Hospital officials across the state are reacting to the hospital tax included in Governor Jim Doyle’s budget this week. One thing is very clear—a hospital tax would set a terrible precedent and place an additional financial burden on individuals who need hospital care.

On Thursday, February 15, the WHA Board of Directors took a unanimous position in strongly opposing the tax and released the following statement:

The Wisconsin Hospital Association supports Governor Doyle’s goal of achieving health care coverage for 98 percent of Wisconsin residents. We believe that initiatives unveiled to advance that goal are promising and we look forward to working with the Governor and Legislature to shape the evolution of these proposals over the next five months.

WHA also supports increasing Medicaid provider payment rates in order to preserve access to care and begin reducing the cost shifting of losses that are a legacy of inadequate reimbursement. This "hidden tax" is a major cause of health cost inflation and an especially problematic issue for hospitals that serve a disproportionate share of Medicaid patients.

WHA agrees that Wisconsin needs to maximize our ability to draw federal money to help finance Medicaid payment and coverage improvements. A tax on hospitals is not necessary to accomplish this. Any general-purpose revenues, including those raised by the Governor’s proposed increase in the tobacco tax, can be used to capture additional federal revenue. We believe Governor Doyle’s proposal to tax hospitals is a flawed mechanism for achieving a sustainable source of funding. The decade long experience with the nursing home bed tax provides strong evidence for this position.

WHA staff has met with representatives from the Department of Administration and the Department of Health and Family Services, who provided copies of their model showing assessments and payments for each hospital. WHA Senior Vice President Eric Borgerding said the plan creates winner and losers. WHA staff continues to analyze the tax plan, which is based on a one percent tax on gross revenues using the most recently audited Medicaid cost reports (typically 2004 or older). The taxes that hospitals pay, in Doyle’s plan, would be used to trigger a matching payment from the federal government and be used to increase Medicaid provider reimbursements. While the hospital tax can be used to trigger the federal match, it is not the only mechanism available to the Governor to gain more federal dollars in the Medicaid program. In reality, any additional funds that the State spends to provide health care to Medicaid recipients is matched by the federal government, including the tax on cigarettes, if the money is used to pay for expenses incurred in the Medicaid program.

"The experience of other states with a hospital tax shows that while it may provide relief for the Medicaid financial burden in hospitals the first year, over time the money is redistributed to cover expenses in other programs and while the tax remains the same to hospitals, the amount of money they receive back from paying the tax declines," said WHA Senior Vice President George Quinn.

Borgerding told the Board, "You don’t have to look much further than our own state to see that the Patient Compensation Fund is being looked at for the third time as a funding source for something other than injured patients and their families. Our track record in Wisconsin for keeping funds whole in segregated funds is not very good."

Jennifer Jackson, chief executive officer of the Connecticut Hospital Association, said that state eliminated its hospital tax in 2003 - after nearly a decade - after a lawsuit from the hospital group. Such programs look appealing the first year because of the revenue potential, she said, but it’s hard to keep the original program and reimbursement rates in later years, as federal rules change and the money is diverted to other programs.

"When we hear other states are considering a hospital tax, we think, ‘Boy, they don’t know what they’re getting into,’" Jackson said.

WHA President Steve Brenton said the Association supports Gov. Doyle’s goal of providing health care coverage for 98 percent of Wisconsin’s citizens; however, he doesn’t believe the hospital tax is the way to achieve it. "The Governor’s goal to provide coverage to the uninsured is admirable, but a hospital tax, which will ultimately be passed on to patients, is not the way to pay for these program expansions," Brenton said. "Through revenue growth and other funding proposals the Governor has put on the table, we believe there is plenty of new money available to pay for his proposed program expansions and much needed payment increases for hospitals serving Medicaid patients," Brenton added.

WHA staff will continue to analyze the hospital tax plan and address members’ questions and concerns. An editorial from the Milwaukee Journal Sentinel about the hospital tax is included in this week’s packet.

The WHA Board of Directors approved the updated "Billing and Collection Guidelines" presented by the WHA Task Force on Pricing and Billing, chaired by Tom Bayer, St. Vincent Hospital, Green Bay. WHA first released billing and collection guidelines in 2002. The new guidelines were developed to reflect the changing financial environment that hospitals and their patients encounter, including health plans that have higher deductibles.

