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Health & Medicine

Offsetting Healthcare Costs


As a result of not expanding Medicaid in Virginia, a new state Work Group is examining how to offset rising healthcare costs and the money it passed up from the federal government.  

This includes conducting an analysis of so-called “provider assessments”—which could tax hospitals, nursing homes, and other facilities for specific services.

The provider assessments would enable Virginia to receive matching federal Medicaid dollars. Analyst Deborah Bachrach from Manatt says all of the potential models must follow the same guidelines.

"The first thing that states do is that it funds the non-federal share. It simply substitutes for general fund revenue. It is no more targeted than that."

She describes another option.

"Rather than saying we're going to use the money that we've saved to fund the non-federal share without specificity, the provider assessment in several states—in many states—is linked to a supplemental payment to providers."

She also says they could fund a rate increase.

"It's been a long time since we've increased fees to doctors. It's been a long time since we've increased certain inpatient rates. The non-federal share could be used to increase rates of payments to providers."

But some observers are also asking whether or not hospitals will offset these taxes and fees—or pass them on to insurance companies and, ultimately, consumers.

States are limited in how large a tax they can assess. In general, the assessments could be used to bolster hospitals and other providers that have been struggling financially to take care of indigent patients or expand healthcare for the uninsured.