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By Ashley Speagle

Correspondent

ATLANTA -- Georgia's rural hospital industry would collapse under proposed 1.6 percent "bed tax," legislators were told Wednesday.

"As many as 20 rural hospitals could be lost in a very short time," said Jimmy Lewis, CEO of HomeTown Health, an organization of rural and small hospitals. "We've got to be sure we don't decimate an industry."

Originally proposed last session, House Bill 307 proposes a 1.6 percent provider fee for hospitals and health insurance providers. Industry officials call it a "bed tax."

Gov. Sonny Perdue included the fees in his fiscal 2011 recommended budget, saying they're needed to fund Medicaid, which will lose one-time funds and needs new funding for an increasing population of eligible patients.

On Wednesday, representatives of several health organizations opposed the fees at an House Appropriations subcommittee hearing. They said the fee would critically hurt many hospitals, which would have to pass the costs on to patients.

Mr. Lewis and others said many hospitals, especially those with only a few Medicaid patients, could fold.

Julie Windom, vice president of the Georgia Alliance of Community Hospitals, said the fee would hurt the state's economy because many hospitals are major employers in their communities.

A Georgia Chamber of Commerce representative said the fee could hurt overall health care in the state.

"Hospitals will shift costs to those that can pay, and businesses would be forced to drop coverage or increase costs to employees," said Joe Fleming, senior vice president of government affairs for the chamber. "This would drive up the number of people uninsured and may exacerbate the health care problem."

Gov. Perdue said the only other option to fill budget holes and continue Medicaid funding would be a 16.5 percent cut across all state health departments.

Many opponents suggested increasing the state's tobacco tax to fund Medicaid, but some legislators didn't like that idea.

HB 307

* Each hospital shall be assessed a provider fee in the amount of 1.6 percent of the hospital's net patient revenue and shall be paid quarterly.

* No less than 90 percent of revenues shall be deposited into the account and dedicated for the sole purpose of obtaining federal financial participation for medical assistance payments to providers on behalf of Medicaid recipients.

* Any hospital that fails to pay the provider fee within the time required shall pay, in addition to the outstanding provider fee, a 6 percent penalty for each month or fraction thereof that the payment is due.

Source: HB 307

"I don't generally favor specific taxes that single people out," sad Rep. Tom Dickson, R-Cohutta. "Everyone should contribute, and we need to figure out other ways to balance the budget."

Other North Georgia committee members said they oppose both the proposed fee and a tobacco tax increase.

"It's gotten to the point where any cuts we make are going to be painful, but tax increases are not the way to get under it," said Rep. Roger Williams, R-Dalton.

Rep. Jay Neal, R-LaFayette, said he's hoping that legislators "can balance the budget without tax increases."

"We need to make as many cuts as possible," he said.

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