The Massachusetts Hospital Association is rightfully upset that that state's hospitals are being assessed to pay a growing amount from the state agency at the forefront of healthcare cost control efforts – the Center for Health Information and Analysis (CHIA). CHIA has seen its budget increase 21% and 6% in the past two fiscal years (FY2014 and FY2015, respectively) and is currently funded almost entirely by the healthcare entities whose finances CHIA tracks as they attempt to meet the state’s healthcare cost benchmarks.
MHA notes:
Hospitals and ambulatory surgical centers (ASCs) are now funding 50% of CHIA’s annual budget, with “surcharge payers” (mainly health insurers) paying the other 50%. In the current fiscal year (FY2015), the tax on hospitals to fund the operation of CHIA is 16.5% higher than it was in FY14. However, when one-time credits for unused prior year funding are taken into consideration, the expenses of the agency actually grew by 30%.
In a letter to CHIA Executive Director Aron Boros, MHA wrote: “MHA believes that the work performed by CHIA is a valuable resource for the commonwealth and its mission should be supported. However the recent increase is unprecedented and also conflicts with the commonwealth’s goal to control growth of healthcare costs as this increase is assigned to healthcare entities subject to the state’s cost growth benchmark.” MHA also noted that the budget of CHIA and its predecessor, the Division of Healthcare Finance and Policy (DHCFP), have grown at a rate significantly above the overall state budget increases over the past 10 years.
MHA explains further:
Chapter 224, which created CHIA out of the former DHCFP, mandates that hospitals/ASCs and health insurers pay at least 33% of CHIA’s expenses. The other third was intended to be paid by state government and federal revenues Massachusetts receives. But because of the changing role of the agency, CHIA no longer receives federal matching revenue it used previously for its 33% share. Yet the state’s general fund continues to receive the matching money, meaning, as MHA noted in its letter, “the commonwealth is now profiting from the transition of DHCFP to CHIA.”
CHIA is doing an excellent job: That's not the issue. There is a long tradition of "creative revenue accounting" in the state Legislature. Even when a regulatory function is an important aspect of public protection, it's so much easier to hide a tax by assessing it on the regulated industry. Here, as MHA points out, the hidden tax is in direct contradiction to the stated public policy objective of controlling health care costs.
MHA notes:
Hospitals and ambulatory surgical centers (ASCs) are now funding 50% of CHIA’s annual budget, with “surcharge payers” (mainly health insurers) paying the other 50%. In the current fiscal year (FY2015), the tax on hospitals to fund the operation of CHIA is 16.5% higher than it was in FY14. However, when one-time credits for unused prior year funding are taken into consideration, the expenses of the agency actually grew by 30%.
In a letter to CHIA Executive Director Aron Boros, MHA wrote: “MHA believes that the work performed by CHIA is a valuable resource for the commonwealth and its mission should be supported. However the recent increase is unprecedented and also conflicts with the commonwealth’s goal to control growth of healthcare costs as this increase is assigned to healthcare entities subject to the state’s cost growth benchmark.” MHA also noted that the budget of CHIA and its predecessor, the Division of Healthcare Finance and Policy (DHCFP), have grown at a rate significantly above the overall state budget increases over the past 10 years.
MHA explains further:
Chapter 224, which created CHIA out of the former DHCFP, mandates that hospitals/ASCs and health insurers pay at least 33% of CHIA’s expenses. The other third was intended to be paid by state government and federal revenues Massachusetts receives. But because of the changing role of the agency, CHIA no longer receives federal matching revenue it used previously for its 33% share. Yet the state’s general fund continues to receive the matching money, meaning, as MHA noted in its letter, “the commonwealth is now profiting from the transition of DHCFP to CHIA.”
CHIA is doing an excellent job: That's not the issue. There is a long tradition of "creative revenue accounting" in the state Legislature. Even when a regulatory function is an important aspect of public protection, it's so much easier to hide a tax by assessing it on the regulated industry. Here, as MHA points out, the hidden tax is in direct contradiction to the stated public policy objective of controlling health care costs.