Montana hospitals have agreed to pay a fee to help fund Medicaid expansion as the state's share of the cost of the health care coverage increases, an official with the Montana Hospital Association said Thursday.

Bob Olsen, the senior vice president for the MHA, said Gov. Steve Bullock and state lawmakers made it clear they expected industries that benefited from Medicaid expansion to help pay to continue it.

State officials have estimated that hospitals statewide saw their $400 million in uncompensated care drop by half as a result of Medicaid expansion, which covered 95,000 low-income adults on Dec. 1.

The MHA had hoped a referendum to increase tobacco taxes would raise the needed money, but when voters rejected Initiative 185 in November, the hospitals had to find another solution, Olsen said.

The proposal calls for hospitals to pay a fee of 0.95 percent of their outpatient revenue, which includes payments for tests and outpatient procedures, but not physician or other professional charges.

The fee is included in a bill Rep. Mary Caferro, D-Helena, released Thursday and a draft Medicaid expansion bill by Rep. Ed Buttrey, R-Great Falls.

It will generate an estimated $30 million over two years, with half funding Medicaid expansion and half helping to increase provider reimbursement rates for traditional Medicaid and the expansion program, Olsen said.

The fee will not be paid by state- or county-owned hospitals.

The state's cost of the Medicaid expansion program continues to increase as the federal share drops to 90 percent in 2020.

Continuing the program is one of the key issues for the 2019 Legislature and Buttrey has said he wants to do so without increasing the cost to taxpayers.

An early draft of Buttrey's bill calls for a tax on health insurance premiums, a work or community benefit requirement for participants and increased premiums for people on Medicaid expansion for more than two years. He also wants to charge additional fees for people with extensive assets, even if they qualify for Medicaid expansion based on their income, and collect from tax-exempt religious corporations the state's share of their members' Medicaid costs — a provision aimed at Hutterite colonies.

Federal law does not allow direct asset testing.

Caferro's bill retains many of the points of the bipartisan bill carried by Buttrey in 2015, while adding the hospital fee and increasing the appropriation for a voluntary workforce training program.

Montana's Medicaid expansion program will end on June 30 if lawmakers don't pass a bill to continue it