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Medicaid closes tax loophole, saving billions for taxpayers

By Newsweek  
   January 30, 2026

CMS finalized a rule this week that ends what it called a healthcare‑related 'financing gimmick,' marking one of the most sweeping Medicaid program‑integrity actions in years. CMS said some states set higher taxes on Medicaid providers and managed care plans, then used that money to pull in extra federal funding, adding that this kind of maneuver shifted states' costs onto federal taxpayers and weakened the partnership that's supposed to fund Medicaid fairly.

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