The tax man came calling at Adams Memorial Hospital recently with his hand out to collect a check for a hospital tax that was implemented on Hoosier health care facilities by the Indiana legislature over a year ago.
The result, albeit without a smile, was that hospital officials turned over the sum of $1,346,270.49 to the state.
AMH President and Chief Executive officer Tom Nordwick said the hospital tax was implemented by the Indiana General Assembly and has proven to be a popular form of generating revenue for Indiana coffers. The law taxes Indiana hospitals for every in-patient day they record and under a formula set up by the lawmakers, this tax is paid to Medicaid under a state and federal partnership.
The tax generated approximately $330 million for the state of Indiana and state officials skimmed about $80 million of that amount off the top to help pay for mandates under the recently enacted Obama health care program. The remaining $250 million was then redistributed to Hoosier hospitals in the form of higher payments for services they rendered to Medicaid patients.
Hospitals that see a higher number of Medicaid patients, such as hospitals like Parkview, St. Joseph’s and Lutheran in Fort Wayne, will actually benefit from the tax because for every dollar generated by the hospital tax, the federal government matches that with two dollars. And larger hospitals, with more specialists and advanced surgeries that translates into significantly higher charges, traditionally see more Medicaid patients than do small, rural hospitals such as Adams Memorial Hospital (AMH).
Adams Memorial could conceivably do better on the reimbursement, but few of the county Amish, estimated to make up about 20-30 percent of the county population, do not enroll in the program, despite the fact they would be eligible under current guidelines. That formula decreases that amount AMH receives back, meaning the tax the hospital pays is actually far more than what it receives back in terms of Medicaid payments.
Adams Memorial and Jay County Hospital in Portland were two of less than 10 hospitals in the state that were negatively affected by the hospital tax.
A program has been established whereby hospitals which actually take in more money than the tax it pays would pool some of that money to go to hospitals such as Adams Memorial and Jay County. Nordwick said any amount AMH would receive from the pool would pale in comparison to what it has had to pay.
Nordwick said concerns expressed by the hospital to the state legislature have fallen on deaf ears as the hospital tax has already been established for 2013 and the General Assembly appears to be considering a proposal in their upcoming session in January that would keep it on through 2014 and 2015.
State Representative Matt Lehman, R-Berne, who represents Adams County in the Indiana House of Representatives, told the Daily Democrat that he has discussed the issue with Nordwick and he’s also had discussions with Rep. Bill Davis, R-Portland.
Lehman said legislators will need to go back over the issue to see what the reason was for putting the tax on in the first place.
“It wasn’t done during a budget year, so this sounds like something that is more of an assessment than a tax,” Lehman said, adding that legislators needed “to take a step back and see what is happening, whether it’s affecting one hospital, 10 hospitals, or 100 hospitals. We need to see why it is what it is.”
Black to red
The tax payment made by Adams Memorial Hospital (AMH) had an obvious impact on the bottom line of the AMH financial statement issued to trustees at their regular meeting last week.
Chief Financial Officer Dane Wheeler reported that year-to-date the hospital is $566,103 in the red after the big tax chunk was paid. At this point in 2011, the hospital was $229,662 in the black.
The current financial sheet shows the hospital had $26,596,518 in total operating revenue and $844,508 in non-operating revenue (the majority of that being CEDIT funds from Adams County to help pay the hospital bond issue floated to pay for the construction of the new hospital in 2005).
Operating expenses have come to $28,007,129 for the year.