Bed tax brings relief to hospitals

Hospital officials across Northwest Montana breathed a sigh of relief Wednesday when the Legislature approved an amended version of hospital bed tax legislation.

Introduced by Sen. Bob Keenan, R-Bigfork, the act extends and increases a tax hospitals pay to gain additional Medicaid dollars. The bed tax, combined with federal funds, returns more than $4 million to this area's hospitals.

As an example, Kalispell Regional Medical Center pays about $600,000 in bed taxes but will receive $1.8 million back for 2005.

"That makes up a little over half of the Medicaid shortfall," hospital spokesman Jim Oliverson said.

Medicaid patients make up only 7 to 12 percent of the medical center's patient count. But Oliverson said this extra federal revenue helps the hospital's budget.

"It's still significant to us in an environment where the bottom line is shrinking," he said.

North Valley Hospital chief financial officer Marilyn Hayes said that medical facility receives back six times what it pays out in the tax.

"The intent is to help hospitals shoulder the burden of medical care for indigent, Medicaid patients," she said.

Hayes said Medicaid reimbursements fall significantly short of the cost of care at most hospitals.

These patients make up about 8 percent of patients treated at North Valley Hospital. In 2005, North Valley will receive $578,039 from the hospital bed tax program.

Payments to hospitals vary due to the volume of Medicaid payments and the type of facility. By legislative mandate, hospitals, not patients, pay the bed tax which leverages federal funds for redistribution back to hospitals.

St. John's Lutheran Hospital in Libby will get $619,365, St. Joseph Hospital in Polson will get $581,491 and St. Luke Community Hospital in Ronan will get $785,271.

The legislation continues the tax and increases the charge for every day a patient is hospitalized, from $19.43 to $24.57 next year and to $27.70 the year after that.

Statewide, the measure would raise $25.6 million over the next two years and bring in $60.7 million in federal funds. That $86 million total would reimburse hospitals for costs of their Medicaid patients.

Although the bill continues the program, Keenan was displeased with the compromise the MHA (formerly Montana Hospital Association) made to secure Gov. Brian Schweitzer's signature on the bill.

"The bill was bullet-proof as introduced," he said.

Keenan said Schweitzer's amendment holds hospitals hostage should anyone file a lawsuit alleging the state exceeded its spending cap. A successful lawsuit would eliminate the program.

Hospital association officials agreed to this change to kill a more onerous amendment allowing hospital tax money to go in the state general fund rather than a special revenue account.

Keenan wanted to force the governor to veto the hospital bed tax, then bring the bill back for another vote in the Legislature. He said an override of the veto was a virtual certainty.

"It passed huge in both the House and Senate," Keenan said.

A similar bill extending the same program for nursing homes sailed through the Legislature with bipartisan support.

Schweitzer said he opposed both bills because of the increase in the bed tax. Keenan said politics drove the Democratic governor's opposition to his bill since this tax gives millions of federal dollars to hospitals.

After a deluge of protests, Schweitzer next proposed amendments he said were intended to inoculate Montana's tax from federal action.

Keenan disagreed with Schweitzer's analysis of impending federal problems. He said bed taxes in 15 states were under government scrutiny, but Montana's was not among them.

Senate President Jon Tester made the motion needed to approve the governor's amendments in the Senate after the House rejected the amendments. The bill then moved to the conference committee for the agreed-upon changes.

On Wednesday, the House and Senate both passed the new version. Keenan was disappointed but philosophical on Thursday just minutes before the Legislature adjourned.

"Hopefully, we can weather the storm and come back in two years and extend it [the bed tax] again," Keenan said.

The Associated Press contributed to this story.

Reporter Candace Chase may be reached at 758-4436 or by e-mail at cchase@dailyinterlake.com.