Tucson hospitals back short-term tax to leverage matching federal funds

Fee would leverage federal funds to cover uncompensated care
2013-08-06T00:00:00Z 2013-08-06T09:37:13Z Tucson hospitals back short-term tax to leverage matching federal fundsStephanie Innes Arizona Daily Star Arizona Daily Star
August 06, 2013 12:00 am  • 

Some Tucson hospitals could share in a federal windfall of up to $70 million to help cover medical costs for those who can't pay, if the City Council signs off on the deal tonight.

A temporary law allows the city to assess a short-term tax on hospitals. The money would be used to qualify the hospitals for additional federal funds to offset debt due to uninsured and underinsured patients.

The council is scheduled to vote on the plan tonight. Hospitals within the city, which have been hit with increased levels of uncompensated care, have filed a letter in support of the tax, which is based on hospital revenues.

Local jurisdictions have until Oct. 1 to approve the tax.

Arizona Health Care Cost Containment System and federal Medicaid officials would also have to approve the plan. But both have already approved a similar "access to care" tax adopted by the city of Phoenix.

Money from the tax is used as the basis for a two-to-one match for federal Medicaid funds. The Phoenix model, which Tucson is following, structures the assessment to prevent any costs from being shifted to patients, health plans or the city. Mesa, Globe and Casa Grande are implementing similar programs.

A state law passed in 2011 authorizes municipalities, counties, tribes and state universities to establish such a funding mechanism as a way of getting federal matching money for health coverage.

The hospital tax would expire on Dec. 31.

The idea is to get hospitals through the end of the year until Jan. 1, when most provisions of the new federal health law take effect - when more people are expected to have health insurance, including up to 300,000 low-income Arizonans who would be eligible to sign up for the state's expanded Medicaid program approved by the Legislature this year.

"This is a stopgap measure," said Dr. Michael Waldrum, president and chief executive officer of the University of Arizona Health Network, which has two hospitals in the city limits. "We appreciate the mayor and the city. It is important."

Supporters are the Carondelet Health Network, HealthSouth Rehabilitation Institute of Tucson, Kindred Hospital of Tucson, Tucson Medical Center, Cornerstone Hospital and the University of Arizona Health Network. Those entities represent eight hospitals.

"It's an opportunity for all of us to take advantage of something that doesn't come along every day," said Judy Rich, president and chief executive officer of Tucson Medical Center. "The city gets to help all of us and do it collectively for the patients."

Rich has not heard any opposition to the proposal. The hospitals have been working with city officials on the plan. Mayor Jonathan Rothschild called the assessment an "economic boost" for the community.

"This is the kind of program we should be talking about and celebrating - one that brings dollars into our community to help our community," he said.

Under the law, a separate "Access to Care Fund" is to be created into which the short-term assessment revenues from hospitals are deposited. The tax is based on hospitals' gross patient revenues.

"It doesn't cost the city anything, or the patients or the third-party payers," Rich said. "As a matter of fact, we are trying very hard not to call it a tax. It's more of an assessment."

Money from the fund would be transferred to the state, minus a small set-aside to cover administrative costs. The state would, in turn, use the funding for its share of uncompensated-care payments to Tucson hospitals. A percentage of the assessment would also be used for statewide health-care needs.

Southern Arizona hospitals provided $134 million in uncompensated care in 2012, largely due to cuts and enrollment freezes in AHCCCS, Arizona's Medicaid program. Nearly 8 percent of all hospital charges reported to the Arizona Hospital and Healthcare Association in May were for uncompensated care, Rich said.

"This has brought the hospital community together. We all share the same challenge of knowing we're not going to get paid for care we used to get something for," Rich said.

Arizona lawmakers voted to expand the state Medicaid program beginning Jan. 1. That change is expected to add 300,000 people to the AHCCCS rolls, which already cover 1.2 million Arizonans.

An effort to repeal Medicaid expansion is gathering signatures to put the expansion to voters in a referendum in the November 2014 election. If enough signatures are gathered, it could delay the expansion from occurring.

Contact reporter Stephanie Innes at sinnes@azstarnet.com or 573-4134. On Twitter: @stephanieinnes

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