STATE NEWS (NV)- Expanded hospital tax could boost Medicaid rates, fund behavioral health services

 
 

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[MM Curator Summary]: CO hopes to use a new provider tax scheme to fund fixes to its abysmal BH services for vulnerable kids. The new plan would cap the “admin” vig of the magic money funds at 15% of “assessments” and then slough off the rest to help address BH needs. So, the leftovers.

 
 

Clipped from: https://thenevadaindependent.com/article/expanded-hospital-tax-could-boost-medicaid-rates-fund-behavioral-health-services

 
 

The entrance to Mountains Edge Hospital in Las Vegas on April, 19, 2019. (David Calvert/The Nevada Independent)

Nevada’s lack of state-supported services for child mental health issues has been described as a “crisis” — underscored by a federal investigation last year revealing that the state’s lack of adequate treatment and services to children and youth with behavioral health disabilities likely violated federal law.

But under a little-noticed bill that would allow private hospitals to implement an existing “provider tax,” state health officials are hoping to leverage up to $30 million in new state funds to address a lack of youth behavioral health resources. The initial funds could potentially grow to an estimated more than $100 million after the money is matched by the federal government in support of new Medicaid services and rate increases for behavioral health.

The proposed measure, SB435, would build upon an existing framework that grants private hospitals the ability to vote for a state-assessed “provider tax” of no more than 6 percent, earmarked as supplemental Medicaid payments as part of a federal dollar-matching program. The bill passed unanimously out of its first committee and has received an exemption from legislative deadlines.

The bill would also align state law with federal requirements by ensuring that tax proceeds are not solely used to offset tax payments made by the providers. Money generated could be used to fund supplemental Medicaid payments, enhance reimbursement rates and pay for state administrative costs to implement the new tax. The specifics of who receives the new payments outside of those paying the tax must be outlined in the poll issued by the state to determine whether there are enough votes to support the implementation of the tax.

One of the proponents of the measure, the Nevada Rural Hospital Partners, said the bill aims to fill the gaps in payments to providers and grants Medicaid the ability to address any unintended financial consequences that may stem from the new “tax” and Medicaid payments.

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“SB435 ensures that our small Critical Access Hospitals in Nevada won’t be unintentionally harmed by the implementation of the provider fee,” said Blayne Osborn, president of Nevada Rural Hospital Partners. “Beyond that, the bill puts forward critical funding to support behavioral health providers in Nevada, which our rural communities desperately need and our hospitals fully support.” 

Though administrators and proponents of the measure describe it as a “provider tax,” it acts more as an assessment, allowing the state to pay the private hospitals more money for Medicaid services with the caveat that a provider is not being guaranteed by the state that they will receive sufficient payments to offset taxes paid as necessary to avoid federal scrutiny.

One of the proponents is Gov. Joe Lombardo. While on the campaign trail, he promised not to raise taxes, and a spokesperson said SB435 does not undermine that vow.

“Senate Bill 435 advances an existing framework that private hospitals were authorized to seek in 2017, and critically, it does not raise taxes or require a two-thirds vote at the Legislature,” Lombardo spokesperson Elizabeth Ray wrote in an emailed statement.

Under an amendment proposed by Lombardo’s office and brought by the state Department of Health and Human Services, the measure would direct the agency to pull no more than 15 percent of what is collected from the “provider tax” for administrative costs. Any remaining money collected for administrative purposes would need to be set aside for future Medicaid expenditures aimed at supporting “behavioral health care for recipients with serious behavioral health conditions and psychiatric disorders.”

That amendment is a direct response to come into compliance with federal disabilities law after the publication of the October report from the Department of Justice finding that Nevada does not provide its children with behavioral health disabilities adequate community-based services and unnecessarily institutionalizes children, sometimes out of state. 

The report indicated that more than 1,700 Nevada children were admitted to a hospital for psychiatric care in 2020, and that same year, more than 480 children received services in residential treatment facilities — places the state reported where children remain an average of nine to 12 months, sometimes longer.

