Missouri hospital pulls out of state Medicaid tax pooling program, citing finances

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Citing a need to ensure financial stability, Kansas City, Mo.-based Truman Medical Center will stop contributing to a provider tax pool that pumps funds into Missouri's Medicaid program, according to the Missouri Independent

Hospitals in the state currently pay a tax called the federal reimbursement allowance, which produces about $1.7 billion annually for the Medicaid program, according to the report. For hospitals that serve a large Medicaid-insured population, like Truman Medical Center, the tax is paid by deducting what is owed from Medicaid payments. Hospitals that have a limited number of Medicaid patients will pay the tax directly to the state.

Under a pooling arrangement, participating hospitals that receive more Medicaid payments than they pay in FRA taxes contribute a portion of the excess payments to the pool. Their contributions are used to make payments to hospitals that receive less in FRA-funded payments than they pay into it. Missouri says recipients of the pooled funds receive them as needed to "offset financial loss incurred by participation in the FRA."

Supporters of the pooling arrangement say that it has helped maintain support for the FRA tax from hospitals that do not serve a large number of Medicaid patients.

Keith King, spokesperson for Truman Medical Center told the Independent that the decision to pull out of the pool was not easy, but it was needed to ensure financial stability.

"As a safety-net hospital and largest single provider of uncompensated care in our region, Truman Medical Centers/University Health operates on a lower operating margin than most Missouri hospitals," Mr. King told the Independent. 

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