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Please tax me so I can earn more?

By Christine Jordan Sexton
2/3/2009 © Florida Health News

Florida’s fiscal crisis recently spurred two groups to do the unthinkable: Nursing homes asked to be taxed, and the Republican-controlled Legislature agreed to do it.

Now, group homes that provide care and training for the developmentally disabled may ask for the same tax when lawmakers convene for their regular session in March.

Both groups say the 5-percent tax on net revenues will help them more than it hurts because every 45 cents it generates brings in 55 cents in federal matching funds through the Medicaid program, which covers low-income elderly and disabled persons in addition to poor children. The assessment will generate a $3.79 increase in the daily rate Medicaid pays nursing homes.

“Only in Medicaid would a provider ask you to tax them and in doing so, make more money,” wrote health care strategist Brady Augustine of Tallahassee in a blog he called “Bizarro World.”

The Florida Health Care Association, which represents nursing homes, says that without the tax, they were facing a 10.5-percent cut in Medicaid funds, equivalent to more than $231 million.

Cuts of that magnitude would have required layoffs of 7,000 nursing-home employees, said Senior VP and Chief Operating Officer Tony Marshall.

“Facilities would do everything in their power to avoid putting patient care at risk,” Marshall said. “I don’t know of another way to have done it.”

Hospitals, which have been paying what they call the “sick tax” for over 20 years, have no desire to increase it, despite their financial struggles in the current economy, said Florida Hospital Association President Bruce Rueben.

Hospitals currently pay a 1.5-percent assessment on net operating revenues from their inpatient services and a 1-percent assessment on net operating revenues for outpatient services. Unlike nursing homes, all hospitals pay the same, regardless of their Medicaid case load. That makes the deal less attractive for hospitals with low Medicaid caseloads.

Reuben said there are too many things “in play” with Medicaid right now, including a change in administration at the Centers for Medicare and Medicaid Services and a pending economic stimulus package that could change the amount of money the federal government spends on Medicaid.

“The most significant, most important and best option for Florida is to increase (the) cigarette tax,” Reuben said.

Nursing homes will start collecting the money April 1 on the assumption that the federal government will approve a waiver of Medicaid rules for the match money to begin flowing back to Florida. The state has until the end of June to get the application in, Marshall said. No reason to think the application would be denied, he said, since Florida is using the same form that 12 other states used successfully in the past. Thirty-two states use the assessment on health-care facilities.

“Bizarro World” blogger Augustine, a former Florida Medicaid official, doesn’t blame states for taking advantage of a matching-fund arrangement that offers an immediate 120-percent return on investment. But it makes an already complex system worse.

He concluded that such machinations “lead states to focus more on creative accounting than they do on improving the performance of their health systems.”

Taxing providers who treat Medicaid patients and pooling the funds to draw down additional federal dollars was an idea that former House Speaker Marco Rubio, R-Miami, directed professional legislative staff to examine this summer.

The interim study, due in by the end of the year, still hasn’t been made public. Jill Chamberlin, spokeswoman for former House Speaker Ray Sansom, R-Panama City, said in an email she wasn’t sure when the study would be released, attributing the delay to focusing on “other priorities,” including the state’s budget problems.

The Legislature gave the green light to the nursing home tax, called the Quality Assessment Program, during the January special session. Gov. Charlie Crist signed the legislation (SB 8A) into law last week.

Like most other Medicaid participating providers, nursing homes saw their rates reduced during the 2008 regular session as well as in two special sessions held that year. In all funding has been reduced by $346 million since 2007.

The nursing home tax will turn back the clock on those reductions. “This will protect Florida’s oldest, most vulnerable citizens,” Marshall said.

-- Editor Carol Gentry assisted in reporting this story. Contact Christine Jordan Sexton.