Wisconsin’s rural hospitals are welcoming changes in the new state budget that will increase Medicaid reimbursement payments and provide long-term funding support.
The state’s bipartisan budget agreement raises Medicaid access payments and triples hospital assessments, a type of revenue tax on hospitals.
The move sets Wisconsin’s hospital assessment at the federal maximum of 6 percent of net patient revenue. That’s up from about 1.8 percent. Seventy percent of the revenue will go toward higher Medicaid payments for hospitals. The state will retain 30 percent for the Medicaid trust fund, according to Jeremy Levin, director of advocacy for the Rural Wisconsin Health Cooperative, which represents about 40 member hospitals.
Levin says the change will generate nearly $1.5 billion. It will result in an estimated $740 million increase in Medicaid payments to Wisconsin hospitals.
“This will be a very significant increase,” Levin said. “I think rural hospitals… will see that increase in their assessment. And depending on their Medicaid payment, patient value and services are poised to realize an increase in their access payments.”
Hospitals in Wisconsin have long struggled with underfunded Medicaid rates and rising uncompensated care costs, Levin explains. He says it has totaled more than $1 billion in recent years. By acting ahead of new federal rules that freeze hospital assessments nationwide, Wisconsin positioned itself to maximize federal matching dollars.
For rural hospitals, which often operate on thin margins, the funding boost could be critical in sustaining access to care. However, Levin noted that Medicaid funding remains subject to change with each two-year state budget cycle, leaving some uncertainty.
The changes come at a time when many communities have seen hospitals reduce hours, cut staff, or even shut down entirely. In 2024, two hospitals in the Chippewa Valley closed their doors. Levin says it was a consequence of reliance on government payers that failed to cover the true costs of care.
“But again, with Wisconsin hospitals seeing an increase in both the hospital assessment and then in turn the access payments, we will be in a stronger position going forward in very uncertain times,” he says.
Levin also noted that reductions in BadgerCare coverage often mean hospitals take on more uncompensated care or bad debt, especially in rural communities.
“Healthcare… provides a lot of the services first before payment is ever really addressed,” he explains. “It’s an industry and a service that… we do it for providing and improving the health of our communities, less so on just pure financial gain. It’s something that over the long term needs to have good funding and stable funding. I think that’s something that this process, and increasing our hospital assessment, helps the state provide.”
