HARRISBURG -- Philadelphia has some notable laws that other cities in Pennsylvania don't.

The Sterling Act is a decades-old measure that lets the City of Brotherly Love impose a wage tax of more than 3 percent on suburbanites who work in the city. And for the past two years, only Philadelphia has had a local law prohibiting smoking in public places, although new statewide smoking restrictions will take effect in September.

And, provided the federal government agrees, a new 3.93 percent tax -- state officials call it an "assessment" -- will be imposed on the profits of general hospitals in Philadelphia, starting in 2009. The idea is to attract more federal Medicaid funding for low-income people.

When the state Department of Public Welfare proposed the hospital tax to the Legislature last spring, there was talk of imposing it on revenue surpluses of hospitals in both Pittsburgh and Philadelphia, where most of the state's lower-income, Medicaid recipients live.

For now, Pittsburgh hospitals won't be facing the new tax, but Michael Nardone, deputy DPW secretary for Medical Assistance programs, said last week, "It's possible that in the future Pittsburgh hospitals could get involved."

The Legislature enacted the levy in June and Gov. Ed Rendell, a former mayor of Philadelphia, signed it in early July.

"Given the time line to get the assessment in place [by 2009], it made sense to focus on one jurisdiction," said Mr. Nardone.

The new levy will be applied to the net operating revenues of general acute care hospitals, meaning those with an emergency room. Children's hospitals and psychiatric hospitals are excluded.

Beside the Legislature, approval for the hospital tax was also needed from Philadelphia city officials. Allegheny County officials would have to approve before the tax would apply to hospitals in Pittsburgh.

Kevin Evanto, spokesman for county Chief Executive Dan Onorato, said that last spring, DPW Secretary Estelle Richman briefed Mr. Onorato on the hospital-tax concept, "but there were no follow-ups."

Revenue from the hospital tax will be matched by higher federal Medicaid payments, if the federal government agrees to count the new tax revenue as the state's local matching share. For every 45 cents of state funding for Medicaid (also known as Medical Assistance), the federal government provides 55 cents.

However, if the feds don't agree to count the new tax revenue as the state's share for Medicaid, the new tax won't be assessed, state officials said.

Mr. Nardone estimated that once takes effect in 2009, the new tax will generate $126 million a year at Philadelphia hospitals. This local share, which will replace funding from the DPW's budget, will permit the state to qualify for $142 million in federal Medicaid funds.

The idea behind the new "hospital assessment" is to increase reimbursement rates for about 15 Philadelphia hospitals that serve low-income people on Medicaid, although each hospital isn't automatically guaranteed that its revenue will increase.

Also, Philadelphia city officials will get $8 million a year for health care services, and city hospitals will get additional funding for emergency rooms.

DPW spokeswoman Stacey Witalec said she knows that some hospitals do have some "concerns" about the tax, which "represents something new in Pennsylvania."

But she said that 16 other states have already implemented such an "assessment" and "have demonstrated it can be done and increase Medical Assistance payments to hospitals."

She said there is precedent for such an assessment, which exists for nursing homes, managed care organizations and facilities for the mentally retarded.

"This is an accepted practice and brings federal dollars to strengthen the overall [health care] system," she said.