Hospitals in Rhode Island stand to lose more than $17 million in state money and millions more in matching federal funds if a proposed hike in hospital licensing fees and other related cuts are approved in the state’s fiscal 2021 budget.
Gov. Gina M. Raimondo’s plan would maintain the current licensing fee of 6%, rather than stick with a planned cut to 5% that lawmakers approved last year.
The 6% fee would generate an estimated $187 million in fiscal 2021, or about $32.3 million more than if it had remained at 5%.
It’s a series of other proposed cuts, though, that add to the sting for hospitals, according to the Hospital Association of Rhode Island.
In the coming fiscal year, Raimondo proposes not funding Medicaid rate increases or supplemental payments, disqualifying the state for matching federal funds. Also, the proposal would deposit $120 million from hospital licensing fees into the state’s general fund, an increase of $17 million from the previous year.
The result? Hospitals lose out on $17 million in state money along with matching federal funds that may have boosted that amount closer to $40 million, HARI says.
“As hospitals in our state are struggling financially, the significance of this cut and tax increase will impact the ability of the hospitals to make the investments that are necessary in technology, workforce and capital,” said HARI President Teresa Paiva Weed.
Still, Raimondo’s proposals include changes meant to increase cash flows to hospitals, including higher payments to hospitals that care for many Medicaid or uninsured patients. All told, the increase would be about $9.6 million, according to the R.I. Department of Administration.
It’s not yet clear what these actions could mean for Lifespan Corp. and Care New England Health System.
Care New England’s fiscal 2019 balance sheet showed a gain for the first time in years, with $3.8 million in operating income.
Lifespan, meanwhile, reported a $23 million loss. Dr. Timothy J. Babineau, Lifespan CEO and president, blamed it on reduced Medicaid reimbursements and a surge in patients, many of them covered by Medicaid, at Rhode Island Hospital and The Miriam Hospital.
Babineau has said Lifespan is aiming to finish fiscal 2020 with $1 million in operating income.
Will Raimondo’s proposals derail that goal?
A Lifespan spokeswoman declined to comment, saying the organization is sorting through the proposed budget. CNE also declined to comment.
If the plan is passed by lawmakers, about $67 million of the licensing fees would be funneled back into hospitals in the form of federally required supplemental payments to offset costs of caring for the underinsured or uninsured.
Combined with matching federal funds that double or triple state investments, that $67 million will likely grow to about $140 million. But compared with this year, those totals pose a loss, HARI said.
Of the revenue generated by fiscal 2020’s 6% licensing fee, $84 million was earmarked to fund Medicaid rate increases and supplemental payments to hospitals. Matching federal funds boosted that number to about $189 million.
Elizabeth Graham is a PBN staff writer. Contact her at Graham@PBN.com.
