Hospital Tax Pilot Program proposal outlined at county commissioners meeting

Highland County commissioners Brad Roades, Terry Britton and David Daniels heard a presentation on a proposed new hospital tax assessment being considered by the Ohio legislature, which may allow both of the county’s two hospitals to recoup up to $150,000 each year, during their Wednesday, June 4 meeting.

Colleen Ernst, executive vice president of health care consulting firm Adelanto Healthcare Ventures (AHCV), presented a slideshow on the proposed Southern Ohio Hospital Tax Pilot Program, as representatives from Highland District Hospital and Adena Greenfield Medical Center were also in attendance Wednesday. Although no official action was taken since legislation has not been enacted yet at the state level, all parties expressed an interest in moving forward if the measure is included in the state funding bill.

House Bill 96 — the legislation for 2026-27 appropriations, which has already been approved by the House and is currently in Senate committee — includes a section to create the Rural Ohio Hospital Tax Pilot Program, through which counties can “set the annual rate” for a new assessment on hospitals. The assessment will be used to “cover … the nonfederal share of Medicaid patients that benefit hospitals in the county” and “administrative expenses” and cannot exceed $150,000, the bill says.

According to Ernst, “Under the current payment model, most rural Ohio hospitals are reimbursed approximately 73 percent of their cost of providing care to Medicaid patients. This low level of reimbursement is not financially sustainable.” Through this proposal, the hospitals would “pay [the] assessment to the county,” with the county sending those funds “to the state’s Medicaid agency to support the non-federal share,” while in turn the “Ohio Department of Medicaid ensures Pilot Program funds are distributed to participating hospitals. 

“Rural hospitals across the country face a very challenging financial future,” Ernst said. “These facilities often are serving many residents who are low-income, some who do not have any insurance, many who are Medicaid-eligible. 

“Because rural hospitals face these challenges, there have been some very disappointing statistics about the financial health of rural hospitals, especially in recent years — 182 rural hospitals have closed across the country since 2010. More than 700 rural hospitals are at risk of closure, and just to put that in context, 46 percent operated at a loss last year.”

Ernst continued that the pandemic led to increased financial strain on rural hospitals.

“Here in Highland County, about one in five individuals is enrolled in Medicaid,” Ernst said. “Across the nation, one in two births is a Medicaid birth. That means one out of every two children born is born on Medicaid. They're getting this public health insurance program to cover the cost of that delivery. 

“When hospitals are treating these individuals here, they're receiving only about 73 cents on the dollar of cost. That means if Highland District Hospital is performing a $10,000 leg amputation on a Medicaid enrollee, they're getting back $7,300. Out of pocket, they have lost $2,700 on that procedure. Treating Medicaid patients is a money loser for hospitals here in Highland County.”

Ernst said that the proposal is “designed for hospitals in this region south of Columbus — a region stretching from here in Highland County going through Scioto County down south, up to Greene County, and stretching over to Muskingum.

“For a defined set of counties and the hospitals that exist in that region, there is an opportunity to help get more than 73 cents on the dollar, to help those hospitals actually get reimbursed the full dollar of cost for the procedures they're performing on Medicaid patients,” she said. “Basically, what the county would do is help the hospitals find a way to pull in federal resources that the state of Ohio has never been able to access. 

“There are other avenues to come up with those missing state dollars to help certain hospitals access the federal money left on the table, and one of those is through counties taxing only the hospitals — no individual citizens, no other businesses, but only the two facilities in the room today — they would be the only ones who receive a bill. When you tax those hospitals — and again, they're here, very supportive — their dollar becomes a state dollar that qualifies for federal match. At that point, those hospitals are doing an industry-led solution, a self-help solution, to access the money that the state of Ohio has not been accessing to help them.”

Aside from “minimal” administrative costs involving sending invoices, receiving payments and related work, Ernst said there is no financial impact on the county.

“To emphasize, no one else in the county receives a bill,” she said. “There is no impact on any other county resources. This is revenue-neutral for the county. It is simply billing these two hospitals and using their dollar to access federal match.

