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Private hospital provider tax funds children’s behavioral health expansions; federal approval for tax program still pending
Summary
The division told the Joint Subcommittee on Human Services that the private hospital provider tax program — a voluntary hospital tax established in prior legislation — has provided revenue the state is using to expand behavioral health services for children and to support implementation of a settlement agreement with the U.S. Department of Justice.
The division told the Joint Subcommittee on Human Services that the private hospital provider tax program — a voluntary hospital tax established in prior legislation — has provided revenue the state is using to expand behavioral health services for children and to support implementation of a settlement agreement with the U.S. Department of Justice.
Program scale and recent activity
Stacy Weeks said the private hospital tax program served more than 40 hospitals and, over the last biennium, the division paid $1.2 billion in supplemental and state-directed payments. Of the total payments made, the division reported that about $488.2 million came from the tax revenue, leaving roughly $777 million of supplemental dollars net to hospitals. The division also said it had dedicated roughly $72.6 million to children’s behavioral health activities under the allowable 15 percent set-aside for behavioral health.
Planned uses and DOJ settlement-related requirements
Weeks walked the committee through planned and requested decision units funded from that set-aside: actuarial work and administrative funding to stand up a new, fully integrated specialty Medicaid plan for children with complex behavioral-health needs (a requirement in the DOJ settlement), enhanced mobile crisis infrastructure and tiered rates, assertive community treatment (ACT) payments, rate increases for partial hospitalization and day-treatment services, community paramedicine payment increases, reimbursement for first-episode psychosis treatment, and other case-management and care coordination efforts.
Federal approval and timing
Committee members pressed the division on federal approval for the private hospital tax program. Weeks said the governor’s office had secured an early release of one quarter’s payment (about $200 million), with hospitals expected to receive those checks on April 11, but final CMS approval for the full calendar-year preprint remained outstanding. Weeks said CMS staff are asking detailed questions about how Nevada defines the average commercial rate used to set state-directed payments and that the division is working with Mercer to respond. Weeks said she did not expect CMS to deny the state the ability to collect the tax but that the size of allowable payments could change depending on CMS’s review of the methodology.
Why it matters
The private hospital tax has been a major funding source for supplemental payments and the children’s behavioral health expansion attached to the DOJ settlement. Federal approval that reduces allowable payments would affect the size of supplemental payments and the program components the division expects to fund from the tax revenue.
Ending
The division said it is continuing to pursue federal approval and that hospitals have received (or will receive) an early quarter payment while the full-year approval is pending. Lawmakers asked the division to monitor CMS responses and alert the committee to any changes affecting planned children’s behavioral health investments.
