Kansas is expected to become the latest state to enact a tax on hospital revenue in order to increase its federal Medicaid funding.
The Kansas Hospital Association supported the 1.83% tax on net inpatient revenue, which is expected to raise about $35 million in its first year. Kansas Gov. Kathleen Sebelius last week was expected to approve the tax within days. The tax is subject to CMS approval.
The tax will draw an additional $52 million in federal matching funds, for a total increase of $87 million in Kansas' Medicaid funding. Eighty percent of proceeds would be used to raise Medicaid reimbursements for hospitals, while 20% would go to physician payments.
Eighty of the state's 153 hospitals are expected to pay the tax. The state's 72 critical-access hospitals are exempt from paying the tax, as is a publicly owned facility.
At least 15 other states have adopted significant hospital assessments, including five others in the past year, according to hospital Medicaid consulting firm Health Management Associates. Not all of the recently enacted taxes have garnered CMS approval yet.