The board of the state’s Medicaid agency gave initial approval Thursday to the hospital provider fee mechanism, paving the way for renewal of the current formula in July.

The next step is for the Department of Community Health to submit the proposal to federal officials, who have 90 days to approve it.

The current provider fee runs out June 30. The renewal is expected to fill a hole of nearly $500 million in the financially squeezed Medicaid budget.

Legislation that sped through the General Assembly this year transferred decisions on the assessment from the Legislature itself to Community Health.

Passage of that bill allowed for renewal of the fee – known among critics as a “bed tax” – without requiring Republican legislators to vote directly to renew it. Anti-tax activists, an important constituency for Republicans, had wanted the fee eliminated.

The board passed three rules relating to the provider fee Thursday. The vote was 7-1 on each, with board member Clay Cox being the lone dissenter each time. The votes took place at a special meeting of the board.

Jerry Dubberly, the state’s Medicaid director, told GHN that he expects the federal Centers for Medicare and Medicaid Services to approve the renewal of the main fee plan, which he said would be submitted Friday.

But the new part of the provider fee, which aims to draw down federal money for private hospitals, won’t be submitted to CMS until the main proposal gets approved, he said.

“We don’t want to confuse the two,’’ he said.

The new part of the hospital fee would help even out the losses for organizations such as Piedmont Healthcare and Northside.

The amount currently raised from hospitals is returned to the hospital industry through reimbursements. Individual hospitals get different amounts based on how much Medicaid business they do, so that some hospitals come out ahead under the formula while others lose money.

Despite critics’ use of the term “bed tax,’’ the fee currently is not levied on individual patients or on hospital beds, but is based on hospital net patient revenue. Almost all states use such assessments to help cover the costs of their Medicaid programs.

Two-thirds of the provider fee money generated in Georgia goes to shore up Medicaid’s budget. The rest goes to increase Medicaid reimbursements to hospitals.

Medicaid, jointly financed by the federal government and individual state governments, covers 1.5 million poor and disabled Georgians.