Update on Proposed Tax on Surgery Centers

Please see some information below concerning the budget proposal in Pennsylvania that could result in an increased tax on Ambulatory Surgery Center revenue.  

Linked below is some media coverage on this proposal:

Also, included below is an update from the lobbying team working on this issue as well as a call to action. If you are interested in reaching out to any of your elected officials to discuss this proposal, you can identify your legislators at the following link:

Below is the communication from the lobbying firm:

Hi Everyone,
We wanted to provide you with an update on our meetings this week on the governor’s proposed Ambulatory Surgery Center (ASC) tax and our meeting with the Department of Human Services (DHS).
Our focus remains on meeting with key leadership and staff. These are the individuals at the table during budget negotiations.
We met with the following: 
  • Rep. Bryan Cutler (R-Lancaster), House Republican Whip, and most likely Republican House Leader next session
  • House Appropriations Committee Deputy Executive Director Ritchie LaFaver and Senior Budget Analyst Ann Bertolino, Office of Chair Stan Saylor, R-York
  • Senate Health and Human Services Committee Republican Counsel Mike Cortez, Office of Chair Lisa Baker, R-Luzerne
Overall, our legislative meetings have been good. Lawmakers are weary of taxes in an election year. However, the overarching theme that we heard is that legislators need to hear from their constituents/surgery centers back home in their districts. When it comes time for budget discussions in caucus, we need to make sure these lawmakers raise concerns and tell their Leaders they don’t support a tax on surgery centers. This is critical.
The Department of Human Services hears us, but they’re not really hearing us. At the end of the day, they say they need more dollars for the state’s Medical Assistance program. They plan to tax surgery centers to generate $25 million dollars as a match to draw down $25 million from the Feds. There is definitely some dollar shifting happening here. This new revenue allows the governor to increase dollars elsewhere in the state budget.
What’s more concerning is the department says they are now looking at a 3 percent tax on Net Patient Revenue. It would apply to CMS certified ASCs, which are the majority of surgery centers.
The department is selling the tax as a means to encourage ASC participation in Medicaid expansion and Community HealthChoices (CHC) program to save the system money, and as an opportunity for surgery centers to negotiate for higher reimbursement from MCOs that need to meet specific quality outcomes. They wanted to know if there is a way that the tax could be structured to be less painful – for example, different tiers based on rural, class, etc. They are also interested in hearing from a surgery center that currently has a high MA payer base.
We explained to DHS that not all procedures are equal nor are all centers, so we don’t see how tiers would work and with the geography and the acuity of patients that centers can accept, the tax would hurt many surgery centers. 
Along with PASA, PA Medical Society also attended the meeting with DHS and also made clear they are opposed to the tax.
We’re in the process of scheduling our next round of legislative visits and will let you know as soon as they are confirmed.
We’ve also had some initial discussions with the PA Chamber and PA NFIB. To that end, are there any surgery centers that are members of the PA Chamber or NFIB? It would be helpful to know.
Please let us know if you have any questions. We will continue to keep you apprised. If you have not done so already, please take the time to call and email your local legislator.
Catharine Conner
Milliron & Goodman, LLC
Government Relations
200 North 3rd St - Suite 1500
Harrisburg, PA 17101
O: 717.232.5322
C: 717.649.4908 
BONES of PA: Our Mission
To promote the professional development of the orthopaedic manager through peer interaction and group education programs; and to encourage and stimulate interest in orthopaedic practice management.