Feds Approve Hospital Fee

Federal officials have approved a new fee charged to hospitals that will help avoid deeper cuts to the state’s Medicaid program – TennCare.

The arrangement requires all private hospitals in Tennessee to pay a 3.5 percent fee on their net patient revenue. This excludes government-owned hospitals.

It’s a self-imposed tax. Hospitals were facing across-the-board decreases to reimbursements from TennCare. State budget cuts to TennCare were compounded by how much federal matching money would be left on the table. The total reduction topped $600 million.

Hospitals agreed to a fee which will raise enough money to fill in cuts to the state budget so the federal money can continue to be drawn down. Under the agreement, hospitals are not allowed to pass on the additional fee to patients.

With the approval from the Centers for Medicare and Medicaid Services, Tennessee joins 25 other states that use similar fees to draw matching federal funds.