"More and more hospitals are reporting that their biggest concern in the area of billing is working with patients who face high deductibles and co-pays that they are having trouble paying," said WHA Senior Vice President George Quinn, who provided staff support to the Task Force. The Task Force solicited data and information from WHA member hospitals in developing the updated guidelines, according to Quinn.

The major recommendations in the new WHA Billing and Collection Guidelines for Hospitals are:

1. Consider offering standard discounts for the uninsured
2. Develop discount policies for uninsured patients with incomes between 100 percent and 300 percent of the federal poverty line
3. Consider offering financial assistance for catastrophic health care bills
4. Review collection agency relationships
5. Make collection and billing information more available to the public

In his presentation to the Board, Quinn pointed out that several of the recently announced improvements to WHA’s PricePoint Web site, www.wipricepoint.org, are aimed at helping consumers, including information that will help them understand the hospital’s expectations for payment.

"Every patient is different when it comes to what they can pay on outstanding balances, and hospitals try very hard to work with the patient to determine if they qualify for charity care or a governmental program that will help them pay their medical expenses," Quinn said. "Without the cooperation of the patient, however, the entire system breaks down no matter how good it is. Communication between the patient and the hospital is the most important determinant as to whether the patient and hospital’s needs are met in this process," according to Quinn.

The revised WHA "Billing and Collection Guidelines" will be available soon. For more information contact George Quinn at gquinn@wha.org, or 608-274-1820.

The Wisconsin Department of Health and Family Services (DHFS) has alerted WHA and other groups that they soon will be publishing a long objected-to administrative rule that will establish fees for copies of medical records. According to DHFS, the new fees will go into effect on April 1, 2007.

Because of the extremely low copy fees permitted in the rule, WHA opposed the rule as proposed by DHFS. WHA worked with members of the Legislature and a coalition of providers, insurers, and attorneys that reached consensus on fee levels that were satisfactory to the payers while also covering the costs of the service. The Legislature asked DHFS to modify the rule to reflect the agreed-to changes, but DHFS declined to make any modifications to the rule. According to DHFS, they intend to start working on a new rule that will reflect the current costs of providing copies of medical records.

Myth: This is an "assessment," not a tax.

Fact: Webster’s Dictionary defines "assess" as... "to charge a property with a special payment, as a TAX..." However you describe it, a tax is a tax, and like all taxes will ultimately be shifted to those who use the service -- hospital patients.

Myth: Revenue from a hospital tax is needed to pay for health care programs.

Fact: Governor Doyle’s tobacco initiatives will generate more than enough money to fund coverage expansion and much needed Medicaid provider payment increases. In fact, the tobacco tax increase alone generates almost $500 million GPR over the biennium. Matched with federal dollars, $1.1 billion is available to pay for health care programs and payment increases for providers who have not seen an increase in almost one decade. The hospital tax is simply not necessary.

Myth: The tax will be good for Wisconsin hospitals.

Fact: The hospital tax creates "winners" (likely temporary) and "losers" among Wisconsin hospitals. The tax "robs Peter to pay Paul" at a time when all hospitals are paid less than 50 cents on the dollar for costs incurred in treating Medicaid patients.

Fact: Wisconsin hospital leaders are unified in their concern about a hospital tax, recognizing it to be a terrible precedent that if enacted may not be sustainable.

Fact: The experience of Wisconsin nursing homes with the "bed tax" is a road map to a dead end that Wisconsin hospitals will fight to avoid. The tax, which is passed on to nursing home residents, increases every year as does the amount of dollars diverted away from the tax for unrelated state spending.

Myth: The hospital tax works well in other states.

Fact: While 20 states currently have hospital taxes in place, in almost all instances close to 100 percent of the money is used to improve hospital Medicaid payments! That is not the case here, where the Administration’s budget would take a significant amount of the money to fund other programs.

Fact: Two states (Connecticut and Utah) repealed their hospital taxes in recent years and several other states have rejected them. The New Jersey Legislature rejected Governor Jon Corzine’s hospital tax plan last year. In California, Governor Schwartzenegger’s hospital and physician tax initiatives are generating bipartisan opposition.

Myth: Hospital tax revenue will be used to pay for health care.

Fact: No matter how this hospital tax is marketed, hospitals have been positioned as the "bank" to be tapped to fund current and future state spending. This mirrors the unsuccessful raids on the Patients Compensation Fund in 2003 and 2005, and past efforts to siphon money away from the nursing home bed tax.

Myth: The federal government has opened up/encouraged this option for states like Wisconsin.

