Senate budget change would eliminate franchise fee cost for hospitals

Ohio hospitals scored a potential victory yesterday when the Senate Finance Committee approved a change to its state budget plan that will allow hospitals to recoup all of the money they are paying under a new franchise fee proposed by Gov. Ted Strickland (Source: “New franchise fee won't cost Ohio hospitals anything,” Columbus Dispatch, June 3, 2009).

Strickland proposed the fee in his original budget proposal to generate revenue that would be used to cover the state’s share of Medicaid. The original plan would cost hospitals an estimated $411 million. The figure was reduced to $127 million under a compromise that passed in the House budget plan. The Senate plan calls for hospitals to recoup the franchise fee payments through a 5-percent increase in the Medicaid reimbursement rate.

Once the full Senate votes on its budget bill, it will return to the House, where it is expected to be defeated, setting up a Conference Committee to iron out the differences between the two plans. Gov. Ted Strickland must have a signed budget in place by July 1.