Hospital fees excite interest in several states

The possibility of instituting hospital fees or taxes to support state Medicaid programs recently has made the news in both Georgia and Tennessee. Now three more states--New Jersey, California and Idaho--also are either looking at creating such fees or increasing fees that are already in place.

Yesterday New Jersey Gov. Chris Christie proposed heavy spending cuts for the state's fiscal year (FY) 2011 budget to address a $10.7 billion budget shortfall. Gov. Christie said that the budget "stands up for our hospitals despite all our fiscal challenges." Yet the New Jersey Hospital Association wasn't impressed, noting the governor wants to lift the cap on the existing 0.53 percent tax on hospital revenues in order to raise an additional $45 million in state revenues, as well as another $45 million in federal matching funds.

In California, the California Hospital Association has negotiated an agreement allowing the state to tax hospitals in order to gain an additional $4.3 billion in federal funding to increase state Medicaid (Medi-Cal) payments. The details of the deal still have to be worked out and approved by the federal government. However, the tax and the associated payment increases will be based on Medi-Cal volume. Out of 430 hospitals in California, 83 would pay the tax but lose money due to low Medi-Cal volume. But most of those hospitals are part of health systems where money-making hospitals could help provide balance for the losers. Approximately 17 independent hospitals probably would pay the tax but lose money, says Anne McLeod, vice president of finance policy for the hospital association.

In Idaho, a group of 20 private hospitals, primarily nonprofits, are backing a bill that would require them to pay $25 million annually in FYs 2011 and 2012 to offset a $47 million Medicaid budget hole and to keep the federal matching funds flowing.

To learn more about the various situations:
- check out the Idaho Statesman article
- here's the Sacramento Business Journal article
- read the New Jersey Hospital Association's statement

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