House Bill Would Provide Critical Access Hospitals Support through Provider Taxes - October 19, 2010

US Representative Ron Kind (D-WI) has introduced a bill, the Rural Hospital Protection Act (H.R. 6346), that would overturn a policy related to provider taxes adopted by the federal Centers for Medicare & Medicaid Services (CMS) in its final inpatient prospective payment system rule for FY 2011. In the final rule, CMS indicates that Medicare contractors should determine on a case-by-case basis whether provider taxes are allowable and also whether amounts received in connection with a provider tax will offset the allowability of taxes paid, thereby reducing or possibly eliminating amounts that qualify as allowable costs. The Rural Hospital Protection Act would ensure that critical-access hospitals would be permitted to treat the full cost of provider taxes as an allowable cost, as long as CMS has not determined that the tax contains an impermissible “hold harmless” provision. No accommodation would be made under the legislation for hospitals that are not critical-access hospitals. It is not clear whether the House will take up this measure during the upcoming “lame duck” session, after the election.