Pennsylvania Public Welfare Department Proposes Assessment on Hospitals in Two Counties

Pennsylvania Department of Public Welfare officials last week proposed placing an "assessment on net patient revenues" of hospitals in two counties to generate additional revenue for all hospitals in the state that treat people with low incomes or disabilities, the Pittsburgh Post-Gazette reports. Public Welfare Secretary Estelle Richman introduced the proposal during a Senate hearing on the state's proposed fiscal year 2008-2009 budget, which is scheduled to take effect on July 1.

Richman proposed placing the assessment on hospitals in Allegheny and Philadelphia counties, the two largest counties in the state. According to Richman, the assessment would increase payments for the state's Medical Assistance programs, which provide services to elderly and low-income patients, and would generate additional federal matching Medicaid funds. DPW officials said hospitals in the two counties are where the majority of Medical Assistance beneficiaries are treated. However, funds from the assessment would be spread to hospitals in all 67 counties, according to DPW.

DPW spokesperson Stacey Witalec said the proposed assessment "is similar to other assessments we already have in place," such as a levy on nursing homes.

According to the Post-Gazette, federal law prohibits a hospital assessment from exceeding 5.5% of "net patient revenues." If the DPW proposal is approved by the state Legislature, hospitals, lawmakers and county officials will have to agree on the actual tax rate under the proposal.

The proposal drew criticism from some state lawmakers. State Sen. Jane Orie (R) said, "I don't support taking money from hospitals in my region" and giving it to the state "only to redistribute it around the state," adding, "Because the assessment is only on selected hospitals, it would put them at a competitive disadvantage with other hospitals in the state" (Barnes, Pittsburgh Post-Gazette, 3/8).