House budget writer: Make Senate find $38M to boost payments to hospitals
A chief House budget writer said it's up to the Senate to find $38 million in higher taxes or further spending cuts to sweeten payments to hospitals under the Medicaid tax plan that already had the support of Gov. Kelly Ayotte and the House of Representatives.
'This is the wrong venue, time and method for this bill,' said House Finance Committee Vice Chairman Dan McGuire, R-Epsom.
'It will cost the state $19 million a year, which isn't in either the governor's budget or the House budget. That is a $38 million drain on the Rainy Day Fund in the biennium which should be unacceptable.'
Meanwhile, Steve Ahnen, the president and CEO of the New Hampshire Hospital Association, called the state Senate-passed bill (SB 249) providing those hospitals more reimbursement money a 'great, first step forward,' but added more is needed to reduce the harm done to some institutions.
'Hospitals will still lose money, we are simply trying to lose less and do so in a fair and reasonable way,' Ahnen told the House Ways and Means Committee Tuesday. "It (Senate bill) needs to do a little bit better."
In 1991, the state imposed the Medicaid Enhancement Tax on hospitals to qualify the state for bonus matching grants from the federal government. Under the legal maneuver, the state pays back the hospitals for nearly all that they paid out in taxes, often on the same day.
Under the arrangement, the state received more than $300 million in annual reimbursements from Washington that it must spend on the federal/state Medicaid program.
The Biden administration ordered New Hampshire and all states to change those hospital tax and payment arrangements that critics here always called a legal "scam."
Federal officials are requiring states to make direct payments to the hospitals to receive the qualifying federal help, rather than impose a tax on hospitals and then pay them back.
Since a 2018 lawsuit settlement, hospitals, in the aggregate, had received 91% back of what they paid the state in MET.
Former Gov. Chris Sununu last summer directed state officials to lower that reimbursement to 80% and to direct more grants to mental health, substance abuse and federally qualified health care centers that were financially beleaguered.
Hospitals sued
In her two-year state budget plan offered last February, Ayotte stuck with the 80% model for 2026-27.
Ahnen said this will give the state $137 million more than it receives currently, while the hospitals will receive $70 million less than they do now.
The state's 11 largest hospitals as a group would lose $100 million, Ahnen said.
That's why the biggest hospital group, Dartmouth Health, joined the New Hampshire Hospital Association in suing the state for the third time in the past decade over the issue.
Matthew Houde, Dartmouth Health's system vice president of government relations, said it would lose $31 million under the plan and if it stands, service reductions would be unavoidable.
Through nine months, Dartmouth Health operated at a 1.4% profit margin which totals $35 million, Houde said.
In response to the suit, Ayotte accused hospitals of being solely focused on 'playing political games and misleading the public.'
'Unfortunately, the plaintiffs are only focused on driving more money to billion-dollar corporations and have resorted to playing political games and misleading the public,' she said. 'They should return to the table and come to an agreement that benefits all Granite Staters.'
Last month, the Senate amended its bill to restore the 91% reimbursement rate which is what former Senate President Jeb Bradley, R-Wolfeboro, tried but failed to get Sununu's support for last spring.
'Now that we have been sued, what happens will be anyone's guess,' said Senate Majority Leader Regina Birdsell, R-Hampstead, the bill's prime author.
McGuire urged the House panel kill or retain Birdsell's bill and force budget writers to find the $38 million in additional reimbursement to the hospitals as it produces an alternative state budget plan next month.
But Houde pointed out Dartmouth Health and other providers have withheld MET payments that were due to the state on April 15.
This threatens the state's ability to obtain all that bonus federal money in the coming weeks if a deal isn't reached soon.
'There is a timeliness component here with regards to getting the match from the federal government,' Houde said.
Ahnen reminded that two past superior court judges found the MET tax to be unconstitutional because it's not levied on 'similar' providers such as ambulatory surgery centers or rehab hospitals. Losing again would deny the state more than $400 million in federal reimbursement, he warned
klandrigan@unionleader.com
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