Ohio faces $558M loss in FY 2018 under proposed managed care organization tax change

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In order to avoid $558 million in losses in fiscal year 2018, Ohio will need to alter its tax structure for managed care organizations by June 2017, The Plain Dealer reported.

Currently, managed care companies in Ohio pay a sales tax on Medicaid services they provide, and that tax is calculated into Medicaid payments the companies receive for administering the services. State and local services use revenue from this tax to fund services.

However, CMS notified Ohio and other states in 2014 that imposing this type of sales tax on MCOs may not adhere to federal guidelines.

Without the tax, the state would lose about $1.1 billion in fiscal years 2018 and 2019, according to a Policy Matters Ohio report. Counties and transit authorities would lose $397 million in the same period.

Other affected states like Pennsylvania and Michigan are addressing the MCO tax change by expanding its definition of MCOs beyond Medicaid organizations, The Plain Dealer reported. 

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