Hospital tax revision scrapped as Deal balks

The plan to revise Georgia’s new hospital tax has suddenly been shelved, even before the proposal was taken up by the General Assembly.

The Georgia Hospital Association said Gov. Nathan Deal voiced opposition Tuesday to the organization’s proposal to change the tax formula for hospitals. Without Deal’s support, “there’s no sense for us to move forward on this,’’ said Kevin Bloye, a GHA vice president.

“We were disappointed. We put a lot of work into this,” Bloye added.

Last week, the GHA board had voted to advance a new formula for the tax, which was levied for the first time last year.

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

The plan would have brought extra millions in federal dollars to the state’s Medicaid program, GHA said.

Yet some hospitals opposed the GHA board effort. A survey by HomeTown Health, an organization of rural hospitals in Georgia, found that 19 of 23 hospitals responding said they were against changes. The Atlanta health system that runs Grady Memorial Hospital expressed doubts as well.

Pursuing the tax revision without the governor’s backing could have exposed hospitals to Medicaid reimbursement cuts, which would have “a devastating impact,’’ Bloye said. Another possible risk could have involved the proposal to lift the sales tax exemption for nonprofit hospitals. That would have a “crippling effect’’ on nonprofit facilities, Bloye added.

Because of the current hospital tax, Deal’s recently proposed 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 hospital tax automatically expires in a couple of years. Bloye said GHA would seek to suggest improvements to the current formula at that point, if not before then.

“We want to be ready to work with the governor when the time is right,’’ Bloye said. GHA leaders will attempt to meet with Deal soon to explain the rationale for the tax revision plan, he said.

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.

At the time it was approved, 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 a hike in payments to Georgia hospitals for delivering services to Medicaid patients.

Several other states have adopted hospital taxes in recent years.