Hospitals Tell Committee SB 1246's Tax Changes Could Worsen Medicaid Shortfall

Hospital representatives and health system finance officials told the Finance, Revenue and Bonding Committee that provisions in Senate Bill 1246 related to a hospital tax could exacerbate the state's Medicaid shortfall and fail to capture available federal matching funds.

Michael Valette, chief financial officer at Stamford Health, said the bill's sections 16 and 18 "cannot be seen as a stand alone proposal" and that, when viewed as a package, the administration's proposal "has left substantial federal dollars on the table and has failed to invest in Medicaid payments to hospitals." Valette said Connecticut hospitals face an aggregate Medicaid shortfall of about $1.4 billion and that the bill would not change the underlying equation.

Valette told the committee that there is room under the Medicare upper payment limit to increase supplemental payments and thereby realize additional federal matching funds. "The full benefit ... afforded under the upper payment limit is not been tapped into," he said.

Speakers

Michael Valette, Chief Financial Officer, Stamford Health (nonprofit hospital system)

Nut graf: Hospital officials warned that the tax and payment changes in SB 1246 as drafted could increase hospitals' Medicaid shortfalls and miss opportunities to secure federal matching dollars by not maximizing allowable supplemental payments.

Details: Valette summarized that the proposed changes would raise the hospital tax component while not providing Medicaid rate increases beyond FY 2026, and that supplemental payments described by other witnesses did not alter the overall fiscal gap.

Ending: Committee members asked clarifying questions; no formal action was taken at the hearing. Officials said they remain available to provide fiscal detail to staff as the bill advances.