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May 06, 2021 (Cleveland, OH )

Ohio Department of Medicaid Announces Ohio Hospital Franchise Fee Assessments

The Ohio Department of Medicaid (ODM) has published the enhanced Ohio hospital franchise fee assessment for state fiscal year 2021, which runs from July 1, 2020, through June 30, 2021. Of the additional $194 million assessed statewide, The Center for Health Affairs’ member hospitals are being assessed an additional $48.6 million, as required by S.B 310. This one-time added assessment is estimated to result in an additional $700 million returned to hospitals statewide for services rendered from January 1, 2021 through June 30, 2021. 

While the distribution of payments back to hospitals has not been finalized, ODM has made what it emphasizes is a preliminary estimate of payments to hospitals for services from January 1 through March 31. According to this estimate, payments to Northeast Ohio hospitals will total $87.5 million. Final payment amounts will reported when they are announced.

The Ohio franchise fee is a tax on hospitals, with all hospitals paying the same rate. It is used by the state of Ohio to draw down federal funds in order to help cover the cost of administering and providing services under the Medicaid program. 

With the recent changes, the final assessment rate for 2021 was increased from 3.23% to 3.93%. The tax is applied to a hospitals’ total costs less the cost of providing Medicare services. For each dollar in tax paid by the hospitals, $3 are drawn down in federal funding. Of this pool of combined funding, a portion is distributed to hospitals to help pay for patient care while the remaining funds are used by the state to cover costs associated with administering the program as well as for additional payments for other Medicaid services, such as nursing home care, home health services, and expanded behavioral health programs.

For more on the Ohio hospital franchise fee, contact us.