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Ohio Medicaid explains emergency rule to collect expanded hospital franchise fee
Summary
Director of the Ohio Department of Medicaid told the Joint Committee on Agency Rule Review that an emergency rule, signed by the governor, was filed to allow collection of an expanded hospital franchise fee tied to the pending state budget; a permanent rule is underway through the Common Sense Initiative.
Director Patrick Corcoran of the Ohio Department of Medicaid told the Joint Committee on Agency Rule Review that the department filed an emergency rule, signed by the governor, to implement collection of an expanded hospital franchise fee tied to the state budget.
Corcoran said the hospital franchise fee is "the broad based tax that is charged to hospitals," and that the emergency filing was intended as a "belt and suspenders" step because the current biennial budget adopted by the legislature includes a significant increase in revenue from that tax.
The emergency rule, Corcoran said, "would simply allow us to begin the process of collecting the tax from the hospitals." He told the committee the department has begun the permanent-rule process and has submitted rule text through the Common Sense Initiative (CSI) and the Electronic Rule Filing (ERF) system.
Why it matters: the hospital franchise fee both raises state revenue and funds distributions that go back to hospitals directly or indirectly; committee members sought clarity because emergency rulemaking short-circuits the usual JCAR timing and because the change accompanies a substantial budget increase.
Representative Michael Berner asked whether the change is sufficient for hospitals operating at deficits and how the fee percentages were determined, saying, "So is this enough, and and how did we arrive at these percentages?" Corcoran replied that the budget raises the fee close to the statutory cap and that the distribution formula was adjusted to target obstetrics, rural hospitals and behavioral health services but did not provide numeric percentages on the record.
Committee co-chair Representative Callender and others accepted the explanation and asked staff-level follow-up questions about whether the permanent rule text is identical to the emergency filing; Corcoran confirmed it is identical. No formal committee action or vote was taken on the emergency rule during the session.
Next steps: Corcoran said the department will continue the permanent-rule process through CSI and ERF while beginning collections under the emergency rule. The committee indicated it will monitor the agency's filings but did not take further action at the meeting.
