Hospital Industry Reaches Consensus On Provider Fee

Dec 27, 2012

Georgia hospitals have come together over the so-called provider fee, a controversial tax aimed at helping the state’s neediest patients.

Since 2010, every Georgia hospital has had to pay a fee based on its net patient revenue. The state collects the fee, which in turns helps draw down matching funds from the federal government. Ultimately it generates more than $400 million each year for the state Medicaid program. But the fee expires in June, unless lawmakers decide to renew it this legislative session.

After months of negotiation, Georgia’s three main hospital trade groups officially endorsed renewal of the fee.

“We had a joint board call. Everyone signed off,” said Julie Ellen Windom of the Georgia Alliance of Community Hospitals. “It's too critical and the alternatives we were facing were all bad.”

One possible alternative would be the state lowering Medicaid reimbursement rates, which Windom said would prove far costlier to hospitals than renewing the tax. 

Most hospitals had been supportive of renewal since the beginning, especially nonprofits that serve a lot of Medicaid patients, like Atlanta’s Grady Memorial and Children's Healthcare of Atlanta.

But some held out, complaining the tax had an unfair financial impact on those that didn’t treat as many Medicaid patients.

Windom says the problem was solved by adding a new reimbursement program that allows some private specialty hospitals to draw down state funds.

“If you’re a cancer hospital, if you do a lot of organ transplants, you get extra payments to get everybody a little closer to being made whole,” said Windom.

Governor Nathan Deal last month called on the hospital industry to reach consensus before legislative session begins in January. He’s hoping unity among hospitals will help mitigate the Republican feuding that marked the 2010 debate.

Now that hospitals have come together, Windom says the real challenge begins - getting the state legislature to renew the tax. 

“I don’t think it will avoid the anti-tax fight that will probably be a part of this,” said Windom. ”Hopefully [lawmakers] see there’s no other option.”