Hospital group takes step toward tax revision

Georgia’s year-old hospital tax has moved a step closer to being back on the table at the state Legislature.

The board of the Georgia Hospital Association this week voted to advance a new formula for the tax, levied for the first time last year.

The tax has created winners and losers among hospitals, generally depending on how much Medicaid business they do. GHA has said its goal in devising a new tax methodology is to lower the losses that some hospitals incur under the current formula, while maintaining or improving the gains that other facilities have realized.

Some hospitals, however, oppose the GHA board’s effort. A survey by HomeTown Health, an organization of rural hospitals in Georgia, found that 19 of 23 hospitals responding said they are against changes. The health system that runs Atlanta’s Grady Memorial Hospital expressed doubts as well.

The hospital tax ”was designed to help support the hospitals that do most of the Medicaid care in the state,” said Matt Gove, a spokesman for Grady Health System. “Until we get a full understanding of the formulas they’re proposing, we cannot support [changing the tax methodology].”

GHA said in a statement Thursday that its board will continue meetings with member hospitals to discuss details of the program, ‘’with the hope of achieving broad support.’’ If final board approval is reached, the statement said, GHA plans to go to the General Assembly to seek to change the tax formula – “modifications that will definitely serve as a ‘win-win’ for Georgia and its health care delivery system.’’

GHA said its new formula can generate additional federal dollars for the hospital industry.

But reopening the issue in the General Assembly carries risks for hospitals. One is the possibility that lawmakers could increase the tax from its current rate of 1.45 percent of current revenue. Ironically, another danger is that anti-tax legislators could abolish the levy entirely. That could lead to large reductions in Medicaid payments to hospitals.

Because of the current tax, Gov. Nathan Deal’s budget spared hospitals from the 1 percent cut in payments for Medicaid and PeachCare services that doctors and other medical providers will face in the next fiscal year.

The General Assembly last year approved the tax on hospitals to help fill a financial gap 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 generate more than $170 million, which then would yield hundreds of millions of dollars in federal funds for the Medicaid program. Coupled with the tax was an increase in payments to Georgia hospitals for delivering services to Medicaid patients.

Many Georgia hospitals, including Grady 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.

Several other states have adopted hospital taxes in recent years.

GHA hired a consulting firm, Health Management Associates, to prepare a new method of calculating the tax for the state’s hospitals.