Hospitals, private hospital assessment and Medicaid funding program extended for fiscal year 2028
HB312 extends Alabama’s Hospital Provider Privilege Tax and related Medicaid financing framework through fiscal year 2028. The bill updates multiple provisions in the hospital assessment statute to reflect the new covered fiscal years, including the assessment period for privately operated hospitals, the use of Medicare cost report data to calculate net patient revenue, and the timing of intergovernmental transfers from publicly owned and state-owned hospitals. It also continues the structure of the Hospital Assessment Account, which is used to collect assessment revenue and support hospital payments under the Medicaid program.
The bill preserves the existing mechanism under which hospital assessments and intergovernmental transfers are used to draw federal Medicaid matching funds and make inpatient and outpatient hospital payments. It maintains the provisions governing base payments, access payments, upper payment limit calculations, refund conditions, and the automatic termination date, while shifting those dates forward to 2028. The act becomes effective October 1, 2025, and is designed to keep the hospital financing arrangement in place for the next several fiscal years.
HB312 amends Sections 40-26B-70, 40-26B-71, 40-26B-73, 40-26B-77.1, 40-26B-79, 40-26B-80, 40-26B-81, 40-26B-82, 40-26B-84, and 40-26B-88 of the Code of Alabama 1975. Its practical effect is to extend the hospital assessment tax and associated Medicaid reimbursement provisions through fiscal year 2028, keeping the Hospital Assessment Account and related payment formulas in force for privately operated, publicly owned, and state-owned hospitals. The bill affects hospitals subject to the assessment, the Alabama Medicaid Agency, and the Department of Revenue, and it continues the state’s ability to leverage provider assessments and intergovernmental transfers for federal matching funds.
The bill appears to have broad bipartisan or at least noncontroversial support in the legislature. It passed the Alabama House 102-0 and the second house 31-0, indicating unanimous support in recorded votes. The absence of committee transcript material suggests there was little publicly documented debate, and the vote totals indicate the measure was viewed as a routine extension of an existing Medicaid financing structure rather than a contested policy change.
There is little evidence of major contention in the available record. The main policy issue embedded in the bill is the continued use of hospital assessments and intergovernmental transfers to finance Medicaid hospital payments, which can raise concerns about provider tax structure, federal compliance, and the distribution of costs among private versus public hospitals. The bill also preserves safeguards that would trigger refunds or termination if federal matching funds become unavailable or if the assessment is deemed impermissible, reflecting concern about federal Medicaid rules and the stability of the financing arrangement. No specific opposition is documented in the votes or transcripts provided.