published Friday, February 11th, 2011

Hospitals extend fee to fill TennCare gaps

by Emily Bregel

Tennessee hospitals will sacrifice some revenue to help the TennCare program forestall looming cuts that could hurt patients, Tennessee Hospital Association officials say.

During a conference call Thursday, members of the THA formally announced the agreement to extend a hospital assessment fee one more year. Last year, the first year of the fee, the 3.52 percent tax on most hospitals' net patient revenues raised about $290 million, THA officials have said.


The hospital assessment fee's extension through fiscal year 2012 will prevent cuts to the TennCare program, including:

* Limit of eight physician office procedures annually

* "Medically needy" enrollment closure

* 7 percent reduction in hospital and health professionals payments

* Cuts to essential access, critical access hospitals and disproportionate share funding payments

* Graduate medical education funding cuts

* Eight-day inpatient hospitalization annual limit

* Eight-visit annual limit on nonemergency outpatient visits

* Limit of eight lab or X-ray procedures annually

* Elimination of reimbursement for physical therapy, occupational and speech therapy

SOURCE: Tennessee Hospital Association

Economywise, "things are a bit brighter this year, but not enough to prevent cuts to hospital care without continuing this assessment," THA President Craig Becker said in Thursday's call.

The percentage taxed will be higher this year, but the funds will be used to forestall the same pending cuts, which were first proposed by the state in 2010, officials said.

Like last year, the money will be used to draw down additional federal matching funds through TennCare, the state's version of Medicaid.

This year, the total funds raised through the fee and the federal match will fill a $870 million hole, compared to $659 million raised last year.

"The only difference is more dollars are needed to fund those same cuts due to increased enrollment, utilization and growing expenses," said Larry Kloess, THA board chairman.

The action allows TennCare to put off a looming 7 percent cut in reimbursement rates to providers, as well as other limits to the program that hospital officials say would have a devastating impact on both hospitals and patients.

"Hundreds of hospital jobs would be lost in communities of all sizes across the state, further complicating our economy and unemployment," Kloess said.

Kloess emphasized that the assessment fee was only a temporary solution, and that responsibility for funding TennCare lies with the state.

"This is simply a stop-gap measure designed to help the state of Tennessee through a difficult economic transition period," he said.

about Emily Bregel...

Health care reporter Emily Bregel has worked at the Chattanooga Times Free Press since July 2006. She previously covered banking and wrote for the Life section. Emily, a native of Baltimore, Md., earned a bachelor’s degree in American Studies from Columbia University. She received a first-place award for feature writing from the East Tennessee Society of Professional Journalists’ Golden Press Card Contest for a 2009 article about a boy with a congenital heart defect. She ...

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