasibility and stability across state Medicaid programs.
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ABOUT THE ASSOCIATION FOR BEHAVIORAL HEALTH AND WELLNESS
ABHW is the leading health plan association working to improve access and quality of care for mental health and substance use disorders. ABHW’s members include national and regional health plans who care for approximately 200 million people. Together, we work to reduce stigma and advance federal policy on mental health and substance use disorder care. ABHW member companies include Aetna Behavioral Health, Elevance Health, Centene Corporation, Evernorth, a Cigna company, Health Care Service Corporation, Kaiser Permanente, Lucet, Magellan Health, Molina Healthcare, Optum, and PerformCare, a subsidiary of AmeriHealth Caritas. To learn more, visit www.abhw.org and follow us on BlueSky and LinkedIn.
