Ohio's Medicaid Committee has proposed a significant increase in the hospital franchise fee, aiming to bolster funding for healthcare services across the state. During a meeting on April 29, 2025, committee members discussed a plan to raise the hospital fee from approximately 4.5% to 7%, which is expected to generate an estimated $900 million in the first year and around $1 billion in the second year. This increase will allow the state to draw down additional federal funds, effectively enhancing the overall budget for hospital services without impacting the state’s General Revenue Fund (GRF).

The proposed budget allocates the new revenue, with a 60-40 split between the state and hospitals. This funding will support various initiatives, including mobile crisis services and behavioral health programs, which are critical in addressing the growing demand for mental health care. The committee emphasized that these funds will also help improve payments to hospitals, particularly those serving rural communities, which have been facing financial pressures.

In addition to the franchise fee increase, the committee discussed state-directed payments, which are designed to streamline funding processes for hospitals. This approach aims to reduce administrative burdens and ensure that funds are allocated based on quality metrics, thereby enhancing healthcare delivery across Ohio.

The meeting also touched on the importance of addressing disparities in Medicaid payments compared to Medicare and commercial rates, highlighting a significant gap that affects hospital funding. The committee is working to ensure that hospitals receive adequate compensation for the services they provide, particularly in underserved areas.

As the committee moves forward, the focus will be on finalizing these proposals and ensuring that the necessary legislative support is secured to implement these changes. The anticipated outcomes of these discussions are expected to significantly improve healthcare access and quality for Ohio residents, particularly those relying on Medicaid services.