NASHVILLE - The Bredesen administration expects Tennessee hospitals will agree next year to increase a hospital assessment fee to fill an anticipated $121.5 million hole in TennCare's upcoming budget.
But Tennessee Hospital Association President Craig Becker said it's premature to predict what hospitals will do, noting they "already bailed out the state" with the 3.52 percent assessment fee passed earlier this year.
Finance Commissioner Dave Goetz said state officials "assume" THA will agree to raise the fee once $121.5 million in one-time federal funds related to the state's share of Medicare prescription drug funding runs out.
That $121.5 million draws down $260 million more in federal Medicaid matching dollars. The administration is using the total to offset about what would have been a $380 million, or 7 percent, cut in reimbursements for TennCare providers. Affected providers are doctors, hospitals, nursing homes, dentists, mental health providers and medical transportation services.
At hospitals' request, the General Assembly passed the one-year, 3.52 percent assessment fee to avoid more cuts to hospital reimbursements. It raises $230 million for TennCare and draws an extra $429 million in federal matching funds.
Becker said recently he doesn't expect a decision before November or December on whether to ask lawmakers to extend the fee. The decision depends on how second-quarter payments pan out, he said.
"If we make sure we've got everything hammered out, I could see that it would go forward," Becker said.
But as for Gov. Phil Bredesen's assumption that hospitals will agree to raising the fee to generate the additional $121 million, Becker said, "we'll have to take a look at what the impact would be and if there are other sources [of funding]."
Hospitals "kind of feel like we've already bailed out the state," Becker said. "To tack on another $120 million ... there'd probably be some resistance on that. We'll figure it out when we get a little bit closer."
Goetz said the Bredesen administration leaves office in January. He said if hospitals don't agree to extend and enlarge the assessment fee, state funds would fall short about $400 million. That would cost TennCare an additional $800 million in federal matching funds.
"I think they have to reach the conclusion and the new administration has to reach the conclusion as to whether or not that's what they recommend," Goetz said. "If they don't, the [budget] problem goes from $45 million to $1.2 billion, so you might want to consider" it.
Both the main candidates to succeed Bredesen are watching the situation.
Knoxville Mayor Bill Haslam, the Republican nominee, says his government experience has prepared him to deal with such issues.
Haslam spokesman Dave Smith said the hospitals' support for the fee this year was "a truly unique situation."
"An industry came together and made it clear to the legislature and the governor that they wanted and needed a coverage assessment to help close the budget gap," Smith said. He said the new administration next year will evaluate the situation and "make sure an appropriate, fiscally responsible solution is reached.
"First and foremost, Mayor Haslam will make sure TennCare never again threatens to bankrupt our state," Smith said.
Democratic nominee Mike McWherter, said he would look at a "combination of funding solutions to bridge the gap" when it comes to the $121.5 million issue.
"I would work with the Tennessee Hospital Association and other health care providers to strike a balance between the hospital assessment fees and potential reductions in reimbursements," he said.