Corker Accuses States of Bilking Medicaid with Bed Tax

Image courtesy Peter Spirer

Tennessee Senator Bob Corker, who is an increasingly central character in the fiscal cliff drama, wants to end what he calls a “massive bed tax.” Hospitals say without it, some could be forced to close.

This “fee” has propped up the TennCare system since 2010, producing $450 million a year. In the face of dwindling state budgets, hospitals tax themselves and get the money right back. But the accounting maneuver allows the state to draw down federal matching funds.

Corker calls it a “gimmick” that is bilking the federal government, and he’s calling for the practice to be phased out. Tennessee Hospital Association president Craig Becker says the fee is less than ideal, but he disagrees with how it’s being characterized.

“I think the senator was a little harsh on his language when he called it a scam because it’s not a whole lot different than any other assessment or tax that’s out there.”

While Senator Corker has become a vocal critic of the bed taxes, he isn’t the first. The debt reduction commission known as Simpson-Bowles also recommended elimination of the financing scheme now used in 47 states.