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Lawmakers at impasse on state’s ’09 budget

Medicaid and hospital tax are sticking points for Democrats and GOP

Budget negotiators signaled last week that progress had been made toward an agreement on the state’s roughly $5-billion budget for fiscal year 2010, which begins in one month.

As of late Thursday afternoon, though, no accord had been struck, as most lawmakers not involved in the negotiations sat idly as updates trickled out of negotiations.

Two primary obstacles conferees were struggling to get over were the Senate and Gov. Haley Barbour’s plan to carry forward money from FY10 to FY11, the year the state’s Medicaid matching portion increases and a year state economists predict will be much worse then FY10 as far as revenue collections, and a hospital tax to fund Medicaid. 

This is the second straight year Barbour and the Senate have wrangled with the House over the gross revenue assessment to hospitals that would pump $90 million into Medicaid. Budget negotiators have agreed to hit hospitals for $60 million, but have sparred over restrictions that would guarantee the state would not reduce benefits to hospitals. The House has demanded that be part of any deal on a hospital tax.

The Mississippi Hospital Association (MHA) president has said $45 million is all hospitals could handle contributing to Medicaid in a recession.

The rhetoric between Barbour and the MHA has intensified the last week and a half. Barbour told reporters at a news conference Wednesday that without hospitals contributing $90 million toward Medicaid, other state agencies would be cut a total of 10 percent — 5 percent that was cut in FY09 and another 5 percent on top of that for FY10.

“It’s going to hurt other people,” Barbour said, using the Mississippi Highway Patrol as an example of an agency that would have to resort to layoffs due to the cut. “You start taking another 5 to 7 percent and you really do have serious problems.”

Barbour has said repeatedly that he wants to “reinstate” the $90-million tax the hospitals “cheerfully” paid from 1992-2005 because they always got more money back than they spent. “The hospital tax should be reinstated at $90 million a year.”

MHA president Sam Cameron took issue with Barbour’s characterization that it was a simple “reinstatement” of a tax hospitals paid for 13 years.

“That, in fact, is not the case,” Cameron said at a news conference last week. “The hospitals never paid the $90 million. The program we designed was an intergovernmental transfer program where 28 public hospitals owned by counties or municipalities gave the state Medicaid program 72 cents. The Medicaid took that 72 cents and drew down the federal matching dollars. Those hospitals were then paid the 72 cents back, plus 28 cents. So for every 72 cents they put up, they received a dollar back reimbursed by the Division of Medicaid.”

One thing Barbour is right about, Cameron said, is the 6-to-1 ratio in money coming back from Medicaid. The only problem, he added, is the money never makes it back where it came from.

“Hospitals do not get a 6-to-1 return for every dollar they put up. Again, that is incorrect. The hospitals do not receive the money. The Division of Medicaid and the state has that money that they in turn have claims payments throughout the Medicaid program.”

Cameron reiterated that the hospitals would be willing to pay $45 million to fill the Medicaid hole, on top of the $150 million hospitals already pay in various other taxes like the bed tax.

“That is more than our fair share, particularly when you consider there are other provider groups who do not pay any fair share as far as the Medicaid program is concerned,” Cameron said. “For the state to come in now and want to put a $90 million new tax on hospitals is unfair. It will lead to a reduction in services. It will lead to a reduction in staff in the hospitals. This is totally not fair to patients and to people who pay the bills for hospital care and health insurance.”



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