The Georgia General Assembly recently passed House Bill 1055, which includes a myriad of increased fees and a new temporary tax on revenue earned by hospitals. O.C.G.A. § 31-8- 179. The tax, officially known as the “Provider Payment Agreement Act,” but more commonly referred to as the “hospital tax” or “bed tax,” imposes a 1.45% “provider payment” on “net patient revenue” earned by hospitals in the state and is imposed for the privilege of operating a hospital. “Net patient revenue” is defined to mean the total gross patient revenue of a hospital less certain items such as contractual adjustments, charity care, and indigent care. The term “hospitals” is defined broadly to include nursing homes and other specialty centers, but the term does not include some hospitals, such as “critical access hospitals” (as defined under Georgia law) and state owned or operated hospitals.  

The tax – which some prefer to call a fee – is intended to be in effect for only three years and was passed in conjunction with other tax reductions included within H.B. 1055 including a five year phase-out of the state portion (a quarter mill) of the property tax and the reduction of state tax on retirement income. The language of the Act is silent as to whether hospitals may pass this tax through to their patients and insurers, but it is anticipated that many hospitals will attempt to do so.  

Other states have recently enacted or expanded similar “hospital taxes” including Colorado (H.B. 1293 – 2009), Maine (H.B. 1351 – 2004), Ohio (H.B. 1 – 2009), Oregon (H.B. 2116 – 2009), Wisconsin (S.B. 62 – 2009, A.B. 770 – 2010), and a tax is currently being proposed in Connecticut (S.B. 478 – 2010).  

If enacted, the “hospital tax” would become effective on July 1, 2010 and would be scheduled to sunset on June 30, 2013. The Georgia House and Senate approved the bill on April 14, 2010, and it is currently awaiting Governor Sonny Perdue’s signature or veto. The Governor is expected to sign the bill.