Deal's 'bed tax' creates uncertainty

When Georgia’s hospital “bed tax” — officially known as a provider fee — was first implemented in 2010, it was the subject of fierce debate, and only passed when coupled with some tax breaks.
This year, Gov. Nathan Deal isn’t asking the legislature to extend the fee, which is set to expire this year.
Instead, he has asked the Senate and House to pass a law handing the power to assess the fee to the Georgia Board of Community Health.
On Thursday, the Senate approved Senate Bill 24, which would do just that. SB 24, the Hospital Medicaid Financing Program Act, doesn’t give up legislative control forever, though. It says the fee must be reauthorized by June 30, 2017, or it will be repealed. The bill passed by a vote of 46-9, with three Republicans and six Democrats in opposition.
Four days into the session is a short time frame for a new bill to pass in either the House or Senate.
To get it done that quickly, the Senate suspended its rules a few times, said State Senator Mike Crane, R-Newnan, who voted against the bill.

The provider fee, a 1.45 percent levy on hospital revenues, is used to help the state get additional federal funds for Medicaid. A portion of the money is used to increase the reimbursement rates paid to hospitals for treating Medicaid patients.

In his State of the State Address, Deal warned of dire consequences if the fee is not renewed — including cuts of 20 percent to reimbursement rates and possible closure of some hospitals.

The fee is supported by many — but not all — of the state’s hospitals. Hospitals that see a lot of Medicaid patients end up getting more in increased reimbursements than they pay in the fee.

Piedmont Healthcare, which operates five hospitals, including Piedmont Newnan Hospital, is a net loser under the current system, and supports an alternate proposal promoted by the Georgia Hospital Association.

Matt Gove, chief marketing officer and senior vice president of external affairs for Piedmont, said they hope legislation will include some of the recommendations from the GHA.

Though three of the system’s hospitals: Newnan, Henry, and Mountainside in Jasper, came out ahead with the fee, the system as a whole lost about $7 million, Gove said. The original Piedmont Hospital in the Buckhead area of Atlanta and Piedmont Fayette were the losers under the system. Gove said the margin at Newnan wasn’t large.

“As you can imagine, going into the discussion, we had some reservations about how this works for Piedmont as a system.”

“Last fall we worked with a lot of other hospitals to develop a program that in theory would pull down even more federal dollars” and would “help mitigate even more of the losses.”

Gove said the Georgia Hospital Association has discussed the issue with the governor.

If that program is “the program that we end up with through the legislative process, then I think all of our hospitals will be OK,” Gove said.

It’s the nature of the program that there will be some winners and losers, said Gove. “But we try to look at these things as a system,” he said. “With the Georgia Hospital Association and the other hospitals, I think we were able to find a program that everybody can support,” Gove said. “The next step in that is the legislature and Department of Community Health implementing that sort of program.”

That program “sends more money up, pulls more money down, and distributes more money to all the hospitals,” Gove said.

Crane is not in favor of the plan in SB 24 or the way it was passed.

His main problem is that “instead of dealing with the issue we face within the budget, in a straightforward manner, it moves the responsibility into an executive branch of the government,” he said.

Even though the bill has a sunset provision requiring it to be renewed in 2017, “the effective reality is it will get renewed, because there will always be a hole in the budget... they have made it a perpetual part of the bureaucracy instead of what it was originally” sold to the citizens of Georgia three years ago as — a way to fill a temporary hole in the budget that was created by a temporary downturn in the economy, Crane said.

“We want to have open debate constantly about the best way to run government,” Crane said.

“Is that aggravating to the executive branch? Sure. But that is the design. If we make it too easy for them you get what you get in Washington.”

Since there is so much uncertainty about what money the federal government will be sending, Crane feels the action on the provider fee could have waited.

“When 25 percent of your overall budget” comes from the federal government “and you’re not exactly sure what that is going to look like, how well can you budget? How well can you make decisions like we made yesterday?” Crane asked.

“I would have chosen... to stand down and see how that unfolds. We’re not going to be able to finalize the budget without knowing that part of the equation anyway,” he said.

“Now we’ve kind of locked ourselves in on this one when we don’t know what it is going to look like in the ninth inning.”

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