Fact: While provider taxes are permissible today, the Center for Medicare and Medicaid Services (CMS) has been clamping down on provider tax schemes for over a decade. In fact, CMS proposed new rules to limit provider taxes as recently as November 2006.

WHA Financial Solutions, Inc. marked its fourth consecutive year of revenue and profitability growth in 2006. Projections indicate that the company will close 2006 with over $2.2 million in revenue, a 10 percent increase from 2005, and a four-year net profit of $1.6 million.

Employee benefits, which represent the company’s greatest area of growth, achieved a 27 percent increase in revenue with the addition of several new clients and a significant increase in the number of products placed for existing clients.

"With our strong financial performance, we are pleased to deliver on our mission of supporting WHA’s advocacy and education efforts," stated Jon Braddock, WHA Financial Solutions’ senior vice president. In 2006, WHA Financial Solutions returned over $458,000 to WHA in the form of advocacy and education support, and shared services.

President and CEO Steve Brenton commented, "Financial Solutions is a terrific asset for WHA and a valued partner for its many clients, most of whom are WHA members. The impressive 2006 results are indicative of that value and speak well of the fine team of professionals that are part of the WHA-FS family."

Some of the most publicized medical errors in Wisconsin, as well as other states, occurred in 2006. These events triggered many questions related to error prevention, the process once an error has occurred, and the accountability of a medical error. WHA recognized the need to facilitate a deeper understanding of the just culture model.

You may be asking, "What is a just culture? The short answer is that a just culture is a way of doing business – a set of standards by which employers and employees can work together to create the best possible outcomes, recognizing that only through shared accountability between organization and the individual, between good system design and good behavioral choices of staff will we achieve these outcomes. Over the last 10 years, just culture concepts have moved from simply a non-punitive reporting policy to a set of human resources and safety standards that dictate how the organization will work across all values – both before and after an event has occurred.

Mark your calendar for March 22, when WHA will be co-sponsoring a seminar entitled, "The Just Culture Community," with MetaStar, the Wisconsin Organization of Nurse Executives, and the Wisconsin Society of Healthcare Human Resources Administration.

The event will be held at the Kalahari Resort in Wisconsin Dells. Risk managers, nursing leaders, human resources professionals, quality managers, CEOs/administrators, COOs, CMOs and public relations professionals are encouraged to attend.

The American Hospital Association (AHA) is sponsoring National Hospital Week,

May 6-12, in celebration of the more than 4.5 million people who work in America’s hospitals. This year’s theme, "Care You Count On, People You Trust," honors the dedicated individuals who day after day provide patients with uncompromising care.

A planning guide has been mailed to AHA member hospitals, which includes a timeline, media release, public service announcements, and activity ideas to help you promote appreciation for your employees.

Nationwide, businesses lose one billion dollars per year due to drug use by employees. That’s why Tomah Police say it is critical for more business owners to be aware of drugs and the impact narcotics have on the workplace.

About a dozen Tomah business and industry representatives got a firsthand lesson on their role in the fight against drugs during a quarterly "Business and Industry" meeting coordinated by the Community Outreach Department of Tomah Memorial Hospital.

Tomah Police Department Sergeant Mark Nicholson said it’s beneficial for businesses to work with law enforcement in policing drugs.

"If they (businesses) are having issues with any employees that they feel that are possibly involved in drug use or abuse contact us and work together with us, there are certain things that we can assist them with as well as they can assist us with," Nicholson said. "Just the exchange of information of things that are going on is very lucrative to both sides."

Nicholson presented a PowerPoint demonstration on various drugs, while displaying a number of drug paraphernalia confiscated by local authorities.

Even though Tomah business owners have been cooperative with local police, Nicholson said there’s not enough awareness on the subject because some businesses don’t want to be linked to drugs.

"The awareness to it may provide a bad, sour taste for somebody," he said. "Some may look at a certain business and say there are drug users at that location, and I think business owners may not want that perception to be involved with their business," Nicholson concluded.

Nicholson said it’s "extremely important" for police to work with business leaders to educate them on drug use occurring in Tomah.

"It shows that we are trying to be as proactive as possible by putting out into the community and businesses that we want to stop the activity that’s going on -- not only to arrest people, but to assist them from using drugs."

Submit hospital community benefit stories to Mary Kay Grasmick, editor, mgrasmick@wha.org or call 608-274-1820.

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