Cook County, Illinois Offer Plan to Replace Hospital Assessment Tax

CHICAGO — Cook County and Illinois legislative officials yesterday unveiled a proposal to replace an expiring statewide hospital assessment tax that has generated more than $2.2 billion in federal matching funds over the last five years with a new program that favors Cook County hospitals.

Under the proposal, only the 62 hospitals in Cook County would pay the assessment based on patient volume. The tax would raise about $730 million, with the expectation that it would leverage nearly $600 million in federal matching funds. Much of the overall pot would then go to hospitals across the state, although Cook County hospitals — especially those with the largest Medicaid volumes — would receive the largest share.

Officials characterized the plan as a “starting point” for legislators in their efforts to craft a program that continues to leverage additional federal funds and can pass the muster of the Federal Centers for Medicare and Medicaid Services, which must approve it.

Cook County President Todd H. Stroger will introduce the ordinance at a meeting today and its chief state sponsor, Sen. Jeff Schoenberg, D-Evanston, will introduce a similar bill to the Senate later this week. The proposal has the backing of the Service Employees International Union and several local hospitals that would reap the most reward from it.

“Without these resources, hospitals serving residents of predominantly lower- and lower-middle-income communities in the Chicago area and those downstate would be threatened with closing their doors or drastically cutting services to stay alive,” Schoenberg said.

The group endorsing the plan includes nine local, mostly independent hospitals that treat a higher volume of Medicaid recipients. The proposal faces potential opposition from the larger systems and hospitals outside of Cook.

The plan’s sponsors said the funding mechanism proposed is more closely aligned with Medicaid volumes, and the change might help it receive approval from the federal government, which is tightening rules on hospital assessment programs. The Illinois Hospital Association wants the state to pass a plan that benefits more hospitals outside Cook.

Currently, the assessment tax on not-for-profit hospitals, which expires in July, is imposed statewide and distributed statewide. The state also keeps a portion to fund health-related services. Under the new proposal, Cook County hopes to receive a piece of the state’s share to fund services at its public hospital.

Hospitals have come to rely on the additional funds from the program, so a delay in federal approval in 2006 was cited as a factor in the downgrade of Resurrection Health Care in Chicago.

The General Assembly enacted an initial two-year program in 2004 that generated about $430 million for hospitals. The state in fiscal 2005 then adopted a three-year program that leveraged more than $1.8 billion. Hospitals have yet to receive their fiscal 2008 allotment.

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