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.
“This is not a tax because it can't be passed on to anyone,” Cox said. “The hospitals are getting back more than they put in.”
The hospital money and Medicaid funds would be placed into a fund managed by the Oklahoma Health Care Authority. It would give funds to hospitals based on the amount of Medicaid patients they treat, said Cox, an emergency room physician.
HB 1381 would prevent hospitals from passing the assessment to patients, he said.
“All hospitals have come together and formulated a plan,” Cox said. “It's the greatest cooperation of different groups that I've ever seen, because the (Oklahoma) Hospital Association, the Health Care Authority, the university hospitals, the critical-access hospitals, the state-owned hospitals, the private hospitals have all come together and worked this plan out.”
Craig Jones, president of the Oklahoma Hospital Association, said the bipartisan vote in the House moves Oklahoma one step closer to being eligible to receive its fair share of federal matching funds to preserve patient services provided by Oklahoma hospitals.
“Forty-six other states already have a program such as this in place,” Jones said. “Oklahoma routinely uses federal matching dollars for transportation and other aspects of government. If Oklahoma doesn't take advantage of this federal match, the money will go to other states.”
HB 1381 provides that the annual assessment would end July 2014 or if the federal match goes away.