The Tennessee legislature is preparing to act on a new 3.5% hospital tax. The industry-supported move is being used as a way to lessen the impact of state budget cuts to TennCare.
By taxing themselves, hospitals will help the state continue to draw down hundreds of millions of dollars from the federal government. Those funds would be lost because of proposed TennCare cuts.
Craig Becker is CEO of the Tennessee Hospital Association, which proposed the fix. He says the state’s reimbursement to hospitals that care for the uninsured has always needed tweaking.
“We feel like we’ve been putting band-aids on this problem since its inception, and now we’re putting a tourniquet on because we’re about to bleed out here.”
Becker says the bill will allow hospitals to temporarily “step into the state of Tennessee’s shoes.” It also doesn’t allow the new fee to be simply passed on to patients.
The effect of Governor Bredesen’s proposed cuts to TennCare – estimated at $660 million – would mean a $3 million reduction to Cookeville Regional Medical Center.
CEO Bernie Mattingly says hospitals feel like they have to support the tax to avoid detrimental cuts to service. But he also fears there will be no going back, even though the tax is only supposed to last one year.
“It may appear to be a short term solution, but unfortunately it will probably become a long term solution.”
Twenty-six other states use this tax to draw down federal money.
Revenues from publicly-owned hospitals like Cookeville Regional, Nashville General and the Regional Medical Center in Memphis are not subject to the tax. The legislation also makes a special exception for St. Jude Children’s Research Hospital.
The Tennessee Hospital Association hopes to get a vote on the new 3.5% revenue tax by mid-April. Federal officials would have to sign off before the tax goes into effect July 1st.
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