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Va. hospitals do about-face, giving McAuliffe Medicaid bargaining chip

Gov. Terry McCauliffe shown in July 2013. (Steve Helber/AP)

Virginia's hospitals reversed their position this week on a controversial bed tax, potentially giving Gov. Terry McAuliffe (D) a path to the top priority of his administration: Medicaid expansion.

Members of the Virginia Hospital and Healthcare Association have traditionally resisted efforts to pay additional fees, but a tax on beds — also known as a provider assessment — would draw down a federal match. Together, the money could be used to expand Medicaid under the Affordable Care Act and without state funding.

“Arriving at this moment did not come easily,” VHHA President Sean T. Connaughton said in a letter to McAuliffe. “However the mounting financial burden of diminished reimbursements, increased uncompensated care, and federal funding cuts necessitate the exploration of even the previously unthinkable. The status quo is simply unsustainable.”

The four-page letter lays out six conditions, including the preference that the program be mostly “placed in the hands of the private sector.”

The Republican-controlled General Assembly has blocked McAuliffe’s efforts to expand Medicaid, and lawmakers remain skeptical of shifting costs to health-care providers.

House Majority Leader Kirkland Cox (R-Colonial Heights) said that if McAuliffe writes his upcoming budget proposal based on the assumption that the state will receive federal funding for expansion, House Republicans will “unwind that.”

“I really hope he doesn’t do that, because we’ve been through that experience before,” Cox said Thursday at a legislative forum. “If you look at the votes before, it’s just not going to happen.”

Cox said the process of rolling back McAuliffe’s spending will disappoint groups depending on more funding for their priorities.

But Sen. Donald McEachin (D-Henrico) said embedding Medicaid funding into the budget will show Virginians the value of the money to the overall spending plan. The approach would display “two competing visions” for the commonwealth, he said at the same event.

Va. hospitals pressure state lawmakers in ad campaign for ACA money

The VHHA’s change of heart comes less than a month after McAuliffe said he has a strategy to expand the federal program at no cost to the state. Previous plans have called for Virginia to eventually pay 10 percent of the annual $2.4 billion cost, or $240 million.

The association laid the groundwork for its about-face this fall when it began an ad campaign intended to promote hospitals' importance to communities.

Hospitals throughout the commonwealth and especially in rural areas have complained of a financial crunch exacerbated by their mandate to provide free or reduced-price care to indigent patients.

The VHHA maintained that the “most appropriate way to pay for care addressed through the public health care programs is with General Funds.”

“We are, however, realists,” Connaughton added. “As a consequence, we are fully prepared to engage in a process to develop an appropriate mechanism for Virginia’s local hospitals and health systems to contribute the funds necessary to meet federal matching requirements and draw down additional federal funding to address the challenges outlined above.”

Virginia is one of 21 states that have not expanded Medicaid.