Local hospitals are preparing to face a new assessment thatwould have them pay half of Medicaid’s $90 million shortfall, aprospect some House Democrats fought bitterly last year andhospital officials now only begrudgingly embrace.

House Bill 105, which passed the House Thursday on a vote of104-10 and will now await action in the Senate, calls for hospitalsto pay $45 million into Medicaid, with the remainder covered bycigarette tax revenue. The assessment would be similar to one paidby hospitals before federal Hurricane Katrina relief money was usedto shore up the program, but the whole plan could be nullified ifthe federal stimulus package sends an estimated $700 million intoMedicaid coffers.

The bill would mean extra payments for hospitals statewide,which are suffering from decreased revenue caused by a seriousdecline in patient volumes. But with the majority of cigarette taxrevenue seemingly destined for the state’s general fund and noother agreeable alternative offered in the Legislature, localadministrators are supporting the plan.

“Considering the alternative that I might have had to pay $90million, I’m happy with it,” said Alvin Hoover, chief executiveofficer for Brookhaven’s King’s Daughters Medical Center. “I’m notexcited that I’m going to be paying more taxes, but for acompromise bill, it’s a good compromise.”

District 39 Sen. Cindy Hyde-Smith, D-Brookhaven, said herchamber’s Medicaid committee chairman has already promised HB 105will go to committee for review rather than being passed as is.Given the past differences on the Medicaid issue between theDemocratic-controlled House and the Republican-friendly Senate -and that a similar bill died in a Senate committee earlier thissession – changes to the bill could be forthcoming.

“That thing’s going to conference,” Hyde-Smith said. “We’redefinitely going to look at it.”

Hoover said HB 105 is based on the framework from last year’sSenate Bill 2013, a divisive bill that called for hospitals to paythe entire $90 million sum. The bill, supported by Gov. HaleyBarbour, passed the Senate by a vote of 41-7, but then languishedfor two months in a pair of House committees before dying inAugust.

HB 105 is more agreeable to hospital officials statewide, Hooversaid, because of a pair of amendments that would prohibit any thirdparty managed care programs and cancel the assessment in the eventof federal stimulus funding.

Hoover said KDMC has yet to discover what its assessment wouldbe. The advent of an additional tax could present a cash flowproblem for hospitals, but Hoover said Medicaid’s Upper PaymentLimit program – which caused cash flow problems last year with latepayments – has been timely this year.

“We’ll find a way to limp along until we get reimbursed,” hesaid.

It is unclear how the assessment would affect revenue-strappedFranklin County Memorial Hospital in Meadville, which countysupervisors are attempting to lease out to a management company.FCMH Administrator Sonny Dickey voiced concerns the hospital maynot survive without a larger corporate umbrella to support it.

Dickey was not prepared to comment on HB 105 until he and hisstaff had reviewed it in full.

About the only sure thing surrounding the hospital assessment isthe fact that hope of using cigarette tax revenue for the majorityof Medicaid’s shortfall is lost.

“The Legislature spent it three of four times already,” saidLawrence County Hospital Administrator Semmes Ross, referring tothe multitude of bills introduced this year seeking cigarette taxrevenue for programs such as education, car tags and homesteadexemptions. “I don’t think it was ever intended from the governorto get any of that cigarette tax money.”

Indeed, the Mississippi Hospital Association, which worked withthe House to draft HB 105, gave up a $90 million cigarette taxrevenue deposit before the session began.

“At the end of last session, we adopted the House’s position onthe tax, and that was to meet the state half way,” said MikeBailey, MHA’s vice president of finance and chief financialofficer.

Ross said small, rural hospitals like his would “have to learnto live with” the assessment if it passes, but he refrained fromcommitting to the tax until he sees it handled in the Senate. Hesaid he does not oppose the bill and citing the same reasons asHoover – there’s nothing better available.

“Last year we passed this and passed that and it went back andforth – you know how the Legislature is,” he said. “I’m not goingto get too excited until I see what actually happens.”