Looming Budget Cuts Make Hospital Belt-Tightening Increasingly Difficult
The federal budget also calls for about $52 billion in cuts to federal funding for Medicaid in the coming years. Moody's said those changes could include replacing current funding formulas with a single matching rate for each state, rebasing disproportionate share payments, and limiting the federal funding match for provider taxes.
"A limit on federal matches for provider tax payments would be a significant development because these programs have proliferated significantly over the past several years, and receive on a combined basis an increasing amount of federal support," Moody's said.
"Prior to 2008, 15 states operated provider fee programs. Today, this number has grown to 33, with another three states considering a program. These programs most benefit hospitals with high exposure to indigent populations and their elimination would negatively affect those hospitals the most," the report said.
Goldstein says the federal government could eventually shut down provider tax schemes as a cost cutting measure for the federal deficit. "Most hospitals realize that these provider tax programs may not go on forever," she says. "We look to hear how those hospitals and management teams will lower their reliance on these funds. How are you going to manage if this program abates one day?"
John Commins is a senior editor with HealthLeaders Media.
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