“The county would set a tax rate that would be a rate that is recommended by the hospitals together, a rate that is acceptable to them, something they're able to pay. That rate results in assessments or taxes paid to the county. The county holds those funds and sends them to Ohio's Department of Medicaid, and the Department of Medicaid pulls down the federal matching dollar and distributes those funds to the hospitals, so the county is never handling federal dollars. The county is never in a position of distributing those dollars. Those dollars flow like regular Medicaid reimbursement. They go through the health plan to the hospitals. But instead of getting 73 cents on the dollar, the hospitals could get up to that full dollar of cost.”

Ernst said that if approved by the state, it will be “a very low-burden program for any of the counties who participate.

“Really the only actions that the county will have to perform are voting on the rate, then mailing or emailing invoices to the two facilities, collecting their payments, sending those funds to the state, and then, of course, monitoring account balances and providing regular reports so that there's awareness these funds are being held,” she said. “There's regular communication, of course, with the hospitals and with those who represent them. That's my company, AHCV, who they've contracted with to manage this.”

Assuming the legislation is approved and the county decides to move forward, Ernst said they would be “subject to annual checks” as both the federal and state governments would have to “reauthorize” the program, plus at the county level they would need to reevaluate the rate each year — assuming they want to continue participating. 

“All layers have to approve in order for this to keep moving forward,” Ernst said. “Hospitals receive notice before they get a new obligation, just like any taxpayer gets notice before they get a new obligation. 

“And if at some point, let's say Highland District Hospital said ‘we don't want this to keep going. We've had a couple good years of this, but let's say this tax no longer qualifies for federal match.’ Nothing would bind Highland County to keep setting rates, to keep imposing a tax. If the hospitals no longer want it to move forward, if there's any reason it shouldn't move forward, the county would simply stop.”

Ernst concluded that the program is designed to “help Highland County hospitals thrive.
“The idea behind this is to help the hospitals close that reimbursement gap, and having a stable financial picture ensures the hospitals are able to provide quality care to all, regardless of income, that the hospitals can be stable, to attract top talent, top physicians, top nurses, to be good corporate citizens and employers and partners with the county to ensure the health, safety and welfare of all citizens here,” Ernst said. “If Highland County is interested in taking advantage of this opportunity, of helping the hospitals, of taking the General Assembly up on this possibility, what the county needs to do — which we are targeting, July 2, right after the budget is adopted, that authority is firmly in place from the General Assembly — we would ask for the county to set a rate resolution that would result in the hospitals making payments to the county, and again, those funds would ultimately pull in federal match and would make the hospitals whole for the cost of Medicaid services.”

One of the administrative expenses listed is “monitoring account balances and providing regular reports.” Daniels asked, “What accounts are we balancing and reporting on?”

“Every year when this tax rate is set, we're working in estimates, so there is a good chance that the amount of money collected from the hospitals would leave a slight balance after you make the transfer to the state,” Ernst said. “It’s designed so that the account never zeros out. We never want, for example, the state to say, ‘Your opportunity is $900,000, and you only have $800,000 in the account, because that's what your rate collected.’ That means we're leaving federal money on the table.

“We would rather have a very small balance sit in the account and roll over to the next year, which would lower the rate for next year.”

Ernst added that they review “historic utilization” of Medicaid to determine the rates, reviewing “the sum total of what you missed out on for each of those patients” and figuring “how much federal money is going to address that problem, and how much state money do you have to put in to pull in those federal dollars,” to reach the rate.

“What we're looking at is having a net result at the end of the day that they're made whole,” Ernst said. “Of course, they're paying their own dollars to access the federal match, right, but the net result at the end of the day is that they're going to get that full dollar of cost for every Medicaid procedure.”
Britton asked how often the tax would be collected.

“The vision we have right now is that it's an annual tax rate collected in installments,” Ernst said. 
“We’re trying to minimize how long they'll have to wait with cash out of hand, but they'll make their payment to you, ODM will call for it very shortly thereafter, and then they should, hopefully, pretty quickly start to see that federal match applied and get the money back.”

Ernst added that she wanted to emphasize that this will not impact the cost of services for patients.

“We get this question all the time — does that mean our citizens are suddenly going to see a $2 surcharge on their hospital bill?” she said. “Absolutely not. 

“There is specific language that says the hospitals cannot have a patient surcharge in order to fund this. They have to use their revenues the same way they're using their revenues to pay their employee salaries to pay their tax bill. That's what they're going to use, no patient surcharge.”

Although it was pointed out that the program has not been utilized much in Ohio thus far, Ernst said that it is successful in other states, including Florida, where she lives.

