The ‘bed tax’ on hospitals
The state charges hospitals 1.45 percent of net patient revenue to help pay for Medicaid. Trauma centers pay 1.40 percent. That money enables the state to draw federal matching dollars. Dollars are redistributed to hospitals based on Medicaid services they provide. Hospitals that care for a lot of Medicaid patients can get back more than they pay, while those that don’t may have a net loss on the tax. It was established in 2010.
The state’s ailing Medicaid program benefited from critical care Friday, when the House overwhelmingly approved a bill that will make way for renewal of a fee on hospitals.
Senate Bill 24 will transfer the power to levy the fee — seen as necessary to avoid a loss of $700 million in funding for the medical care program that serves low-income Georgians — from the Legislature to the state’s community health care agency.
The bill, proposed by Gov. Nathan Deal, solves a problem for many legislators who did not want to renew the 2-year-old fee, widely known as the “bed tax,” because they saw it as a tax increase.
Without the fee, hospitals and doctors faced cuts in Medicaid reimbursement that could exceed 20 percent, a hit that would have forced many to drastically cut services and cause some small rural hospitals to shut down.
“The legislation just breathed life into 27 hospitals,” said Jimmy Lewis, the CEO of HomeTown Health, a network of rural hospitals and providers.
Hospital officials say swift passage of the bill by both the House and Senate, which approved it early in the legislative session, avoided a catastrophic blow to hospitals and the thousands of patients who rely on them for critical care.
The fee, which was set to expire in June, requires hospitals to pay 1.45 percent of their net patient revenue. The state uses that money to draw roughly $450 million in federal matching dollars to aid hospitals that care for large numbers of low-income patients.
But major hurdles still loom large for hospitals and Georgia’s health care system. Enrollment in Medicaid, which already provides health care for 1.7 million low-income Georgians, is on the rise. Health care costs continue to escalate. And the Affordable Care Act brings with it new costs and penalties.
Legislators must also grapple in the coming months with big budget woes at the Department of Community Health, which oversees Georgia’s Medicaid program and the health benefit plan for nearly 650,000 state employees. Deal has asked the agency to trim more than $160 million from its Medicaid and PeachCare for Kids programs.
“The debate about health care has only just begun,” said Lewis, who referred to SB 24 as the biggest piece of health care legislation in Georgia in at least the past decade.
Without the fee, Children’s Healthcare of Atlanta would lose $103 million in funding, said David Tatum, Children’s vice president of government affairs.
“We would have had to make some very difficult decisions, decisions we hope we never have to make,” Tatum said.
Lawmakers originally passed the controversial fee in 2010 after heated debate. But many were reluctant to vote to extend what they saw as a tax increase. SB 24 essentially lets legislators off the hook, placing the fee — and the power to reduce or eliminate it — under the Department of Community Health board. The board would need legislative approval to increase the fee.
The House vote Friday on the bill — which had the backing of Speaker David Ralston, R-Blue Ridge, and top Senate leadership — was quick and lacked nearly any sign of opposition.
The 147-18 vote featured not a single Democrat in opposition. The Republicans who voted no were mostly freshmen or second-term members, many of whom were elected with tea party backing.
The bill now awaits Deal’s signature to become law.
Several top Republicans, including Majority Leader Larry O’Neal, R-Bonaire, Majority Whip Edward Lindsey, R-Atlanta, and Appropriations Chairman Terry England, R-Auburn, spoke in favor of the bill and took largely favorable questions from colleagues.
Lindsey made an impassioned plea for the bill.
“Let’s move forward and try to figure out the long-term way forward,” he said. “But for God’s sake, let’s not take a step back.”
England, charged with wrangling a nearly $20 billion budget for the fiscal year starting July 1, said his job can’t be done without the provider fee. Asked by Rules Committee Chairman John Meadows, R-Calhoun, whether anyone had suggested an alternative, England said there wasn’t one.
“There’s nowhere to find it,” he said. “We’ve trimmed the fat, we’ve trimmed the meat, we’re sawing on the bone right now. It’s simply not there.”
While the bill’s passage is a big win for Georgia’s health care community, funding problems will continue as people remain uninsured or on Medicaid in a tough economy, said Kevin Bloye, a spokesman for the Georgia Hospital Association.
“As long as the economy continues to struggle,” he said, “we’re still going to have major Medicaid issues.”
About the Author