Data gathered as part of the reporting process revealed that most children in residential care did not receive state behavioral supportive services, and less than a fifth of the children who were hospitalized for psychiatric care in 2020 received wraparound care coordination from the state. Findings also showed the state relies on residential treatment facilities in and outside of Nevada to treat children with behavioral health disabilities.

Nevada has a history of leaving mental and behavioral health behind or on a bus to another state,” Children’s Advocacy Alliance lobbyist Lea Case said during public testimony. “We support this first step while recognizing that there will still be a need for increased and sustainable funding to address the shortcomings noted in the DOJ report.”

Lombardo’s proposed budget shows the “provider tax” is estimated to bring in more than $388 million annually in new state revenue, with 15 percent allocated for administrative costs and any remaining funding within that percentage going toward behavioral and psychiatric services. The state estimates that this new state revenue could result in about $850 million to $1 billion in total for new supplemental Medicaid payments to private hospitals in Nevada. 

Director of Health and Human Services Richard Whitley said he estimates that 15 percent of the proposed “provider tax” would generate about $30 million for behavioral health, specifically, which can be matched with dollars from the federal government. The match could more than double or triple the money for behavioral health services, he said, potentially generating more than $100 million for behavioral health care in Medicaid.

“This will benefit both adults and children and reduce impact on the hospitals and the crisis services that are currently being provided in our emergency rooms,” Whitley said during a mid-April hearing on the measure.

 
 

Nevada Department of Health and Human Services Director Richard Whitley speaking with Assemblywoman Sarah Peters (D-Reno) in the Legislature in Carson City on February 8, 2023. (David Calvert/The Nevada Independent)

Nevada Medicaid Administrator Stacie Weeks said the state hopes to implement the tax by January 2024 and estimated it would support about 55 private hospitals within Nevada.

“It will create new supplemental payments, inpatient and outpatient, in addition to state-directed payments in our managed care program,” Weeks said during the hearing.

Though the budget includes estimations and projections related to the “provider tax,” a more detailed model of the finances and program, as well as the total funding generated, is expected to be available in June if the bill passes. Representatives of the Nevada Psychiatric Association, legal services providers, Clark County and the Nevada Republican Club testified in support of the proposed bill at its hearing last month.

Background and a future vote

The proposed bill takes advantage of a law passed under Republican Gov. Brian Sandoval during the 2017 legislative session that allows for a provider fee or tax program, as long as it is developed in collaboration with a majority of providers from medical facilities such as doctors’ offices, hospitals or other licensed medical offices, or an agency providing personal care assistance services. 

As part of the 2017 law, the provider tax program would be developed at the request of a group of providers and could proceed only with the approval of a supermajority vote of the providers (67 percent) within the group. Once that happens, the state division of Health Care Financing and Policy is given regulatory authority to assess and run a provider fee or tax program.

Whitley said the state’s low Medicaid rates have contributed to an overall provider shortage, and the “provider tax” will help address the shortage by ultimately bringing in more Medicaid dollars. He and other presenters said that the state will treat the proposed provider tax as a contract with the hospitals and, when voting, all hospitals will receive every detail related to the tax, including how the funding will be used and the tax percentage.

“The hospitals have to agree to participate in this,” Whitley said, adding that the provider tax under the new bill could also help public rural hospitals by opening the door for supplemental Medicaid payments to those hospitals in the event that something changes within the Medicaid structure as a result of the new private hospital tax.

The Nevada Hospital Association brought forward the request for the provider tax, the outlines of which were detailed in a public workshop held earlier this year by the Division of Health Care Financing and Policy.

A spokesperson for the association said all Nevada health care providers, including hospitals, are underfunded by Medicaid. In the past 20 years, she said hospital Medicaid rates have only increased 5 percent overall though hospital costs have increased approximately 50 percent, and additional funding is needed to preserve and sustain Medicaid services.

“We support the administration’s efforts to bring more funding through Medicaid provider fee programs,” said spokesperson Jeanne Corbit. “And we are working with the administration and lawmakers to craft legislation that sustains and improves access to hospital services.”