End state Medicaid financing loopholes

Project 2025 directs CMS to end state Medicaid financing loopholes. Public Law 119-21 and a CMS final rule restrict provider-tax and state-directed-payment arrangements used to generate federal matching funds.

Project 2025 said

Direct dollars to beneficiaries more effectively and responsibly. The current funding structure for the Medicaid program rewards expansions, lacks transparency, and promotes financing gimmicks. CMS should: 1. End state financing loopholes.

Chapter: 14 · Department of Health and Human Services
Author: Roger Severino
Department: Centers for Medicare & Medicaid Services
Printed page: 467
PDF page: 499
Last verified: August 17, 2026

Open Project 2025 — Chapter 14, printed page 467PDF viewer page 499

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Compared with

Government did

Match: Strong Alignment

Public Law 119-21 restricts Medicaid financing arrangements

Public Law 119-21 restricts Medicaid provider taxes and state-directed payments. CMS later finalized rules implementing the provider-tax restrictions and transition periods.

Sections 71115-71117

Provider-tax and state-directed-payment restrictions

Sections 71115 through 71117 restrict Medicaid provider taxes and state-directed payments, including conditions for waiving the uniform-tax requirement. CMS describes transition periods for affected arrangements.

Action type: Federal Statute
Identifier: Public Law 119-21
Current status: Enacted
In effect: Yes
Last verified: August 17, 2026

Why this match

Project 2025 broadly directs CMS to end state Medicaid financing loopholes. Public Law 119-21 and the CMS final rule address specific provider-tax and state-directed-payment mechanisms. The direction is strongly aligned, although the enacted text is more specific than the proposal.

How this can change

Reversibility: Difficult

Congressional Repeal Or Amendment

Congress can amend or repeal the statutory restrictions. CMS may revise implementing regulations only within the authority the statute leaves to the agency, while states can redesign financing arrangements to comply with federal law.

Authority: Congress · President · Agency · States

Show me the receipts

3 public source receipts

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