Opinion ID: 853052
Heading Depth: 2
Heading Rank: 5

Heading: Principal Effect Has Been to Reduce Local Tax Burden

Text: While Griffin complains about paying a higher HCI rate than some others do and about HCI funds being used to leverage federal Medicaid dollars, the net result has been to generate more money to aid the poor without provoking the higher property taxes the former system produced. The legislature's 1993 decision to use some HCI revenue for this purpose is illustrative. Some $35 million per state fiscal year of the state HCI fund is now transferred to the Medicaid indigent care trust fund to be used to leverage federal Medicaid dollars. [8] P.L. 277-1993 Section 82; ( see also, R. 694). Allowing these funds to go through the Medicaid program generates more money for medical care provided by Indiana hospitals by leveraging approximately two additional federal dollars for every one local dollar contributed. (Department Br. at 8.) Undoubtedly, a portion of the additional Medicaid funds make their way to Lake County hospitals. The General Assembly decided that if this Medicaid revenue program generated more than $45 million in federal matching funds in a fiscal year, then the excess fund, up to $18 million, would be returned to the State HCI fund annually. P.L. 277-1993; (Department Br. at 8). In 1995, the legislature revised the HCI program again eliminating the physical transfer of monies used to procure federal Medicaid matching funds back to the state HCI fund for payment of HCI hospital claims. Instead, it used the $35 million appropriated from the state HCI fund, [9] to make lump-sum payments variously referred to as Medicaid payments to hospitals in lieu of HCI payments or HCI Add-On. [10] Amounts remaining in the state HCI fund were to be used to reimburse non-hospital indigent care providers, e.g., physicians. (Department Br. at 9.) [11] Under the 1995 amendments, the hospitals received lump sum payments in addition to their base in-patient payment rate. This was based on HCI payments during fiscal year 1992 divided by the hospital's total Medicaid patient days during that period. See Ind.Code § 12-15-15-8 (as amended 1995) (repealed 1998). Money in the HCI fund at the end of the state fiscal year may not revert to the state general fund. Ind. Code § 12-16-14-9. The 1995 changes caused the HCI fund balance to grow to approximately $17 million. Most subsequent legislative efforts have further ameliorated Griffin's complaint about his county's disproportionate share of HCI tax. The General Assembly reduced Lake County's share of the property tax levy by $4,000,000. Ind.Code § 12-16-14-3.4. It also reduced St. Joseph County's share by $1,000,000. Ind.Code § 12-16-14-3.7. [12] The legislature added Ind.Code § 12-15-15-9 specifically aimed to address concerns about disparity in payments between some counties' HCI contributions and the reimbursements of providers within those counties. P.L. 126-1998 Section 5. This section, which is retroactive to the 1997-98 fiscal year, required the Family and Social Services Administration (FSSA) to prepare a formula that minimizes the difference between the aggregate amount paid under this section to all hospitals in a county for a state fiscal year and the amount of the county's HCI property tax levy for that state fiscal year. Id. Between the effects of federal leveraging and the impact of this formula, an even greater amount of money was returned to Lake County providers than to providers in other counties. Specifically, in April 1999, by operation of the HCI county equity payment methodology developed by FSSA, the State forwarded Lake County hospital providers HCI county equity payments totaling $6,757,188 for the State's 1998 fiscal year. (R. at 749.) In its November 1992 report, the Indiana Commission on State Health Policy characterized the HCI program as underdefined and misaligned. It noted: Indiana spent approximately $33 million in total county funds for providing emergency services under the Hospital Care for Indigent (HCI) Program.... The program is inadequate in addressing the health care needs of the uninsured in Indiana.... If Indiana were to use this money under the Medicaid program, the state would have approximately $66 million more to serve the health care needs of Indiana's uninsured.... Indiana Commission on State Health Policy, Hoosier Health Reform at 21-24 (Nov. 1992) ( quoted in R.M. Haycox, A year of Change for our Health Care System, 1992 Survey of Recent Developments in Indiana Law, 26 Ind. L.Rev. 1003, 1012 (1993)). This is exactly what the legislature chose to do. In the end, the question that is posed by the foregoing facts is: Aren't Griffin and his fellow property tax payers better off with the Medicaid leveraging than without it? [13] The question answers itself, but we will pause to lay out the answer anyway. Lake County residents historically received much more HCI service than residents in other counties. [14] Moreover, the HCI program cannot be examined in isolation because disproportionate share hospital (DSH) payments, a related part of Medicaid, are also relevant here. Through DSH, Lake County providers have received significantly more reimbursements than those in many other counties. (R. at 695-96.) When DSH is taken into account, the total benefits received outweigh the tax levy. For example, in state fiscal year 1995, Lake County hospitals and providers received $27,755,978 in DSH and HCI reimbursements compared with an HCI tax levy of $14,320,445. (R. at 699, 708.) For state fiscal year 1996, Lake county hospitals and providers received $26,928,506 in DSH and HCI reimbursements compared with an HCI tax levy of $15,242,100. Id. Furthermore, during the fiscal year 1998, the total amount collected by the HCI program statewide was $144,313,918. (R. at 148.) The total amount of HCI and Medicaid reimbursements paid statewide during that fiscal year was $52,231,742. Id. During that period, Lake County taxpayers paid $16,931,455 in HCI tax. Of the reimbursements made during that year, however, $17,682,517 was allocated to Lake County. Id. Thus, Lake County ended with a positive balance for state fiscal year 1998 of $751,062. In comparing the proportions of Lake County's HCI contributions and reimbursements with the statewide contributions and reimbursements, a differential of 4% exists. Nevertheless, as demonstrated above, Lake County has received more than what it has contributed. The HCI tax formula has thus been effective in allocating the tax burden according to the costs it has incurred. Put another way, the tax is proportionate to the expenses.