published Friday, January 22nd, 2010

'Bed tax' eyed to plug Georgia Medicaid hole

By Ashley Speagle

Correspondent

ATLANTA -- Proposed fees on hospitals and managed care providers could raise $345 million to bolster Georgia's Medicaid program, but it also could suck money from some hospitals, lawmakers learned Thursday.

In a joint House and Senate budget hearing for health and human services agencies, state Health Commissioner Rhonda Medows said Medicaid funding is projected to fall more than $500 million short in 2011.

She said budgets will have to be cut, but she urged lawmakers to support Gov. Sonny Perdue's proposal for 1.6 percent fees on hospitals and health insurers' total revenues.

"What if the hospital bed tax doesn't pass?" asked Rep. Doug Collins, R-Gainesville.

"If it's not enacted, the options are few," said Trey Childress, director of the Office of Planning and Budget.

Gov. Perdue has proposed an $18.2 billion budget for the fiscal year that begins July 1. It reflects the end of $2 billion in federal stimulus spending.

Lawmakers are meeting jointly this week to hear budget requests from state agencies.

The "bed tax" would increase payments and trigger larger reimbursements from the federal government to provide health care for the poor.

But Dr. Medows said the tax would benefit only 39 hospitals that treat large numbers of Medicaid patients. She said another 39 hospitals will break even, while the rest -- more than 120 that have the fewest Medicaid patients -- will lose revenue.

"Only those that have a substantial Medicaid portfolio will see the return," Mr. Childress said. "With a higher fee rate, you would see greater disparity between the winners and losers."

Dr. Medows said legislators will receive a list of "winners and losers" before they vote to approve the fee on behalf of hospitals in their districts.

Democrats called the fee a "sick tax" that would raise revenue directly from hospitals and "the state's most vulnerable citizens."

"While insurance and hospital costs will rise under Perdue's budget, the bulk of the new revenue from the 'Sick Tax' will come directly from hospitals that raise the fees on their patients," Jane Kidd, chairwoman of the Democratic Party of Georgia, said in a news release.

But Mr. Childress said if the fee doesn't pass, the state will use health care money to plug the budget hole, cutting payment rates by 16.5 percent for all Medicaid providers.

The Office of Planning and Budget estimates a $365 million loss for hospitals with 16.5 percent across-the-board rate cuts, compared with a $77 million loss under the fees.

Gov. Perdue proposed identical provider fees last year, but they didn't make it into the budget.

HOSPITAL IMPACTS

The state Office of Planning and Budget has estimated the impact to hospitals from a 1.6 percent tax on revenues and a 16.5 percent rate cut.

* Floyd Medical Center (Rome, Ga.) would gain almost $1.6 million with the tax or lose almost $5 million if rates are cut.

* Gordon Hospital (Calhoun, Ga.) would lose $430,126 with the tax, $1.3 million with the rate cut.

* Hamilton Medical Center (Dalton, Ga.) would lose $1.77 million with the tax, $3.7 million with the cut.

* Hutcheson Medical Center (Fort Oglethorpe) would lose $937,365 with the tax, $2.2 million with the cut.

* Murray Medical Center (Chatsworth, Ga.) would lose $126,796 with the tax or $392,199 with the cut.

* Wildwood Lifestyle Center and Hospital (Wildwood, Ga.) would lose $7,514 with the tax and nothing from the rate cut.

Source: Office of Planning and Budget

Dr. Medows said that, while funding needs make it harder to maintain the program, Medicaid remains a necessity for the state because the number of recipients keeps growing.

Besides recipients dependent on the program, some health care providers operate largely through Medicaid money, and nearly 70 percent of residents in nursing homes depend on Medicaid, she said.

"We are extremely short-staffed, and 'Can we get rid of the Medicaid program?' is the question I've already been asked," Dr. Medows said.

While cutting Medicaid is not a legal or practical option, legislators have said that possible federal health care legislation could put a more severe burden on the state for Medicaid coverage.

"We're not going to focus on what may be down the road," Dr. Medows said.

Ashley Speagle covers the Georgia Legislature. Contact her at speagle.ashley@gmail.com.

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