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Hospital assessment program update could bring federal funds while raising bed taxes

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Tuesday, March 13, 2018  |  Article  |  By Greg Bishop/Illinois Radio Network

Hospitals, Health Facilities Planning Board (48) , Rauner, Bruce Bellock, Patricia "Patti"--State House, 47 , Steans, Heather--State Senate, 7

SPRINGFIELD – Surrounded by Republicans and Democrats, Gov. Bruce Rauner on Monday signed legislation that updates the state’s hospital assessment program, an effort that could bring $3.5 billion in federal funds to Illinois, but also raise hospital bed and outpatient taxes by $140 million annually. 

The existing Hospital Assessment Program is set to expire at the end of June. Department of Healthcare and Family Services Director Falisia Norwood said the new measure signed Monday updates the state’s hospital assessment program by having more Medicaid dollars follow more beneficiaries. 

“That means that additional dollars will follow the individual and services that they receive in the hospital,” Norwood said. 

State Sen. Heather Steans, D-Chicago, said the updated law is critical to capture more federal dollars. 

“All done, not through state money, but by the hospitals themselves putting in an assessment, a tax on their beds and getting a match from the federal dollars and getting it redistributed back out now more than ever based on the care they’re providing Medicaid patients,” Steans said. 

The Illinois Health and Hospital Association said the existing hospital assessment program is the combination of two separate taxes. As it is now, there is an occupied bed tax of $218 per bed. Then there’s a second outpatient tax of 0.008766 multiplied by each hospital’s outpatient gross revenue. 

The updated program still uses two separate taxes. The occupied bed tax goes down to $197 per bed while the outpatient multiplier goes up to 0.01358. 

Overall, the tax collected per hospital bed combined with the outpatient multiplier will increase by about $140 million annually, something IHA said is aligned with federal maximum tax levels. 

Norwood said there’s also critical funding for safety net and critical access hospitals for vulnerable communities and support for graduate medical education for additional physician training. 

But because the measure is dependent on the federal government’s approval, Norwood said it has a bridge. 

“That is to really get the feds to support our continuous use of the existing Medicaid program and the reimbursements structure until they approve the new program,” Norwood said. 

Norwood said the state plan will be submitted to the federal government as early as next week. Steans and others praised the bipartisan work on the bill.

Asked if such bipartisan agreement is possible with the upcoming budget negotiations, Republican state Rep. Patti Bellock said the single issue of the hospital assessment is different than the full budget. 

“When you’re talking about the entire budget of the state of Illinois,” Bellock said, “you’re talking about several hundreds of different groups, different committees.”