Peach punch

Ga. hos­pi­tals choose more taxes over less pay

Modern Healthcare - - The Week In Healthcare - Joe Carl­son

Hos­pi­tal op­er­a­tors across Ge­or­gia balked at pay­ing a new tax on their gross pa­tient rev­enue this year, and pre­cip­i­tated an all-out lob­by­ing as­sault on the pro­posal from Gov. Sonny Per­due.

Then the gover­nor re­vealed the dis­mal state of Ge­or­gia’s fi­nances, and pre­sented hos­pi­tals with two op­tions: ei­ther pay the new tax and see a Med­i­caid re­im­burse­ment in­crease, or don’t pay and face 10.25% de­creases in Med­i­caid re­im­burse­ments along with the loss of ex­emp­tion from state sales tax.

The hos­pi­tals de­cided to ac­cept the 1.45% tax. “I think we took the best op­tion avail­able. It’s clear we’re in an un­prece­dented bud­get cri­sis at the state level, and from the hos­pi­tal stand­point, it was a way to help the state get out of this mess,” said Ge­or­gia Hos­pi­tal As­so­ci­a­tion spokesman Kevin Bloye.

Hos­pi­tals across the coun­try have ap­proached sim­i­lar de­bates in vary­ing ways. In Ten­nessee, where a one-year hos­pi­tal tax is be­ing de­bated, the Ten­nessee Hos­pi­tal As­so­ci­a­tion this month is­sued a news re­lease un­der the head­line, “Hos­pi­tals praise leg­is­la­tor lead­er­ship in swift ap­proval of fee.” To the north, the Wis­con­sin Hos­pi­tal As­so­ci­a­tion for years re­sisted a hos­pi­tal tax but then em­braced the fee in 2009 shortly be­fore it be­came law.

In Ge­or­gia, the fee is ex­pected to gen­er­ate roughly $225 mil­lion in taxes from hos­pi­tals, and us­ing the 3-to-1 re­im­burse­ment for­mula un­der fed­eral stim­u­lus rules, the added rev­enue would gen­er­ate roughly $675 mil­lion in fed­eral Med­i­caid match­ing pay­ments, of­fi­cials said.

Un­der this $900 mil­lion net rev­enue, providers will see an in­crease in Med­i­caid re­im­burse­ments of be­tween 10% and 12%, said Bert Brant­ley, spokesman for the Repub­li­can gover­nor. “To in­crease Med­i­caid re­im­burse­ment rates dur­ing this re­ces­sion is some­thing that is pretty dra­matic,” he said. “It’s a good, com­mon-sense agree­ment.”

The law says the fee ex­pires in three years, a com­pro­mise that was the re­sult of in­ten­sive ne­go­ti­a­tions be­tween the par­ties, al­though ob­servers were skep­ti­cal that law­mak­ers would truly al­low the fee to van­ish af­ter Per­due and some of to­day’s law­mak­ers are no longer in power.

Amer­i­cans for Tax Re­form, a Wash­ing­ton­based not-for-profit that op­poses tax in­creases in any form, lob­bied Per­due’s of­fice to op­pose the tax. “We found it in­ter­est­ing that dur­ing a time of ex­plod­ing costs be­cause of health­care re­form, the gover­nor wanted to in­crease taxes” on health­care providers, said Joshua Culling, a state af­fairs man­ager for Amer­i­cans for Tax Re­form.

As is the case in other states, hos­pi­tals with higher con­cen­tra­tions of Med­i­caid pa­tients stand to make more rev­enue in en­hanced pay­ments than they would lose in taxes, while the re­verse is true for providers with smaller pro­por­tions of Med­i­caid pa­tients.

Per­due said Med­i­caid pay­ments would have de­creased 10.25%.

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