Physician tax plan promotes debate in Michigan.(Practice Trends)

Michigan physicians are divided over efforts by Gov. Jennifer Granholm (D) to pass a physician tax that would help increase payments to Medicaid providers in the state.

Under the governor's proposal, a 2.28% gross receipts tax would be levied on all physicians in the state. The tax would raise $96 million, which would then be put into the Medicaid program and would increase the amount of matching funds the program received from the federal government.

"In that scenario, the state keeps $40 million, and then the $56 million left would be paired with Medicaid matching dollars, so we can return $125 million to providers, bringing up to Medicare rates our physicians who've long complained that Medicaid [reimbursement] rates were too low," commented T.J. Bucholz, who is a spokesman for the Michigan Department of Community Health in Lansing.

In the case of physicians who have at least 3.5% of their practice revenue coming from Medicaid, "they will get more back in terms of Medicaid reimbursement" than they paid into the system in taxes, he noted.

But the Michigan State Medical Society (MSMS) isn't buying it. "Inherent in that is an underlying current of a lot of trust, and for those of us who have paid attention to legislative and gubernatorial activities in the state over the last decade, a track record of trust is one that needs to be earned. People have a lot of questions about that," said Gregory Forzley, M.D., a member of the society's board of directors.

For instance, "when they introduced the state lottery, it was going to benefit K-12 education programs and colleges in the state, but it appears they used the lottery money in place of other governmental funding," said Dr. Forzley, a family physician in Grand Rapids. "So when they come with a similar-sounding proposal in a system already fraught with cutbacks and underfunding, most people say, 'I don't believe you when you say you are going to put safeguards in.'"

But Stephen DeSilva, M.D., president of Michigan Doctors Making a Difference, said that some of these problems could be overcome. For example, the law could be written so that "when the federal matching funds go away, the tax would automatically sunset," he said.