By Sam W. Cameron
President/CEO, Mississippi Hospital Association
The Mississippi Hospital Association has over 100 member hospitals - ranging from for-profit to non-profit, public to private, urban to rural, small to big - from the Coast to the Delta. In the 36 years I've been with the hospital association, there have been issues which have divided hospitals or pitted one hospital or type of hospital against another. Gov. Haley Barbour's proposed gross revenue tax on our state's hospitals is not one of them.
As we have stressed from the beginning, we believe that the tax levied by the Division of Medicaid is in violation of the Mississippi Constitution. The statutory authority claimed by Medicaid to levy the tax is an unconstitutional delegation to Medicaid of the Legislature's taxing power. Frighteningly, Medicaid has also made it clear that they believe they have the authority to tax up to six percent of hospital gross revenue without legislative involvement.
It's taxation without representation, pure and simple. Who gets taxed and how much should not be decided behind closed doors. It is not Gov. Barbour's fault that this federal method of financing the program went away. But it is now up to all of us to work together to find a workable solution for all parties.
I know many of you have heard over and over that the public hospitals have been paying the way for the private hospitals and it is now time for the private hospitals to pony up. Or that the former intergovernmental transfer (IGT) program was nothing but creative financing or shade-tree accounting. But that's simply not true.
Medicare and Medicaid financing is nothing that can be explained in a book, much less a column, but, basically, the IGT program that Mississippi and many other states used in past years transferred state or local funds from qualified public hospitals to Medicaid to be matched with federal funds. The qualified hospitals got their transferred money back plus additional monies. This also benefited non-participating hospitals because Medicaid had money to fund the program. (For example, a public hospital that last year contributed $360,000 to the program would receive $500,000 in return as a disproportionate share hospital payment. In addition, the state recognized $1,000,000 to be used to fund the Medicaid program.)
The federal government, in June of 2005, decided that this method of financing the program to maximize federal matching was unacceptable. Their position is that the program is designed to increase federal revenue to the state without additional state effort. (The money came from public hospitals, not the general state fund.)
MHA has been working with the Division of Medicaid since June of 2005 for an acceptable alternative. We hired consultants, at the request of Medicaid, to explore alternatives. The consultants worked on developing a funding mechanism using certified public expenditures (CPE). CMS has approved this funding mechanism as an alternate means of securing federal matching funds.
Medicaid rejected this proposal because they said it would require an amendment to our state plan with CMS, which is a lengthy and complicated process. Instead, they levied a 1% gross revenue tax on all hospitals while leaving payments unchanged. Hospitals were sent letters stating that the tax was due on July 1, even after we asked for a three-month extension to continue working on the issue (which Gov. Barbour did eventually grant). The tax was later cut in half, from its original $90 million, after Gov. Barbour pledged to use $45 million from a $70 million state budget surplus towards the funding hole.
We are not advocating for the CPE program, though we do think it deserved more consideration. We simply paid for the consultant’s report at the request of Medicaid. But we are vehemently against taxing the gross revenue of any hospital – public or private – to make the budget right again.
This is not a public hospital versus private hospital issue. Many of our state’s public hospitals are not considered disproportionate share hospitals (DSH). Some of our private hospitals are. This is an access to care issue that affects all Mississippians. Any hospital that has an emergency room is mandated by federal law to provide care to all who come through their doors – whether they have insurance or not. This tax severely hurts three-quarters of those hospitals with open doors.
This is not just a tax on hospitals – it’s a tax on anyone who works at a hospital, anyone who depends on a hospital for quality health care and any business that provides health care insurance to its employees. Hospitals exist to serve our community, but we have to be able to keep our doors open – to make payroll, to have money available for capital and technological improvements, to continue to provide much-needed services, like emergency care, that often end up costing money to operate but are critical to our communities.
In the past, we have worked, in conjunction with the legislature and Medicaid, to shore the program up when it was needed. Last year, hospitals voluntarily agreed to an additional bed tax when Gov. Barbour threatened to cut the benefits of Medicaid beneficiaries. But the state cannot continue to balance the Medicaid budget on the backs of hospitals. If this continues, we will all see access to care seriously threatened in our state.
Hospitals do not want to see the federal matching dollars go away either. But we cannot pay for it and continue to deliver the quality health care that all Mississippians deserve. Our state does need the money, but the money needs to come from somewhere else – not hospitals.