Senator Jack Hill's analysis of the Quality Assessment Fees

Medicaid currently relies on around $90M from a 5.5% CMO “Quality Assessment Fee” that provides funds to the Medicaid population. These fees are used to “draw down” enhanced federal funds and do not have a negative impact on the CMOs. The Federal Agency with Medicaid responsibility has ruled that states like Georgia cannot assess a fee on one Medicaid provider without assessing the same fee on all health care providers. You can’t treat a Medicaid provider differently from other providers like insurance companies. So Georgia is faced with a choice which must be made and implemented by October 1, 2009. Either stop taxing the care management companies and create a $90M hole in the 2010 budget or start assessing insurance companies the same amount. Governor Perdue has proposed to lower the assessment fee from 5.5% to 1.6% but to apply the fee to insurance companies and to the net revenue of hospitals. In other words, all health care providers will be subject to this fee. The total produced by the fee would continue the $90M presently collected as well as plug a Medicaid shortfall created by the prior use of one-time reserve funds. This amount is $204.9M. The total of $217M would also pay for increased Medicaid demand and fund $60M towards a Trauma fund for hospitals. The Hospital piece of the funding, $259M has been met with strong objections by hospitals around the state. Rural hospitals particularly say they would be hard hit and that the fee has the potential to put some out of business. This is one of the crucial issues before this General Assembly. The Governor’s proposal does not appear to have widespread legislative support.