Hospitals seek fed declaration that CT Medicaid rates and hospital tax are illegal

By Kevin Zimmerman

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The Connecticut Hospital Association (CHA) has asked the federal government to declare that the state is violating federal law by paying inadequate rates for treating Medicaid patients and imposing a $556 million tax on the industry.

The group is appealing the declaratory ruling of the Department of Social Services/Department of Revenue Services on the basis that the hospital tax is illegally implemented. The hospitals are disputing the state’s findings that the tax is applied legally and assert that the hospital tax violates the U.S. and Connecticut Constitutions, as well as a number of federal and state statutes; is in excess of the Departments’ statutory and regulatory authority; and is arbitrary and capricious.

In addition, the CHA and the heads of 21 hospitals have filed a petition with the Centers for Medicare & Medicaid Services, stating that the state’s reimbursement and tax scheme violates the federal Medicaid Act.

In the petition, the hospitals maintain that the tax exceeds by nearly 30 times the corporate tax rate and violates federal law.

“Connecticut’s Medicaid payment system has degraded to a point where provider payments are no longer sufficient to assure efficiency, economy, quality of care, and adequate access to care for Medicaid beneficiaries,” according to the petition.

The CHA maintains that as a result of the hospital tax and poor Medicaid funding, there have been 1,390 layoffs and more than 1,700 open positions eliminated at Connecticut hospitals since 2013. It further states that many hospitals are now considering eliminating several programs and are assessing their ability to meet bond covenants.

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