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Conn. hospitals ask for relief from tax

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The Connecticut State Capitol building, in Hartford.

Connecticut hospitals have filed a petition with  the CMS in which they assert that the state is violating the federal Medicaid Act through enforcing a hospital tax and providing inadequate Medicaid reimbursement.

State legislators imposed the hospital tax in 2011 with the goal of increasing federal funding. When states tax hospitals and  then redistribute the funds back to the sector, the Feds  provide matching funds through the Medicaid program. However, since the tax was put into place, the state has reduced the money it redistributes after collecting the tax.

The hospitals say that the  $556 million annual tax puts hospitals in financial peril. The Connecticut Hospital Association asserts that inadequate Medicaid funding and the hospital tax have forced hospitals  to lay off 1,390 employees since 2013. “Hospitals are actively evaluating the elimination of programs and, in many cases, are also assessing their ability to meet bond covenants,” said the CHA.

The hospitals ask the CMS to make the state  amend its Medicaid plan to bring Connecticut’s Medicaid rates and the hospital tax in compliance with the federal Medicaid Act.

The Connecticut Hospital Association and 20 hospitals have also appealed a recent state  decision rejecting their argument that the tax is applied illegally.

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