For-profit hospitals could feel a fiscal pinch in 2011 after a new addition to the federal tax law takes effect requiring a mandatory withholding of 3% from government payments to businesses, Federation of American Hospitals President Chip Kahn told members of Congress on March 22.
The provision would affect most government payments, including Medicare, which hospitals rely on for about 30% of their revenue, he said. Kahn called the across-the-board withholding “unfair” and said the CMS, which would have to implement the tax provision, is ill-equipped to do so.
“Instead, the government should focus on those healthcare providers who avoid their tax obligations and withhold their Medicare payments,” Kahn said. Two bills—one in the House and another in the Senate—have been introduced to repeal the provision.
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