A Republican proposal to reduce the Medicaid provider tax threshold from 6% to 5.5% drew a sharp industry response on Friday. The reduction was floated as one way to keep the interest rate low on subsidized Stafford loans to students.
“The Republican leadership’s offer to finance student loans by gutting an important statutory way to pay for Medicaid spending in the states is a prescription guaranteed to cause a major ripple effect in scores of states across the country if enacted,” Mark Parkinson, president and CEO of the American Health Care Association, said in a statement.
In a letter sent Thursday to President Obama, Speaker of the House John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY) called for the adjustment.
The GOP is proposing reducing the provider tax threshold from the current 6% to 5.5% in 2013, while the Obama administration has proposed phasing it down to 3.5% over three years. Any reduction would cut into reimbursement for healthcare providers such as nursing homes, as states generally use the provider tax to generate new in-state funds that can be matched with federal funds in order to receive additional federal Medicaid dollars.
Parkinson emphasized that this proposal couldn’t have come at a worse time.
“With the impending Supreme Court ruling, coupled with continued budget crunches at the state level, now is not the time to indiscriminately cut a key component of how skilled nursing care is financed,” Parkinson added.
Click here to read the letter.
