The Ohio Senate Medicaid Committee convened on April 29, 2025, to discuss significant changes to the hospital franchise fee as part of the state’s budget proposal. The primary focus of the meeting was the proposed increase of the hospital fee from approximately 4.5% to 7%. This adjustment is expected to generate substantial revenue for the state, with estimates indicating an influx of around $900 million in the first year and approximately $1 billion in the second year.

During the discussion, it was clarified that the calculation of the franchise fee differs from the federal ceiling of 6%. The Ohio calculation, which results in the proposed 7%, is designed to align with federal guidelines while maximizing state revenue. Importantly, the franchise fee is structured so that hospitals pay into a fund, which allows the state to draw down federal matching funds, ensuring that there is no impact on the state’s General Revenue Fund (GRF).

The committee highlighted that the revenue generated from this fee increase would be split between the state and hospitals, with a proposed distribution of 60% to the state and 40% to the hospitals. This arrangement has been in place for several years, fostering ongoing discussions with the hospital community regarding the implications of the fee structure.

As the meeting progressed, committee members examined the specifics of how the new revenue would be allocated, emphasizing the importance of transparency in the distribution of funds. The proposed budget aims to ensure that the financial benefits are effectively utilized to support healthcare services across Ohio.

In conclusion, the Ohio Senate Medicaid Committee's meeting underscored the critical nature of the proposed hospital franchise fee increase, which is poised to significantly enhance state funding for healthcare while maintaining compliance with federal regulations. Further discussions and evaluations are expected as the budget proposal moves forward.