Hospital assessment stuff - and how it led to Derrick Van Orden's latest idiocy

A mundane funding mechanism that involves taxing Wisconsin hospitals has led to quite a lot of crazy stuff in our state's politics over the last week. This includes our Legislature and Governor having to race through the night of July 2-3 to beat Congress in passing a budget bill, and in one of the state's members of Congress getting caught playing both sides of this issue, and then melting down when he got called out on it.

First, let's review what the state's hospital assessment is, and how it works. Fortunately, Wisconsin's Legislative Fiscal Bureau has a good explainer, and how it relates to services for state residents on Medicaid and other Medical Assistance.

For the purposes of reimbursement under the Medical Assistance [MA] program, hospitals are grouped in one of several categories. By far the largest category, by patient revenue, is the acute care hospital (ACH), which is a general medical-surgical hospital that does not meet the criteria for being designated as a critical access hospital (CAH). A CAH is also a general hospital, but has a distinct designation based on smaller size (no more than 25 inpatient beds), and being in a rural or isolated location. Outside of these two classes of general hospital, there are three types of specialty hospitals: psychiatric hospitals, rehabilitation hospitals, and long term acute care hospitals....

In addition to the standard base reimbursement payments, hospitals receive supplemental payments for providing services to MA patients, some of which are distributed broadly to all or most hospitals in a particular classification, and some of which are more narrowly targeted to specific hospitals or related to specific services. The largest hospital supplement expenditure is for hospital access payments. Access payments are fixed dollar amounts paid for each MA inpatient (upon discharge) and for each outpatient service. The program spends $654 million annually for access payments to the group of hospitals that includes acute care hospitals, long term acute care hospitals, and rehabilitation hospitals (psychiatric hospitals do not receive access payments). The program has a separate payment pool for critical access hospitals, which varies in accordance with a formula, but for 2024-25 is $8.7 million.

There’s also the matter of how much to kick back to the Critical Access and Acute Care hospitals from those funds. Under current law, around 63.67% of the state funding goes back to the hospitals, and the Feds pay more than 150% of that state amount to the hospitals for coverage. Most of the rest goes to the state’s Medical Assistance Trust Fund (MATF) for other health care needs.

The total raised by the hospital tax for ACH services to has been set at $414,507,300 since 2011. Then that money is used to pay providers for MA services, which gets federal matching funds, and it allows for extra funds generated by the tax to be used for other Medicaid services.

So Gov Evers wanted to raise the hospital assessment from 1.8% of net patient revenues to 5.7% in his budget bill. And with that higher tax would come another $346.6 million to be used for MA services, another $551.4 million to ACHs, and another $31.1 million to Critical Access Hospitals.

Everyone's a winner in this scenario, unless you don't want to see the Feds spend more money on health care. Which is where Congress and Trump/GOP come in to this debate.

The practice of using state directed payments through HMOs to increase payments up to the ACR has recently drawn scrutiny, as it can allow states to make total payments that exceed the federal payment limits that would otherwise apply, including payments that exceed the hospitals' costs attributable to Medicaid patients. On May 22, 2025, the U.S. House of Representatives passed the Budget Reconciliation Bill, which includes a provision that would prohibit state directed payments that result in total payments that exceed 100% of the payments under Medicare, or 110% of Medicare for states that have not adopted Medicaid expansion (to account for higher rate of uncompensated care in those states). However, the provision would allow state directed payments that were already in place, or that had already been submitted for approval, by the date of the passage of the federal law. If this provision were to pass prior to Wisconsin making any changes to access payments, the state would likely not be able to implement the proposed access payment increases, since they would result in payments exceeding the Medicare limits. Milliman estimates that total payments under the [Evers] Administration's proposal would be 152% of the Medicare rate for inpatient services and 137% of Medicare rate for outpatient services.

So if the Evers Administration and the Legislature didn't work out a deal to raise the hospital assessment before the Big Bunch of Bollocks got signed by Donald Trump, they'd be prevented from doing so, and wouldn't be able to pay for these added services or would have further budget crunches from paying full cost for them.

So as final passage of the bill in Congress got closer, it led to the odd scene of Joint Finance passing the budget on Tuesday of last week, both houses of the Legislature debating it all day on Wednesday before passing it late at night. Then Governor Evers signed the bill with few vetoes just after 1:30 Thursday morning.

In the budget, the state's hospital assessment ended up being raised up to around 6%, which is slated to result in over $2 billion more a year in access payments, pay for nearly $300 million in Medicaid services, and hospitals get a larger share returned to them.

As the budget was being pushed through in Madison, they were getting encouragement to speed things through from a strange place.

And here's the letter from Van Orden, sent on Wednesday, the day before the House was set to pass their bill to prevent states from increasing hospital assessments.

I cannot emphasize enough the importance of signing the proposed state budget into law without delay. As you are aware, timely enactment is especially critical this year due to the proposed increase in the state provider tax, which must be effectuated before the anticipated signing of the One, Big, Beautiful Bill on or around July 4, 2025.

This is a once in a lifetime opportunity and I implore you to put politics aside, and our neighbors first.

The One Big Beautiful Bill will have a profoundly beneficial impact on Wisconsinites from all socioeconomic backgrounds by ensuring that Badger Care, in its current form and scope, remains solvent into the future and bolstering our rural healthcare systems.

Wisconsin will immediately receive a $500,000,000 plus up for rural healthcare infrastructure, and an additional billion dollars annually for healthcare in our great state...

Delaying the state budget enactment beyond July 3rd risks losing vital opportunities for the state’s healthcare system and the Wisconsinites who rely on it. Healthcare and rural healthcare, in particular, is vital to us in Wisconsin. We cannot leave anything on the table. Please act swiftly to sign the budget and secure the provider tax increase in time to meet this critical federal deadline.

Well, Small-D, if you really think it's important to have this extra coverage for hospitals in rural Wisconsin so more don't close and BadgerCare "remains solvent into the future", maybe you should have "put politics aside" AND NOT VOTED FOR THE BILL THAT PUTS IT IN DANGER. And nice try in implying that somehow the bill you're passing in DC is the one that's funding the extra money for health care, when that bill you voted for would have taken that funding away.

Fortunately, my Congressman isn't one to let BS like this go, and set the record straight.

“It’s clear that Derrick doesn’t understand the bill or legislative procedure when he claimed that he also helped secure an additional $500 million for rural hospitals. This provision came from a Senate amendment he had nothing to do with and was only included because Republicans felt pressure to put a band-aid over the bullet wound they are inflicting on rural hospitals by this bill. Moreover, there is no guarantee that Wisconsin will receive any or all of these funds, as award amounts have yet to be determined.”

“You can’t create a problem and then claim credit for someone else's help in making it slightly less horrific. He and his Republican colleagues are the reason this legislative fix was so necessary in the first place. The legislature's actions will help lessen some of the impact, but certainly not all of the bill.”

And if you click Pocan's press release, you'll see Van Orden have a typical multi-tweet meltdown in response to Pocan's fact-giving. What a dipshit.

Bottom line is that it was Wisconsin's elected officials at the state level who kicked into action to get a state budget passed that would allow for more Federal dollars to head to the state with a higher hospital tax. I still am not sure why we couldn't have just done the hospital assessment as standalone legislation vs having it be part of the budget, and allow the budget to get the fuller debate it likely deserved.

But we got another $2 billion coming into the state to help hospitals and provide Medicaid services, and it'll help Wisconsin be in a better position to weather the damage that is sure to come from the garbage bill that Derrick Van Orden and all other GOP Wisconsin Congressmen voted for.