Texas District Court Issues Preliminary Injunction Prohibiting CMS From Applying Provider Tax Mitigation Policy in Texas

A Texas district court judge has issued a preliminary ruling in Texas’ lawsuit challenging an Informational Bulletin released by CMS’ Centers for Medicaid and CHIP Services (CMCS) in February 2023 purporting to prohibit certain voluntary redistribution agreements among private parties participating in a Medicaid provider tax. The judge issued a preliminary injunction prohibiting CMS from applying its interpretation in Texas, holding that the policy exceeds CMS’ statutory authority, which allows CMS to intervene only where a state unit of government has provided for a guarantee to hold taxpayers harmless for the cost of the tax.