7/24/2008

CHARLESTON

The Charleston Daily Mail

Why would Charleston Area Medical Center volunteer to pay a new tax?

With the Medicaid program reimbursing hospitals for only half of what it costs to treat those patients, CAMC is pushing for a plan to draw down more federal dollars and reduce that shortfall. CAMC in 2007 collected $32 million less from Medicaid, the government health care program for the poor, than it cost to treat those patients.

Other government health programs, like Medicare for the elderly and PEIA for public employees, also pay hospitals less than their costs, but CAMC officials say Medicaid has by far the lowest reimbursement rates, at 50 percent of costs or less. CAMC is affected more than other hospitals because it is the state's largest Medicaid provider.

The situation causes CAMC and other hospitals to shift the uncovered costs to non-government payers - those with private insurance - in a practice they characterize as a "hidden tax" on people covered by such plans or those who pay in cash. Now CAMC has come up with a plan to collect more from Medicaid and reduce the cost shifting, but its proposal is both complex and controversial.

The proposal is included in the city of Charleston's home rule plan. The city earlier this year was approved for participation in a pilot project aimed at letting state officials see whether cities can properly manage a greater degree of control over their own affairs. CAMC persuaded the city to include among its home rule proposals a new municipal health care tax on the hospitals within city limits. The idea is to use the tax revenue to draw more federal aid for Medicaid, which is operated by state government but funded jointly by the state and federal governments.

West Virginia draws $3 in federal aid for every $1 in state revenue it spends on Medicaid. That reimbursement rate, which is based on the state's per capita income, is the second highest rate among states and a key factor in CAMC's proposal. "It's the 3-1 match that makes it work," said Tom Susman of TGS Consulting, who is helping CAMC with the proposal.

If the proposal were to pass muster, at this year's revenue levels CAMC would shell out $5 million for the new tax but reap $20 million in increased Medicaid funding. State officials already have expressed strong reservations and give the plan little hope for success.

Rocco Fucillo, deputy secretary and general counsel for the state Department of Health and Human Resources, in May sent the home rule board a negative assessment. After pointing out several stumbling blocks, Fucillo concluded: "DHHR does not believe that it would be beneficial to commit its limited resources to this proposal given the proposal's high probability of failure at the federal level."

Martha Walker, DHHR secretary and Fucillo's boss, maintains that the agency has an open mind on the subject, but she, too, expressed concern about how much time the proposal might require of her agency in light of its slim chance for federal approval. The plan's proponents contend similar strategies are being employed in other states. Walker responds that those situations are different. She also wonders how other hospitals around the state would react if this proposal were successful and how many different sets of complex rules would have to be written for the various situations.

Barbara Eyman, another consultant for CAMC, had this to say in a letter that accompanies the proposal submitted to the home rule board: "Adoption of this proposal by other municipalities would symbolize the success of the Legislature's Home Rule Pilot Program."

Eyman contended the state Bureau of Medical Services can present the plan to the federal government in a way that "enables smooth expansion of the program to other municipalities if and when they are granted the authority to levy a similar provider tax."

Walker agreed that uncompensated care is a problem for hospitals but said Medicaid is not t