Senate Bill No. 1550 proposes to subject children's general hospitals to the hospital provider tax starting July 1, 2026. This bill mandates that any children's general hospitals that were previously exempt from this tax must now pay it on both inpatient and outpatient hospital services at the same effective rates as other hospitals, which are set at 6% for inpatient services and 10.4858% for outpatient services based on each hospital's audited net revenue from fiscal year 2016. The bill also removes the requirement for the Commissioner of Social Services to seek approval from the Centers for Medicare and Medicaid Services to exempt children's general hospitals from the tax.

The legislation includes specific insertions and deletions to current law, notably eliminating the exemption for children's general hospitals and establishing their obligation to pay the net revenue tax. The bill is expected to generate an estimated $23 million annually in hospital provider tax revenue, with a corresponding hospital supplemental payment of $23 million through the Department of Social Services, which will also lead to a federal grant revenue gain of approximately $15.5 million annually. The effective date for these changes is set for July 1, 2026.