The board of the Tennessee Hospital Association voted unanimously Monday to support a hospital-fee plan similar to one that has been strongly opposed by the association's counterpart in Georgia.
The tax would expire after one year and would help offset proposed cuts to the state's Medicaid program, TennCare.
Although a number of Tennessee Hospital Association hospitals had concerns about the idea, the group's leaders say those issues were addressed during a four-hour meeting on Monday.
"I can't say there was unanimous enthusiasm about it," Craig Becker, president and CEO of the Tennessee Hospital Association, said Monday during a conference call with reporters. "I think everybody did come around to recognize the fact that we couldn't go forward with these kinds of cuts" in the proposed budget.
The fee would likely come in the form of a 1 percent to 2 percent tax on hospitals' net revenues, which would go back into the TennCare program and be used to draw down federal matching funds, officials said.
"This proposal is designed to be a gap-financing plan, a one-year plan to see if we can't get through to a better solution instead of a massive reduction in funding," Jim Brexler, chairman of the board of the THA and president and CEO of Erlanger hospital, said during the conference call.
Hospitals that receive certified public expenditures from the government to offset charity care, including Erlanger hospital in Chattanooga, would be exempt from the fee, which hopes to raise at most $200 million from hospitals.
"We don't want to do anything to take those (certified public expenditures) off the table," Mr. Becker said.
BY THE NUMBERS* 1 percent to 2 percent: Amount of proposed tax on hospitals' net revenues* $200 million: Top amount expected to be raised by tax* $170 million: Amount of TennCare cuts proposed last year* $200 million: Additional TennCare cuts proposed this year* 7 percent: Proposed decrease in TennCare provider rates* $10,000: Proposed cap on TennCare inpatient staysSource: Tennessee Hospital Association, Gov. Phil Bredesen proposed budget
Darrell Moore, president and CEO of Parkridge Medical Center, said through a spokeswoman that he did not have enough information to comment on the proposal.
Officials with Memorial Hospital couldn't be reached for comment after hours on Monday.
The tax is an effort to offset what will be a $540 million hole in TennCare hospital reimbursements next year under Gov. Phil Bredesen's proposed fiscal year 2011 budget, officials said.
The proposed budget for the fiscal year that will begin July 1 includes $200 million in state funding cuts to TennCare, on top of cuts of $170 million originally proposed for the current fiscal year's budget.
The proposed cuts include a 7 percent decrease in TennCare provider rates, as well as a $10,000 cap on inpatient stays, which would be devastating to hospitals, Mr. Becker said.
At least 26 states have implemented some kind of hospital fee aimed to draw down federal matching funds, Mr. Becker said.
The Tennessee Hospital Association's preliminary proposal is similar to a measure in Georgia Gov. Sonny Perdue's budget for the upcoming fiscal year. The proposed 1.6 percent tax on all hospitals' net patient revenues has been strongly criticized by Georgia hospitals and the Georgia Hospital Association.
In Tennessee, the hospital association's proposal likely will have support among legislators, said state Sen. Diane Black, R-Gallatin. Sen. Black, who is a registered nurse, said the legislation would have to ensure that the funds are used only to support hospitals.
State Sen. Bo Watson, R-Hixson, said that without any details on how the tax would affect individual hospitals he's unsure how he feels about the proposal.
"Nobody knows really the exact details of what they're proposing," he said.