“It has grown like wildfire,” Ernst said. “I’ve never seen it get a negative vote. I've never seen a hospital oppose it. It has really become just something that's part of the fabric of how another state that's not looking to tax its citizens has found a solution to fund Medicaid. Texas, also a big player, and Pennsylvania, right next door, they use local taxes on hospitals to help fund their care.”

Daniels asked if the program is “a cost to the General Assembly” since “this is in some ways dependent upon the General Assembly passing this program.” Ernst said that “it is not” and is more of “a passthrough.

“It's gotten through the House,” Ernst said. “The Senate is looking at it now, but so far, it's gotten support. We haven't heard of any issues, any problems, and we know that the governor had it in his recommended language. ODM [the Ohio Department of Medicaid] is behind it, so that's all very good.”

Regarding any potential “downside,” Ernst said the only ones she tells hospitals are “you're doing a lot of work to establish this, and the rules could change tomorrow” at the federal level.

“I think until that time, it's crazy not to take advantage of this opportunity for the hospitals,” she said.

Roades asked how the county can facilitate the process.

“I'll need a point of contact just to be working closely to make sure that we're all lined up, and the big action item would be for this board to pass a resolution creating the hospital assessment,” Ernst said. “Hopefully we'll be back on July 2 with the General Assembly's budget all lined up, governor signed, and we'll be ready to go. 

“Because the federal government is looking at this application from the state of Ohio right now, you would set the rate. You wouldn't collect payments right away. We would wait until that federal approval is at hand that we've heard ODM is ready to go, but the rate would be passed, and that is one important piece. We want to have this in place as soon as possible, because we know the federal government is making so many changes in the budget right now, and we want to be in the best possible position at the time that it’s adopted.”

Daniels said Highland County Auditor Alex Butler would serve as the county’s “point of contact.”

“It would appear that by doing this, we are going to do what we can — what little we can — to help access to health care for Highland County residents and Highland County citizens,” Daniels said. “I don't see why we wouldn't do it.”

In other discussion:

• Commission clerk and Community Development Block Grant coordinator Mary Remsing hosted the second CDBG public hearing to discuss two previously announced $500,000 Critical Infrastructure grant applications — a water line replacement on Greystone Drive in the city of Hillsboro and upgrades at the Rocky Fork Lake Wastewater Treatment Plant.

Remsing said Hillsboro’s application would be a replacement of “2,350 linear feet, benefiting 42 households on Greystone Drive.” The Rocky Fork Lake application would benefit the plant’s 1,715 users and would upgrade their SCADA [Supervisory Control and Data Acquisition] system and several other areas.

“The application deadline [to the state] is June 11,” Remsing said. “We should be awarded approximately September 1, or know if we are awarded.”

Remsing added that the city of Hillsboro “has money they’re putting forth with their project,” while Remsing is also seeking match money from the county’s revolving loan fund for the Rocky Fork Lake application.

• Commissioners authorized a contract among commissioners, County Commissioners Association of Ohio Service Corporation, Ohio Child Support Professionals Association and Job and Family Services, which was a partnership agreement regarding the usage of the agreement between the CCAOSC and West Publishing Corporation.

“It's a database that child support and one staff member from the Job and Family Services income maintenance unit uses to locate and search for parties and cases, phone numbers, addresses,” Child Support Administrator Shira Smith said. “It goes into great detail. As far as if they're out of state, you can see even the criminal records, what addresses they reported with their criminal records to help us locate parties.”

• Commissioners approved a First Aid & Safety Cooperative Acceptance Agreement contract between Cintas and the Sheriff’s Office. According to Highland County Sheriff Randy Sanders, this is a monthly fee for AED maintenance.

Commissioners also made the following approvals, each by a 3-0 vote:

• A $3,215 quote for flooring and a separate change order regarding doors, partition walls and HVAC as part of ongoing Administration Building upgrades.

• A transfer from Transfers Out to 4030 – 911 Wireless in the amount of $75,000. Also requested is an additional appropriation from unappropriated funds within the 911 (4030) fund in the amount of $75,000.

• A budget modification within the (2300) 2025 Primary Election Grant Fund in the amount of $1,766.30.

• A request from the Board of Elections for an additional appropriation from unanticipated revenue within the (2300) 2025 Primary Grant Election Fund in the amount of $13,583.

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