Tuesday, February 15, 2011

Provider tax slowly gets the axe

February 15, 2011

Yesterday, President Obama released his budget proposal for Fiscal Year (FY) 2012, which seeks to reduce the national deficit by $1.1 trillion over ten years. Of interest to long term care providers is the inclusion of a phased reduction to the Medicaid provider tax, which is a tax paid by health care providers to help fund state Medicaid programs (provider tax is also referred to as provider assessment, bed tax, or quality assessment fee). Beginning FY 2015, the allowable percentage – or the amount that state governments can actually tax – will be reduced to 4.5 percent. In the end, this means fewer dollars funding state Medicaid programs. The budget also outlined phased reductions in the future – 4 percent in FY 2016 and 3.5 percent in FY 2017.

In response to the President’s budget, AHCA/NCAL President and CEO Mark Parkinson released the following statement:

“Simply put, cutting Medicaid provider assessments is the wrong move. As states across the country face unprecedented fiscal crises, we struggle with the recommended loss of $18.4 billion in critical Medicaid funding over the next decade. Provider assessments are vital tools that allow states to voluntarily leverage funding to care for the economically disadvantaged and medically frail.”

While the budget proposal appears bleak for providers, it’s important to remember that it only serves as a recommendation to Congress. In the future, the House and Senate Budget Committees will take it under advisement; they are not required to incorporate any of the President’s recommendations into their own budget bills, and often do not. AHCA/NCAL will continue to monitor the FY2015 budget as it develops and keep updates posted here on our blog.

For more information on the President’s budget, read AHCA/NCAL’s detailed budget summary.

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