CHICAGO - Winning the praise of many lawmakers and business and health care groups, Wisconsin Gov. Jim Doyle this week resurrected a plan to impose a new assessment on hospitals with the aim of raising an additional $300 million annually in federal Medicaid funds.

"In these challenging economic times, it is more important than ever that we move forward with a hospital assessment in order to reward hospitals that consistently provide high-quality health care to Medicaid patients," Department of Health Services Secretary Karen Timberlake said of the new proposal that was submitted to lawmakers.

Doyle first proposed such a tax, similar to one imposed in neighboring Illinois and 21 other states, in 2007 but it was opposed by hospital groups, and the Legislature's Republicans, who controlled the House, killed it. Democrats now hold a majority in both of the Legislature's chambers. The failed proposal was expected to leverage an additional $450 million annually in federal matching reimbursements.

Under the new three-year program that would include the current fiscal year, about 72 hospitals would be assessed a 1.4% tax on their gross patient revenues. Most hospitals would receive federal reimbursement equal to their payments and about 59 will receive $200 million in additional funds based on their level of Medicaid patients. The state would also use a piece of the new federal dollars to cover state health care costs, freeing up money in the general fund as the state grapples with a $5.4 billion, two-year budget deficit.

Unlike the governor's original proposal, its successor received a ringing endorsement from various health care groups. It comes as hospitals across the state are struggling with declining revenue and investment returns and a heavier load of bad debt and charity care as they treat more uninsured and under-insured patients.

The latest economic turmoil has contributed to what is already a roughly $600 million annual shortfall between the costs hospitals incur in treating Medicaid recipients and what they receive back. About 58 critical access and state psychiatric hospitals are excluded from the program because they automatically receive a 100% Medicaid reimbursement.

"Wisconsin hospitals have been hit hard by the recent economic downturn with both charity care and bad debt increasing by 20% over the past year, and these numbers will get worse," Wisconsin Hospital Association president Steve Brenton said in a statement. "Medicaid utilization is also increasing and the combination of those factors, left unaddressed, could jeopardize access to important health care programs in communities all across the state."

House Speaker Mike Sheridan, D-Janesville, predicted swift passage. "I believe that the hospital assessment is a smart way to help bridge our budget gap. The assessment on hospital revenues could attract several hundred million dollars in federal money to help reimburse hospitals for care provided to patients on Medicaid," he said in statement.

While Democrats praised the plan, some Republicans remained skeptical, including Senate Republican Leader Scott Fitzgerald of Juneau, who raised concerns that the state would use the funds for non-health care related expenses.

"I am fearful ... revenue will be skimmed off and used as a quick source of cash for unrelated projects, which has occurred in the past with the transportation fund," Fitzgerald said in a statement.

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