Connecticut hospitals filed a petition with CMS on Tuesday, arguing the state is violating the federal Medicaid Act through the enforcement of a hospital tax and by providing inadequate Medicaid reimbursement.
Connecticut legislators imposed the hospital tax in 2011 with the goal of increasing federal funding. When states tax hospitals and redistribute the collected funds back to the industry, the federal government will provide matching funds through the Medicaid program. However, since the tax was put into place, the state has reduced the amount of money it redistributes after collecting the tax.
In the petition to CMS, the hospitals highlight how the yearly $556 million tax puts hospitals in financial peril. According to the Connecticut Hospital Association, inadequate Medicaid funding and the hospital tax have caused hospitals in the state to lay off 1,390 employees since 2013. "Hospitals are actively evaluating the elimination of programs and, in many cases, are also assessing their ability to meet bond covenants," said the CHA.
The hospitals are asking CMS to compel the state to amend its Medicaid plan to bring Connecticut's Medicaid rates and the hospital tax in compliance with the federal Medicaid Act.
The CMS petition is only one prong of the hospitals' fight against the tax. The Connecticut Hospital Association and 20 hospitals have also appealed a recent state administrative decision rejecting their argument that the tax is applied illegally.
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