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Oklahoma House passes bill to create program to receive federal Medicaid funds

House Bill 1381 would form the Supplemental Hospital Offset Payment Program to allow Oklahoma hospitals to pay a 2 percent assessment on their net patient revenues. Backers say if the state is unable to come up with the money, it would mean further cuts in Medicaid reimbursement rates.
BY MICHAEL MCNUTT Published: March 11, 2011

The House approved a bill Thursday to create a fund to allow the financially strapped state to continue to receive federal Medicaid dollars.

House Bill 1381 would allow hospitals to pay a 2 percent assessment on their net patient revenues into a fund that would be used to get more federal dollars. It passed 76-22, but a parliamentary procedure prevented it from moving immediately to the Senate.

Rep. Doug Cox, the bill's author, said the assessment would apply to 77 hospitals and exempt 69 others, including specialty hospitals and state-owned hospitals such as the OU Medical Center.

The bill would form the Supplemental Hospital Offset Payment Program, which would generate about $325 million for the upcoming fiscal year, said Cox, R-Grove.

Its failure would mean the state, as it had to do this fiscal year, would make further cuts in Medicaid reimbursements, Cox said.

Legislators this fiscal year cut Medicaid reimbursements by 3.25 percent.

“That little 3.25 percent cutback put some of our small rural hospitals from being in the black to being in the red,” Cox said.

Legislators had a $1.2 billion shortfall this fiscal year, and they are anticipating a budget shortfall of about $500 million for the 2012 fiscal year, which starts July 1.

“The hospitals have seen the dire financial straits that the state is in, and they have stepped up to the plate to basically volunteer to do this,” Cox said. “The only reason we have to put it in statute is it has to be in statute to pull in the federal match.”

Hospitals would pay in about $115 million to the state fund, Cox said. The assessment would generate federal Medicaid matching funds in the amount of $210 million.

The assessment fee paid by hospitals would replace state funds used as Oklahoma's match for federal Medicaid funds.

HB 1381 should withstand constitutional questions because it is not a fee or a tax, he said.

Legislators last year passed a 1 percent fee on health insurance claims to pay the Medicaid match. The state Supreme Court ruled it was a tax and unconstitutional.

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