Governor signs legislation sponsored by Overbey to prevent potentially catastrophic impact of budget cuts to Tennessee hospitals

(NASHVILLE, TN), July 7, 2010 –  Governor Phil Bredesen recently signed legislation sponsored by State Senator Doug Overbey (R-Maryville) to  prevent potentially catastrophic cuts to Tennessee hospitals as a result of budget cuts proposed earlier this year in the state’s 2010-2011 budget.  

Hospitals asked the General Assembly to enact a coverage assessment in order to raise $230 million.  Money raised will be used to draw down federal funds available through a temporary Medicaid match program officially approved by the Centers for Medicare and Medicaid Services (CMS) on June 30.

“I am pleased the General Assembly passed this legislation and the governor has signed it  into law,” said Senator Overbey.  “Without this legislation, many of our hospitals, particularly those in rural areas, would have faced severe consequences and possibly closure.”

“The hospital coverage assessment will restore $659 million in proposed cuts to the TennCare program by allowing hospitals to temporarily “step into the state’s shoes” to fund a significant portion of the program,” said Craig A. Becker, president, Tennessee Hospital Association (THA).

“We appreciate the strong leadership of Senator Doug Overbey and his sponsorship of the bill in the Senate,” Becker continued. “We also would like to thank House sponsor Joe Armstrong for his unwavering support and all the other legislators who signed on to the bill and voted for it.”

Language in the legislation, Senate Bill 3528, ensures that any assessment imposed by this legislation would not be passed along to patients.  The assessment is based on 3.52 percent of a hospital’s net patient revenue according to its 2008 Medicare cost report.  Local government hospitals, critical access hospitals, freestanding rehabilitation hospitals, long-term acute care hospitals and pediatric research hospitals are not included in the assessment, as well as state mental health institutes.

 “As with all TennCare providers, the Tennessee Association of Mental Health Organizations’ (TAMHO) membership recognizes that the most important legislation passed this year was Senate Bill 3528,” said Charles Blackburn, Executive Director of TAMHO in a letter to Overbey. 

Twenty-six other states have a similar assessment plan to provide funding for their Medicaid programs and twelve additional states are currently considering such a plan. 

A few examples of the cuts that would be restored include those to critical access hospitals, the Graduate Medical Education program, a $10,000 cap on inpatient and the 8-visit limit imposed on outpatient services, therapies, and office visits.  Money raised by the fee will provide funds for the medically needy program and payments to reimburse hospitals for a portion of their uncompensated TennCare. 

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