The state House of Representatives adopted legislation Wednesday to let Tennessee's hospitals pay a fee to avoid more than $650 million in cuts in Medicaid spending.
The bill, which already cleared the Senate, now goes to the governor for his signature. The House vote was 91-4.
The bill prohibits hospitals from passing on to patients the $239 million assessment they would pay.
In his February state budget proposal, Gov. Phil Bredesen capped Medicaid payments to hospitals at $10,000 for each patient. That meant Nashville's General Hospital and the state's other charity hospitals would wind up holding the tab for enormous medical expenses.
The Tennessee Hospital Association said it would force hospitals across the state to close. General Hospital said it would lose $10 million. The association's director, Craig Becker, called it "Armageddon" for hospitals in this state.
Hospitals then agreed to volunteer to pay the fee and use the money to draw matching federal funds to offset Medicaid cuts. For every $1 of state tax, the federal government sends nearly $3 for Medicaid.