Georgia hospitals accept 'bed tax' over reduced Medicaid payments

Faced with the alternative of losing already tight Medicaid reimbursement, Georgia hospitals agreed to a 1.45 percent fee or "bed tax" on patient revenue to remedy its worsening budget crisis. With the passage of HB 307, which the House Appropriations Committee voted in favor of on Tuesday, the new fee will be used to redistribute revenue among hospitals with varying bottom lines and ultimately fund a $50 million increase in what the state can spend on Medicaid. Georgia will use the remainder, $175 million, to pay for Medicare services. Hospitals serving more indigent patients expect to see a net gain.

In the final version of the bill, the fee drops from Gov. Sonny Purdue's originally proposed 1.6 percent to 1.45 percent, and goes away after 2013. Hospitals will also avoid a proposed sales tax exemption and provider reimbursement cuts by conceding to the fee.

"We worked in good faith to come up with a compromise," Earl Rogers, a lobbyist and senior vice president for the Georgia Hospital Association, said moments after the vote.

Lawmakers have also been clear that the fee may not be passed onto patients, but must come from hospital efficiencies, according to the Atlanta Journal-Constitution. Although all of these proposals must still go through the Senate, the agreement appears to have its support, as well as that of the House and governor's office.

To learn more:
- read the Atlanta Journal-Constitution article
- read this article on
- here's the original bill
- view the letter from the Georgia Hospital Association to hospital CEOs