After months of internal wrangling, Georgia’s hospital industry finally appears united in support of a revised plan for the state’s provider fee.
Now the heavy lifting begins.
The hospitals’ proposal goes next month to the General Assembly, where it will draw opposition from many anti-tax representatives, who often refer to it as a “bed tax.’’ The current provider fee expires in July.
With the Georgia Medicaid program already facing a $400 million shortfall, major payment cuts to hospitals are expected if a fee proposal does not make it through the Legislature.
The provider fee probably will be the most visible and contested health issue during the 2013 General Assembly session.
This week, three hospital organizations – the Georgia Hospital Association, the Georgia Alliance of Community Hospitals, and HomeTown Health – endorsed what is expected to be termed the “Medicaid Financing Program.”
Piedmont Healthcare, the hospital system that had been the most vocal critic of the current formula, is more satisfied with this one. Piedmont told GHN this week that the new formula potentially will lower the losses that Piedmont has experienced under the current arrangement.
Piedmont Hospital, in Atlanta’s Buckhead district, lost $6.4 million with the current provider fee arrangement in fiscal 2011, according to state figures.
Matt Gove, a Piedmont executive, said the new proposal, devised by GHA, is better than the alternatives – a large Medicaid reimbursement cut or the repeal of a tax exemption for nonprofit hospitals.
“Many of us had a problem with the original formula,’’ Gove said.
The new proposal is expected to have two parts. The first would be a renewal of the current formula, which would be combined with a new arrangement to draw down federal money for private hospitals. The latter part would help smooth out the losses for organizations such as Piedmont and Atlanta’s Northside Hospital.
Gove declined to give details of the new arrangement, but said, “We felt like this is the best approach.’’
The assessment currently generates more than $430 million annually for Medicaid.
Not renewing the fee could mean a 20 percent reimbursement cut to Georgia hospitals. When a related payment add-on is removed as well, the overall cut in Medicaid reimbursements to hospitals could amount to more than 30 percent.
The financial fallout could close many rural hospitals, Jimmy Lewis, CEO of HomeTown Health, said recently.
A positive development for the hospitals is that the money from renewing the provider fee is likely to be included in Gov. Nathan Deal’s budget in January.
Opponents will undoubtedly benefit from the support of Grover Norquist, a Washington-based anti-tax activist. In a recent letter to Georgia legislators, Norquist said renewing the hospital fee would kill jobs and raise health costs. He urged state lawmakers to oppose renewing what he called “a bed tax.”
Norquist is the author of an anti-tax-increase pledge signed by many of the nation’s Republican lawmakers, including leading ones from Georgia. He said renewing the hospital tax would amount to breaking that promise.
Currently, the fee is not levied on individual patients or on hospital beds, but is based on hospital net patient revenue. More than 40 states use such assessments to help cover the costs of their Medicaid programs.
Two-thirds of the money generated in Georgia goes to shore up Medicaid’s budget. The rest goes to increasing Medicaid reimbursements to hospitals.
Individual hospitals get different amounts based on how much Medicaid business they do, so there are, in effect, winners and losers under this formula.
Grady Memorial Hospital, with its large Medicaid patient mix, received more than $9 million from the state’s hospital provider tax in fiscal 2011. Children’s Healthcare of Atlanta’s two hospitals netted a total of more than $22 million, according to state figures.
Medicaid, jointly financed by the federal government and individual state governments, covers 1.5 million poor and disabled Georgians. The program faces constant funding problems in Georgia.