Faced with the threat of a 10.25 percent cut to Medicaid payments, the Georgia Hospital Association has reversed its vehement opposition to a plan that would raise funds through a tax on hospitals’ revenues.

Charles Stewart, president and CEO of Hutcheson Medical Center in Fort Oglethorpe, said late Friday afternoon that he had just learned of the hospital group’s reversal and was unsure how to react.

The hospital association’s board met Thursday with state officials and decided to begin negotiating a hospital fee plan that could be used to fill a budget hole in the state’s Medicaid program.

The plan, which would tax hospitals’ net patient revenues, would allow the state to receive additional federal matching Medicaid funds, said Kevin Bloye, spokesman for the Georgia Hospital Association.

Members were informed of the association’s change in support during a Friday conference call, he said.

As originally proposed in Gov. Sonny Perdue’s recommended fiscal year 2011 budget, a 1.6 percent hospital fee would collect $345 million in state funds, including $247 million from hospitals.

That money would be put back into Medicaid to draw down almost $1 billion in federal matching funds according to the Governor’s plan.

Some hospitals would have had a net gain from the tax and others, mainly those that served fewer Medicaid patients, would have sustained losses, he has said.

The Georgia Hospital Association strongly criticized the fee plan, saying it adversely would affect too many hospitals in the state and even force some to close.

Last week, Gov. Perdue announced revised budget recommendations that removed the hospital fee, but instead would have reduced Medicaid payment rates to hospitals and doctors by 10.25 percent and removed the sales tax exemption for some nonprofit hospitals

Chattanooga Times-Free Press