The wait continues for federal approval of the Georgia hospital provider fee — a delay that’s increasingly worrisome to some in the hospital industry.

The financing mechanism is designed to fill a nearly $500 million hole in the state’s Medicaid program. Legislation to ease the renewal of the current hospital fee sailed through the General Assembly early this year, with a push from Gov. Nathan Deal.

Hospital industry officials expected approval from Washington in late June. Yet it still has not come.

The Department of Community Health has maintained that the Centers for Medicare and Medicaid Services (CMS) has raised no red flags about the Georgia proposal.

Tim Connell, chief financial officer for Community Health, said Wednesday that the agency has answered questions on the hospital provider fee from CMS officials, and communicates with federal officials about the issue on a daily basis.<–more–>

The Georgia Hospital Association says it’s not worried about the delay. “We are very confident that the CMS will approve Georgia’s Hospital Medicaid Financing Plan very soon,’’ said Kevin Bloye, a GHA vice president.

But Jimmy Lewis, CEO of HomeTown Health, an organization of rural hospitals in the state, told Georgia Health News, “We are very worried with each day it’s not approved.’’

“Rural hospitals are totally dependent on it to survive,’’ he said.

Some hospital officials say they are concerned that Georgia’s hard line against expanding Medicaid under the Affordable Care Act (ACA) has not helped the state’s cause with the feds on the provider fee.

CMS is a division of the U.S. Department of Health and Human Services (HHS). And this week, HHS chief Kathleen Sebelius, on a visit to Atlanta, criticized Georgia’s opposition to expansion and what she characterized as a passive approach to the health insurance exchange, the two main pillars of the health reform law.

But Community Health’s Connell said Wednesday that there is no reason to believe the feds’ disagreements with Georgia over the health care law are related to their slowness in approving the fee. “CMS has never said we’re going to drag it out because you’re not going to expand” Medicaid, he said.

The U.S. Supreme Court ruled last year that states are within their rights if they refuse to expand Medicaid. The feds, however, offer financial incentives for states to expand the program, and about half the states have agreed to do so.

CMS, for its part, said recently that it’s still reviewing the Georgia fee proposal. It’s certainly a busy time for the agency, which is involved in rolling out the main provisions of the Affordable Care Act.

Formula spells big bucks

The provider fee — known among critics as a “bed tax’’ — raises money from hospitals and returns funds to them through reimbursements. Individual hospitals get different amounts based on how much Medicaid business they do, so some hospitals come out ahead under the formula while others lose money.

Almost all states use such assessments to help cover the costs of their Medicaid programs.

The previous provider fee ran out June 30, and Community Health has continued to pay hospitals a related 11.8 percent additional Medicaid reimbursement, the same as under the old formula. The money is coming out of Medicaid and general funds, the agency said.

“We’re paying it as if approved because we didn’t want to hurt the hospitals,’’ Connell said, also citing the state’s confidence that the fee will ultimately be accepted by federal officials.

Connell said the chance of CMS not approving the hospital fee “is extremely remote.’’ But under such a scenario, Community Health would have to recoup that extra Medicaid pay from hospitals, he said.

He said Georgia’s proposals to CMS have been split between a renewal of the old fee mechanism, which is now before federal officials, and a new provision that would help private hospitals that are financial losers under the previous formula.

The latter would help even out the losses for organizations such as Piedmont Healthcare and Northside Hospital, two large health care systems.

The second part of the hospital fee will be submitted to CMS soon, Connell said.

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.

Once federal officials approve the Georgia request, the state can begin collecting the “tax’’ from the hospitals, said John Upchurch, Community Health’s director of reimbursement.

Connell also noted that Medicaid programs expect greater financial scrutiny from federal officials. He cited a letter from the National Association of Medicaid Directors that says, in part, “states should be prepared for increased oversight in all aspects of their [Medicaid] programs, from financing mechanisms to managed care contracting to program integrity efforts.’’

Here’s a Georgia Health News article about another issue before Community Health — the dispute over the State Health Benefit Plan contract.