Massachusetts lawmakers have proposed a state budget that imposes a $250 million annual tax on hospitals over the next five years to fund the state's Medicaid managed-care plan, MassHealth.
The funds would help the state transition the MassHealth program to an accountable care organization model.
Mass. Gov. Charlie Baker proposed in January that the tax not have an end date. But faced with opposition from hospitals, the proposed House budget aligns the tax with a planned five-year Medicaid waiver to support an ACO transition.
The House budget calls for the tax to begin Oct. 1, 2016, and end July 1, 2022.
Under the proposed budget, the allocated tax revenue will be reimbursed to the hospitals depending on the number of Medicaid patients they treat.
The Massachusetts Hospital Association, which lobbied for a five-year tax, predicts about 50% of hospitals will be reimbursed, said Lynn Nicholas, president and CEO of the association.
Nicholas said the association, which represents 71 hospitals, will continue to lobby for measures in the budget that will protect hospitals that will not be reimbursed. "It is a real concern," she said.
MassHealth provides safety net coverage to 1.8 million adults and children in the state. MassHealth and related healthcare programs accounted for $16.2 billion of the state's $38.1 billion budget in fiscal 2016.
The state has struggled to fund its Medicaid program. A June 2015 state auditor's report noted that $521 million was wasted through improper payments.
Michelle Hillman, spokeswoman for MassHealth, said in a prepared statement, “MassHealth believes increasing the existing assessment to maximize federal revenue will aid in the transition into an ACO model of care and value-based payments.”
The proposed House budget needs approval from the full General Assembly. Fiscal 2017 begins July 1.