The Massachusetts House Ways and Means Committee has released its FY17 proposed state budget and it contains a provision that hospitals had fought hard for – insertion of language that would sunset a new $250 million tax on hospitals that Gov. Charlie Baker proposed.
The “tax” – which is a term the federal government uses for the mechanism as opposed to “assessment” – would be part of a 5-year Medicaid waiver proposal the Baker Administration is seeking from Washington. The $250 million would be used to leverage federal matching dollars and $250 million in Medicaid payments would be sent back to hospitals. Approximately half of Massachusetts hospitals will get back more than they pay in, and approximately half of the hospitals in the state will be taxed more than they receive back in Medicaid payments. Some hospitals will face significant financial losses under the tax.
The tax, as currently drafted, is also slotted to start a year earlier than the new waiver, with the FY2017 proceeds being scooped by the state to pay for costs associated with expanded coverage in the Medicaid program.
In the proposal the governor filed, the tax was permanent in nature and would have continued in perpetuity. In response to MHA concerns, House Ways and Means, led by committee chairman Rep. Brian Dempsey (D-Haverhill), on Wednesday did insert key language that would end the tax on June 30, 2022.
“Sun-setting the new tax on hospitals is a critically important step. We’re grateful that the House heard our concerns and put a stop date on what could have been an open-ended financial hit to hospitals,” said MHA President & CEO Lynn Nicholas, FACHE. “By setting a defined end for the new tax, the House Ways and Committee proposal appropriately ties the tax with the waiver’s time-limited investments into a new Accountable Care Program. We strongly support the sunset date and we look forward to working with the legislature on other workable adjustments to the governor’s tax proposal to ensure that the intent of the House Ways & Mean’s proposal is fulfilled. That includes assurances that all hospitals receive the Medicaid funding as intended. Helping to provide meaningful mitigation of the tax burden to net-payer hospitals is also important. Any attempt to increase the size of the tax beyond $250 million would receive strong opposition from the hospital community. The aggregate amount of the new tax over the 2017 to 2022 period is $1.5 billion. More than that is unacceptable and unjustified.”