Georgia and Tennessee Enact Hospital Taxes - May 26, 2010

Georgia and Tennessee have both enacted hospital assessments aimed at closing projected state Medicaid shortfalls. First, on May 12, Georgia Governor Sonny Perdue (R) signed into law a 1.45 percent provider revenue assessment, which begins July 1, and will expire in three years. It is meant to help close a $608 million deficit in the Medicaid budget by raising a projected $214 million, of which $49 million will cover increased provider rates. The assessment does not apply to certain psychiatric, critical access, or any state-owned or operated hospitals. Then, on May 13, Tennessee Governor Phil Bredesen (D) signed into law a 3.52 percent assessment on net patient revenue for licensed acute care and psychiatric hospitals, based on the most recent Medicare cost report. The assessment will be imposed only for the fiscal year beginning June 30, and helps to fill a $659 million TennCare budget cut. Critical access, government-owned, rehabilitation, long-term acute care, and pediatric research hospitals are exempt. Preliminary analyses indicate that NAPH members in Georgia would be subject to the provider assessment, but members in Tennessee would be exempt from the new tax.