ATLANTA — Gov. Nathan Deal has signed into a law his plan to extend a key piece of Medicaid insurance funding without explicitly extending a tax on hospitals.
The next step in avoiding a $450 million loss of federal support is now up to the Georgia Board of Community Health. The new law empowers that panel of governor’s appointees to do what lawmakers wanted to avoid doing themselves: levy a tax on Georgia hospitals’ net patient revenue.
“Giving (the Department of Community Health) the power to authorize a provider fee — as it currently does with nursing homes — will help ensure that hospitals, particularly rural hospitals and those serving a large number of Medicaid patients, will still receive their fair share of reimbursement,” Deal said as he signed the legislation at a meeting of the Georgia Hospital Association on Wednesday.
Practically speaking, the law will change little in the way Medicaid is financed.
Currently, hospitals pay a 1.45 percent tax on their net patient revenue. That money — more than $230 million this year — is used as state-match financing to qualify for additional federal Medicaid support, about $450 million this year. The money is then used to boost what the state pays to hospitals that treat Medicaid insurance beneficiaries.
Deal spokesman Brian Robinson said Wednesday that the administration expects the levy to remain the same once the board acts in the coming months.
The General Assembly passed the tax in 2010, but it expires June 30, the end of the current fiscal year. Lawmakers didn’t want to jeopardize federal support, particularly amid warnings from hospitals that the revenue loss would force widespread layoffs and, potentially, the closure of several rural and community hospitals around the state. But many legislators, particularly Republicans, also feared primary challenges in 2014 if they voted to extend that setup.
Medicaid is an insurance program financed by federal and state governments, with state agencies administering the service under rules set in Washington, D.C. The Georgia program serves more than 1.5 million people at a cost of about $5.8 billion to federal taxpayers and $2.6 billion to the Georgia treasury. Most of the beneficiaries are children, elderly adults or disabled adults from low-income households.
Senate Bill 24 was Deal’s compromise plan to extend the financing scheme without lawmakers having to approve the tax again. From the beginning, the governor and his allies have called the levy a “provider fee” rather than a tax. The maneuver won overwhelming support in both chambers, though a few critics mocked the idea the “provider fee” isn’t the same thing as the current tax.
As the bill moved through the legislature, provisions were added that maintain the General Assembly’s control over the levy. The new law doesn’t explicitly set a top tax rate — the federal government already caps it at 6 percent — but lawmakers specified that the rate cannot generate more money than is called for in a specific line item they will include in the state operating budget. Further, legislators will be able to override the fee after the fact, if they deem it excessive.
Those provisions mean the board cannot act with certainty until after Deal signs the budget later this spring. The document is still being debated in House committee.
The nine-person board meets each month, with the next meeting scheduled for Thursday. Pam Keene, a spokeswoman for the state health agency, said she couldn’t predict when the board will set the rate for 2014.