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Hospitals back budget package that raises franchise fee; some providers warn 340B changes will hit certain hospitals
Summary
Hospital groups told the House Medicaid Committee they support the administration's package — including an increased hospital franchise fee to draw federal dollars — while acknowledging some hospitals could be disadvantaged by proposed 340B contract‑pharmacy policy changes.
Representatives of the Ohio Hospital Association and the Ohio Children's Hospital Association told the House Medicaid Committee they generally support the governor's Medicaid financing package that includes an increased hospital franchise fee and changes to state‑directed payments.
Scott Borgaminski of the Ohio Hospital Association said the franchise fee would draw federal dollars and help shore up rural hospitals with thin margins, while acknowledging that some providers will face difficult tradeoffs. “This program in its totality is a win‑win for the state,” Borgaminski said, adding that hospitals across the political spectrum rely on similar mechanisms.
The nut graf: Hospital leaders said Ohio hospitals face severe financial pressure — high contract labor costs, low Medicaid payment rates and narrow operating margins. They urged the committee to consider the package as a whole, noting that while certain changes (notably proposed 340B adjustments) could reduce some hospitals' revenue streams, the additional franchise fee and state‑directed payment realignments provide broader rate support and other priorities.
Children's hospitals: Nick Leshotka of the Ohio Children's Hospital Association said children's hospitals are heavily dependent on Medicaid — he cited a gap of roughly $728,000,000 for his member hospitals between payments and costs — and said the package's financing is critical to maintaining pediatric specialty services across the state.
340B and uneven impact: Hospital witnesses said proposed 340B changes are concentrated; Borgaminski acknowledged the department aims to recapture lost rebates but said the policy has winners and losers. Both hospital groups urged close engagement between the department and providers on implementation details and said they support the package overall while asking for refinements.
Ending: Hospital leaders said they would continue consulting with the administration and the committee. They requested further fiscal detail and transitional provisions to avoid unintended hospital closures or service reductions, particularly in rural areas.
