Governor signs legislation co-sponsored by Yager to prevent potentially catastrophic impact of budget cuts to Tennessee hospitals

(NASHVILLE, TN), July 20, 2010 –  Governor Phil Bredesen recently signed legislation sponsored by Senator Doug Overbey and co-sponsored by local State Senator Ken Yager (R-Harriman) 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.  Yager said, without passage of the legislation, every hospital in Senate District 12 would have been severely impacted.  The hospitals in District 12 include Rhea County Medical Center, Roane County Medical Center, Jamestown Regional Medical Center, St. Mary’s Scott County Hospital, St. Mary’s Medical Center in LaFollette, and Jellico Community Hospital. 

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 Yager.  “Without this legislation, our rural hospitals would have faced severe consequences and possibly closure.  They serve as the first point of contact for many citizens who may not have the time or resources to travel to a larger facility in one of the urban areas.  In some counties, the local hospital is the largest employer.”

“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).

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.

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.

Senator Yager’s speech from the floor of the Senate regarding legislation to help provide funds for hospitals

Mr. Speaker, I rise in support of SB 3528.  The prime sponsor (Senator Doug Overbey) has eloquently made the case for the bill’s passage.  I would like to add six additional reasons why I support the bill:  the six community hospitals in my district.   These hospitals, however, could be anywhere in the state and they serve as a good example of  the important role the community hospital has in providing  affordable health care access.

The majority of Tennessee hospitals are in the small to medium counties.  They serve as the first point of contact for many citizens who may not have the time or resources to travel to a larger facility in one of the urban areas.  In some counties, the local hospital is the largest employer.

It is no overstatement to say that the proposed TennCare reductions threaten their very existence.

It’s not merely a matter for rural hospitals to cut out the so-called high cost services in order to compensate for the proposed cuts.  Rural sole-community hospitals would have to reassess every service they provide.  Some will likely close, with devastating healthcare and economic consequences to both patients and providers alike.

The hospitals of the state have voted to impose an assessment on their own net revenues
to trigger federal funds already set aside for this purpose. The assessment will not be passed on to the patient.  In order to make this happen the General Assembly must pass this bill.  I plan to vote for the bill and urge my colleagues to do the same. 

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