“We're willing to work with the governor on trying to create a solution, and we don't think a tax is the best solution,” he added. That may mean using a Band-Aid approach—such as the cut in Medicaid rates currently in place in the state—while all parties work on a long-term fix, he said.
For now, though, the provider tax seems unlikely. Neither the house of representatives nor the senate included the provider tax in their budget proposals, although it is still in the governor's budget proposal.
Michigan is not the only state to have considered provider taxes. Outgoing Washington Gov. Gary Locke (D) also proposed such a tax in January, but Christine Gregoire (D), the current governor, did not include it in her budget proposal, nor has the state legislature moved to implement it.
Physician concerns about taxing providers actually reflect issues revolving around Medicaid copayments, said Diana Ewert, senior manager for state government relations at the American Academy of Family Physicians. These are proposals in which “if you contract with the state to provide Medicaid services … they would require you to take the patient, whether or not the patient pays the copay, and the state will still deduct the copay on other end because you should have collected it,” she explained. “That makes the losing proposition of taking Medicaid patients even more critical, which we believe will impact the safety net and result in less access.”
Ms. Ewert expressed concern regarding states enacting legislation such as provider taxes to increase federal Medicaid matching funds—a strategy known as intergovernmental transfers (IGTs)—for the coming fiscal year. She noted that the federally chartered commission on Medicaid will be looking at all financing mechanisms, including IGTs, in a preliminary report due to Congress on Sept. 1 (see story above). The goal is to cut $10 billion from Medicaid over the next 5 years.
“If states are depending upon IGTs to offset Medicaid costs and for some reason that doesn't come through, that may put states in an untenable situation,” Ms. Ewart said.