The tax on Georgia hospitals: Part II

Print Friendly and PDF By: Andy Miller Published: Dec 17, 2010

Earlier this week, the Georgia Hospital Association convened a meeting in Macon of representatives of hospitals across the state.

The topic was taxes.

But not the kind that individuals and corporations pay.

The Georgia General Assembly earlier this year passed a tax on hospitals to help fill a financial hole in the state’s Medicaid program, which covers more than 1 million low-income and disabled residents.

The levy among Georgia hospitals was projected to produce more than $170 million, which then would generate hundreds of millions of dollars in federal funds for Medicaid. But coupled with the tax was an increase in payments to Georgia hospitals for services rendered to Medicaid patients.

Several other states have adopted hospital taxes in recent years.

The effect of the tax in Georgia varies, generally depending on the amount of Medicaid business that a hospital does. Many Georgia hospitals, including Grady Memorial Hospital in Atlanta, are projected to receive more money in added Medicaid reimbursement than they pay out in taxes. But there are some hospitals on the losing end because of the tax.

And that’s why the GHA meeting took place. The hospital organization’s goals, according to a letter from GHA President Joe Parker to members, include seeking ways to lower the losses that some hospitals incur under the current formula, and to maintain or improve the gains that other facilities have realized.

GHA hired the consulting firm Health Management Associates to prepare a new method of calculating the tax for the state’s hospitals. At Tuesday’s meeting in Macon, each hospital received specific calculations on how the new formula would affect it, said Kevin Bloye, a GHA vice president.

“We feel that the proposal represents a win-win for the state and the hospital community as a whole,’’ Bloye said Friday. “Nobody is worse off under the plan.’’

GHA received a go-ahead from state officials to work on a proposal, Bloye added, ‘’as long as we generated the same level of revenue for the state.’’

The hospital organization is looking for buy-in from its membership before proposing a new formula to the General Assembly next year. “The overwhelming majority of hospitals will have to support this to move forward,’’ Bloye said.

There are risks for hospitals in reopening the issue before the Legislature. One potential pitfall is that lawmakers could increase the tax from its current rate of 1.45 percent of current revenue. Ironically, the other hazard is that anti-tax legislators could abolish the levy entirely. That could lead to big cuts in Medicaid payments to hospitals.

“Anytime you open up this can of worms again, there’s always a potential it could go in another direction,’’ GHA’s Bloye said. “We felt the potential benefit outweighed the risk.’’

Hospital officials will have a lot to think about before the General Assembly gets cranked up in January.

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