Bankrupt Arizona hospital asks court to end levy for Medicaid expansion

Green Valley (Ariz.) Hospital, which filed for bankruptcy in April, is urging the Arizona Supreme Court to terminate a hospital levy that generates $265 million a year from hospitals to finance Medicaid expansion, according to the Arizona Daily Sun.

The hospital is siding with the conservative Pacific Legal Foundation to ask the court to designate the levy as a tax rather than an assessment placed on hospitals.

If the Arizona Supreme Court rules that the levy is a tax rather than an assessment, the legislation would have been illegally enacted because Arizona law mandates that taxes can only be approved with a two-thirds vote in the House and Senate. The 2013 measure did not receive enough votes if it is classified as a tax.

A change in terminology would end the levy on all hospitals in the state and exempt Green Valley from paying its share. It would also create solvency issues for the Medicaid expansion program in Arizona as the state would need to find funding elsewhere, according to the report.

John Matuska, CEO of Green Valley Hospital, argues that his facility pays more money toward the levy than they receive back from Medicaid expansion. This places the hospital at odds with the Arizona Hospital and Healthcare Association who wants to preserve the levy.

State officials intended for the expanded Medicaid program to lower hospitals' bad debt levels, which would partially offset the assessment on hospitals. However, less than 10 percent of Green Valley Hospital's patients are on Medicaid, making the fee a financial burden, according to the report.

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