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$190 million hospital assessment supplemental ties to upper‑payment‑limit changes, analysts say
Summary
The department has requested a $190 million supplemental tied to hospital assessment collections and recent changes to upper payment limit calculations; part of the assessed funds are dedicated and part are federal drawdown dollars, officials said.
The committee heard a $190 million supplemental request for the Division of Medicaid tied to the hospital assessment fund and changes in how the state calculates upper payment limits for hospitals and skilled nursing facilities.
Alex Williamson, budget and policy analyst, told members the $190 million supplemental would be recorded as trustee and benefit payments: roughly $77 million would come from dedicated funds (the hospital assessment fund) and about $113 million from federal funds. The request connects to Senate Bill 1350 from 2022, which changed the methodology for certain UPL calculations, and hospitals subsequently determined the assessment required to generate the federal match was larger than originally forecast.
“After these changes went into effect, the hospitals realized that the assessment that would need to come into and hit the state's books was much higher than forecasted, allowing them to access additional federal dollars,” Williamson said, summarizing the department’s explanation.
Department officials and legislators discussed whether the assessment could be redirected or constrained. Williamson and Director Alex Adams said a portion of the hospital assessment is retained by the state and used, for example, to offset provider rate increases, but redirecting the assessment to a different purpose would require policy changes by the Legislature.
Representative Tanner pressed whether the assessment functions like a “blank check” to hospitals; Williamson replied some portion stays with the state and that changing the destination or calculation of the assessment would require legislation.
The hearing did not record a formal vote on the supplemental. Committee members asked for additional detail and follow‑up on the calculation and possible policy options for directing assessment proceeds.
