ctnewsjunkie file photo
Gov. Dannel P. Malloy gets cornered by Day Kimball Hospital staff outside his Capitol office in March 2016 (ctnewsjunkie file photo)

HARTFORD, CT — The Connecticut General Assembly may give Gov. Dannel P. Malloy the benefit of the doubt when it comes to reconvening a special session as early as Wednesday to fix language related to the hospital tax.

Malloy has until Wednesday to sign or veto the two-year, $41.34 billion budget and he’s hedging because of the way the language regarding the hospital tax is written.

“As you know, there is no guarantee that the federal Centers for Medicare and Medicaid Services will approve any request, but I believe that failing to amend the language you passed will almost certainly cause them to reject this one,” Malloy told legislative leaders Friday.

The Malloy administration contends that the language as written in the budget adopted by veto-proof margins in the House and the Senate could end up costing the state money.

Exceeding the federal safe harbor tax rate on inpatient services will result in the state incurring federal penalties of $550 million to $620 million per year, according to an analysis by the Office of Policy and Management.

The analysis further contends there’s issues with the language because it would permit the hospitals to delay payment of the tax until after they receive supplemental payments. Also Malloy’s budget office says the state would be on the hook to make the payments to the hospitals even if the federal government decided not to reimburse Connecticut at the higher rate.

The analysis shared with reports shows that Connecticut could lose up to $331 million in 2018 and $399 million in 2019 in revenue if it needed to make the payments to the hospitals.

Adam Joseph, a spokesman for the Senate Democratic caucus, said leaders are reviewing the analysis “to determine if further legislative action is necessary.”

The Office of Policy and Management met for two hours Monday with officials from the Connecticut Hospital Association.

“Today the administration met with the Connecticut Hospital Association and caucus staff to discuss complex policies included in the state budget to leverage more federal funding for vulnerable residents,” Senate Republican President Len Fasano, R-North Haven, said. “Tomorrow, we hope to see new language from Gov. Malloy that will take into account today’s discussion with Connecticut hospitals. Lawmakers look forward to reviewing that language to determine if any changes to the budget are needed.”

The Malloy administration and the Connecticut Hospital Association have had a rocky relationship and there’s a lack of trust between the two organizations.

Last year, the Connecticut Hospital Association sued the state claiming the taxing scheme, which was supposed to be mutually beneficial when it first began in 2012, was illegal. The governor had called for the Connecticut Hospital Association and 20 hospitals to settle the legal action before proceeding with the new calculations as part of the state budget.

However, the two sides have been unable to reach a universal agreement. Their next court date is Nov. 15.

The Connecticut Hospital Association did not offer any comment following Monday’s meeting.

Legislative leaders said after passage of the budget if there’s any branch that’s protected the hospitals over the years, it’s the legislative branch.