Missouri House approves health care provider taxes

JEFFERSON CITY — Ambulance services, in-home care providers and centers for developmentally disabilities all could have their taxes increase — and that's exactly what they want.

The Missouri House gave final approval Monday to legislation imposing taxes on industries as a means of drawing down more federal Medicaid money. The bill now goes to Gov. Jay Nixon.

It's a model that has worked for several health care industries. Hospitals, nursing homes and those dispensing medications all previously have agreed to be taxed.

Here's how it works: The health care providers pay a tax or fee to the state government, which then uses that money as Missouri's necessary matching funds to bring in additional federal Medicaid money. The total then is redistributed to the health care providers.

According to figures from the Social Services and Mental Health departments, existing taxes levied on industries such as hospitals, nursing homes, prescription drug providers and Medicaid managed care companies generated nearly $1.1 billion last fiscal year, triggering an additional $1.8 billion in matching federal Medicaid funds.

Lawmakers have approved two bills this session extending or creating health care provider taxes or certification fees.

Legislation sent last week to Nixon would extend the expiration date until 2011 on provider taxes for pharmacies, Medicaid managed care and intermediate care facilities for mentally disabilities. A bill sent Monday to Nixon would create a provider tax for ambulances and in-home care providers and a certification fee for certain mental health care providers.

Although the arrangement might seem counterintuitive — businesses asking lawmakers to increase their taxes — supporters contend that the additional federal revenue can be significant.

Mary Schantz, the executive director for the Missouri Alliance for Home Care, said the higher federal share would help increase wages. In-home care providers help Missourians with chores, personal care and respite. The services can keep people out of nursing homes.

Schantz said the industry's workers have a difficult job and sometimes are underpaid.

"It's a struggle," she said.

Because the provider taxes attract federal money, the Centers for Medicare and Medicaid Services must sign off on the programs. For example, the provider tax on Medicaid managed care is to change in September because of a shift in federal policy to broaden the reimbursement to all managed care providers.

The federal government wants to broaden the program to all managed care companies to eliminate an incentive to segregate Medicaid business from non-Medicaid accounts. Doing that could result in Medicaid taxes only being levied against part of a managed care company.