CMS Rejects Tucson Tax Plan to Cover Unpaid Hospital Care

CMS has denied a request from the city of Tucson, Ariz., to assess a short-term tax on hospitals that would lead to up to $70 million in new Medicaid funding, according to a report from the Arizona Daily Star.

The city planned to use the money from the tax to create a two-to-one match for federal Medicaid funds, according to the report. Money from the fund would be transferred to the state, which would use the money for its share of payments to cover uncompensated care for Tucson hospitals. Some of the funding would go toward statewide healthcare needs.

Largely due to Medicaid cuts and enrollment freezes, hospitals in southern Arizona provided $134 million in uncompensated care in 2012, according to the report.

The tax was subject to approval from CMS and the Arizona Health Care Cost Containment System, the state's Medicaid agency. AHCCCS spokeswoman Monica Coury wrote in an email to the Star that CMS did not approve the tax for various reasons, although the main one was a lack of opportunity to fund additional coverage options for children or adults with the tax funds.

Tucson based its proposal on a similar tax the city of Phoenix, Ariz., passed last year, according to the report. A portion of the money Phoenix has collected through the tax has gone to KidsCare II, a temporary health insurance program for kids whose parents have incomes above the Medicaid eligibility threshold.  Tuscon healthcare providers that supported the tax included Tuscon Medical Center, Carondelet Health Network, HealthSouth Rehabilitation Institute of Tucson and the University of Arizona Health Network, according to the report.

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