CONCORD — The Senate Finance Committee approved a proposal to force state hospitals to join Medicaid managed care networks or face losing state aid for charity care.
Hospitals have balked at the compensation offered by the three companies the state hired to run the Medicaid managed care program.
Because the managed care program has not been begun, the state will not realize $15 million in savings budget writers planned this fiscal year.
On Friday, the committee reviewed a proposed amendment that would require the hospitals to join the managed care program or lose a projected $61 million in state and federal funds for reimbursing the hospitals for uncompensated care in the next fiscal year.
The hospitals would have to join the managed care networks by July 1, the date the new operating budget begins in order to receive state help.
The state’s smaller critical access hospitals receive the bulk of the state and federal money for uncompensated care, while the state’s largest hospitals no longer get any state or federal help after budget writers slashed the program two years ago.
The state taxes hospitals on net patient services through the Medicaid Enhancement Tax, and uses the money to match federal funds and then return it to the hospitals for uncompensated care reimbursements.
In the last budget, budget writers decided the state should keep about $75 million of the $175 million the tax produced and eliminated uncompensated care for the larger hospitals.
The hospitals sued the state over reimbursement rates in federal court and that case is pending.
During the committee meeting, Sen. Lou D’Allesandro, D-Manchester, praised the proposals, saying “pushing managed care is a way to get things going. It’s movement in the right direction.”
The committee has worked to find ways to increase uncompensated care payments to hospitals to entice them to join the managed care networks so the program can begin, including using a $20 million reduction in personnel compensation and benefits costs as well as other reductions in the Health and Human Services Department.
Health and Human Services Commissioner Nick Toumpas told the committee last week that, without managed care, expanding Medicaid under the Affordable Care Act would be untenable.
The Senate Finance Committee has worked for the last month on its budget proposal and hopes to finalize the plan early next week.
On Friday, the committee added about $84 million in revenue to the bottom line by using $37.5 million of this fiscal year’s projected $40.6 million surplus for the next biennium budget, along with $16 million from the renewable energy fund, $26 million in business tax collections from additional audits at the Department of Revenue Administration and increasing the real estate transfer tax revenue by $5 million.
With the additional money, the committee’s current proposal would have a $493,000 balance at the end of the biennium with a $14.1 million balance after one year.
The Senate budget spends a total of $10.7 billion compared to the House’s $11 billion spending plan. Much of the difference is in assumptions on how much money the Medicaid Enhancement Tax will generate.
The Senate rejected a 20-cent increase in the tobacco tax projected to raise $40 million that both the House and Gov. Maggie Hassan included in their budget proposals.
The House and Hassan included $13 million in savings by delaying business tax credits passed last year but not due to go into effect until the coming biennium that the Senate rejected as well.
Toumpas told the committee the proposed budget is about $40 million below what he needs to meet his agency’s obligations. Without additional money, he told the committee, he would have to reduce spending for popular programs like reducing the developmentally disabled wait-list for services, mental health and Children in Need of Services (CHINS).
Committee chair Chuck Morse, R-Salem, said the Senate budget is realistic. He said there is only about $100 million more to spend than the last biennial budget due to the slow economy.
“Reality is showing up in the Senate budget,” Morse said. “The public has been promised everything, but there is no new revenue and we can’t do too much about it.”
He noted it is going to be hard work with House negotiators to pass a budget in the next 30 days.
The Senate is expected to vote on its version of the budget June 6 and then House and Senate negotiators will try to reach a compromise before July 1 when the new fiscal year begins.