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Republicans Seek Federal Review Of Hospital Tax

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CBS Baltimore (con't)

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ANNAPOLIS, Md. (AP) — Senate Republicans are seeking a federal investigation into whether a proposed tax on Maryland hospitals violates an agreement between the state and the federal government that limits how much patients pay for care. 

Gov. Martin O’Malley wants to raise about $300 million to pay for hundreds of thousands of uninsured residents on the state’s Medicaid rolls by increasing a tax on hospitals. 

O’Malley’s proposal would help pay for an estimated 900,000 Maryland residents receiving Medicaid. An O’Malley spokesman defended the plan Monday. 

But Senate Republicans, in a March 17 letter to the US Department of Health and Human Services inspector general, said that plan violates an agreement with the federal government that allows the state to set health care costs. 

A copy of the letter was obtained by The Associated Press.   

Senate Minority Whip E.J. Pipkin, R-Cecil, and Sen. David Brinkley, R-Frederick, the top Republican on the Senate’s budget committee, said the governor’s proposal effectively shifts the burden for fixing the state’s budget to the federal government. 

“The state will, in effect, be taxing the federal government,” the two wrote in the letter to HHS Inspector General Daniel Levinson. 

A spokeswoman for the inspector general did not return an e-mail seeking comment Monday. 

The governor is seeking to increase — by 2.5 percentage points — the rate hospitals pay into a pool, which is then used to pay for Medicaid. 

House lawmakers, working on the governor’s budget proposal, tentatively approved the plan last week. It would have to be approved by the Senate and survive a panel of House and Senate budget gurus before taking effect. 

An O’Malley spokesman said the proposal does not violate any federal rules or agreements. 

“Provider assessments are used by many states, and our assessment complies with the federal rules,” said Shaun Adamec, an O’Malley spokesman. 

O’Malley and Democratic lawmakers significantly expanded the number of people who would qualify for Medicaid in 2007, paid for in part with a $1 increase in the cigarette tax. The number of people who qualify for Medicaid is also set to increase in 2014 with the phase-in of federal health care reform. 

While hospitals in other states would be able to pass the increased cost onto patients and insurance companies, Maryland’s Health Services Cost Review Commission establishes how much hospitals can charge for their services and operates under a waiver from the federal government. 

Spokesmen for the Maryland Hospital Association did not return calls and e-mails seeking comment, although the group sought to soften the blow from the rate increase in a policy paper on its web site. 

Maryland is facing a $1.16 billion shortfall in paying for Medicaid, MHA estimates. 

“Largely responsible for that deficit is the program’s rapid expansion,” the group wrote. 

(Copyright 2011 by The Associated Press.  All Rights Reserved.)

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