United States Government Publishing Office publisher pbl distributor dst United States National Archives and Records Administration Office of the Federal Register author aut Government Organization text government publication eng FR Regulatory Information 2026_register executive 2026-07-23 article Part II Proposed Rules D09002ee1e58c44db D09002ee1e58c49b3 United States Department of Health and Human Services originator org United States Government Agency or Subagency United States Centers for Medicare & Medicaid Services originator org United States Government Agency or Subagency This proposed rule would revise standards for determining whether an indirect hold harmless arrangement exists for a health care- related tax. This proposed rule is necessary to implement a provision in the "One Big Beautiful Bill Act," herein referred to as the "Working Families Tax Cut (WFTC) legislation," which established new indirect hold harmless thresholds for health care-related taxes. Currently, the threshold for a State's collection of tax revenues is no more than 6 percent of net patient revenue attributable to the assessed permissible class of health care items or services. Effective October 1, 2026, the WFTC legislation generally sets the threshold equal to the applicable percent of net patient revenue attributable to taxes imposed as of July 4, 2025. Effective October 1, 2027, the WFTC legislation also requires a phase down of the hold harmless threshold in expansion States. Apart from establishing the new threshold in regulation and proposing related changes and enhancements to existing processes, we propose to sunset a secondary prong to the indirect hold harmless determination to ensure the thresholds determined as of July 4, 2025, serve as the maximum permissible level. Finally, this rule proposes to add a new permissible class to enhance CMS oversight of health care- related taxes. 91 FR 46562 https://www.govinfo.gov/app/details/FR-2026-07-23/2026-14897 2026-14897 fr23jy26-32 RIN 0938-AV93 4169-69-P CMS-2452-P https://www.govinfo.gov/app/details/FR-2026-07-23/2026-14897 https://www.govinfo.gov/content/pkg/FR-2026-07-23/html/2026-14897.htm https://www.govinfo.gov/content/pkg/FR-2026-07-23/pdf/2026-14897.pdf Administrative Practice and Procedure Child Support Claims Grant Programs-Health Medicaid Reporting and Recordkeeping Requirements 38 p. 46562 46599 91 FR 46562 Title 42 Part 433 42 CFR Part 433 RIN 0938-AV93 Medicaid Program; Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes; Federal Register Vol. 91, Issue PRORULE 2026-14897 II DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 2026-09-21 CMS-2452-P 4169-69-P 2026-14897 Proposed rule.

This proposed rule would revise standards for determining whether an indirect hold harmless arrangement exists for a health care- related tax. This proposed rule is necessary to implement a provision in the "One Big Beautiful Bill Act," herein referred to as the "Working Families Tax Cut (WFTC) legislation," which established new indirect hold harmless thresholds for health care-related taxes. Currently, the threshold for a State's collection of tax revenues is no more than 6 percent of net patient revenue attributable to the assessed permissible class of health care items or services. Effective October 1, 2026, the WFTC legislation generally sets the threshold equal to the applicable percent of net patient revenue attributable to taxes imposed as of July 4, 2025. Effective October 1, 2027, the WFTC legislation also requires a phase down of the hold harmless threshold in expansion States. Apart from establishing the new threshold in regulation and proposing related changes and enhancements to existing processes, we propose to sunset a secondary prong to the indirect hold harmless determination to ensure the thresholds determined as of July 4, 2025, serve as the maximum permissible level. Finally, this rule proposes to add a new permissible class to enhance CMS oversight of health care- related taxes.

To be assured consideration, comments must be received at one of the addresses provided below, by September 21, 2026. Jonathan Endelman, (410) 786-4738, and Stuart Goldstein, (410) 786-0694, for Health Care-Related Taxes. Administrative Practice and Procedure Child Support Claims Grant Programs-Health Medicaid Reporting and Recordkeeping Requirements Medicaid Program Indirect Hold Harmless Threshold of Health Care-Related Taxes, http://www.regulations.gov http://www.regulations.gov/docket/CMS-2026-2476 https://oig.hhs.gov/reports/all/2018/although-hospital-tax-programs-in-seven-states-complied-with-hold-harmless-requirements-the-tax-burden-on-hospitals-was-significantly-mitigated/ https://www.bls.gov/oes/tables.htm https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/historical https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing https://www.federalregister.gov/documents/2008/12/19/E8-30000/medicaid-program-disproportionate-share-hospital-payments https://www.federalregister.gov/documents/2025/11/28/2025-21332/federal-financial-participation-in-state-assistance-expenditures-federal-matching-shares-for https://www.macpac.gov/federal-match-rate-exceptions/ https://www.macpac.gov/wp-content/uploads/2021/11/The-Effect-of-State-Approaches-to-Medicaid-Financing-on-Federal-Medicaid-Spending.pdf https://www.medicaid.gov/federal-policy-guidance/downloads/SMD100997.pdf https://www.medicaid.gov/medicaid/downloads/providertax_dcl_11142025.pdf https://www.reginfo.gov/public/jsp/Utilities/a-4.pdf https://www.reginfo.gov/public/pdf/eo14192/Accounting_Methods_under_EO_14192.pdf https://www.regulations.gov/ https://www2.census.gov/library/publications/2025/demo/p60-288.pdf Medicaid.gov Regulations.gov Vol. 91, no. 140 Office of the Federal Register, National Archives and Records Administration 2026-07-23 continuing daily deposited born digital 470 p. Table of Contents: AE 2.7: GS 4.107: AE 2.106: KF70.A2 https://www.govinfo.gov/app/details/FR-2026-07-23 P0b002ee1e58c456a 0097-6326 0042-1219 0364-1406 769-004-00000-9 000582072 f:fr23jy26 https://www.govinfo.gov/app/details/FR-2026-07-23 https://www.govinfo.gov/content/pkg/FR-2026-07-23/pdf/FR-2026-07-23.pdf https://www.govinfo.gov/content/pkg/FR-2026-07-23/xml/FR-2026-07-23.xml fdlp 46239 46701 DGPO 2026-07-23 2026-07-23 FR-2026-07-23 machine generated eng FR FR-2026-07-23 91 140