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Garry Rayno's State House Dome: Medicaid tax debate may linger into summer

State House Bureau

May 24. 2014 11:43PM

LAWMAKERS may well go home in two weeks without reaching agreement on the Medicaid Enhancement Tax, meaning they would have to return later to deal with the problem.

While a $22 million revenue drop in April caught everyone’s attention in the State House, the MET issue may be a bigger hurdle.

There are some simple fixes to the tax, which two superior courts have ruled is unconstitutional because it does not treat all medical providers equally, but fixing the tax is just one part of a much larger picture that encompasses state finances, the financial well-being of hospitals, state health care for the poor, Medicaid expansion and future contracts with the managed care companies administering the state Medicaid program.
At stake is $185 million this fiscal year and $190 million the next year. Hospitals are not likely to pay the tax next fiscal year, given the court decisions, and may ask for refunds for what they have already paid this fiscal year.
Not all of the money affects the state budget, but about $72 million does, and the rest is returned to hospitals as provider payments for uncompensated care.

Negotiations between the state and the hospitals have been going on since the first court decision, in February, and intensified with the second decision, in April, but common ground has been elusive.

It is hard to reach agreement when hospitals are split over which direction to take: Back away believing you hold the cards that won two suits, or try to reach an agreement that preserves state and federal help with unpaid or underpaid bills while restructuring the tax.
Some hospitals want the additional money from the MET, while others pay more in MET than they receive from the state in payments for treating Medicaid patients. The state’s Medicaid reimbursement rates are among the lowest in the nation, paying about 50 cents on the dollar.
The rates are not expected to go up when the contracts with the three managed care companies administering the Medicaid program have to be renegotiated.

Some hospitals are threatening not to take Medicaid patients because of the low rates, and that is a problem for the newly approved Medicaid expansion program, which will add 50,000 low-income adults to the state program under the Affordable Care Act.
With this backdrop, Gov. Maggie Hassan told the Joint Legislative Fiscal Committee last week her office is seeking an agreement that protects the state budget and the state health care system and returns uncompensated care to hospitals.
She said 48 other states have a Medicaid tax, so there are alternatives.

Translation: Hospitals had better come to the table willing to deal or their uncompensated care could go away and the state could find a tax that is constitutional if they want a refund.

While those negotiations are continuing, the House and Senate also do not agree on the best direction.

The Senate wants to phase out the tax over some years and help offset the revenue with additional insurance premium taxes as more people sign up for insurance or qualify for Medicaid under the Affordable Care Act.

At the same time, the plan would boost reimbursement rates for Medicaid services but reduce state payments for services that hospitals provide but are not paid for, what is called uncompensated care.

At the moment, hospitals want the uncompensated care to continue and are less enthusiastic about boosting provider payments.

The House would clarify lawmakers’ intent to use the MET revenue for health care programs and eliminate a provision allowing the money to go into the general fund.

House members hope that is enough to persuade the state Supreme Court to uphold the current arrangement.

But if the court upholds the lower court decision, the House plan would expand the tax base to include other health care providers beyond hospitals.

Those are two very different approaches with only three days for House and Senate negotiators to reach a deal.

Senate President Chuck Morse, R-Salem, may have tipped his hand last week after Hassan said she may have to call back lawmakers for a special session if June revenues tank and major reductions have to be made.

Morse reiterated the state does not have a revenue problem, and he would not bring back the Senate to deal with that, but he would recall it to act on something to address the MET issue.

Add election-year politics to the mix, and no one is going to vote for a new tax.

All of these factors are not conducive to addressing the entire package in a meaningful way, so a short-term fix is more likely. The main fix would then be kicked to the next Legislature, which would have two years for voters to forget lawmakers voted for a new or expanded tax.

The conference committee on the MET will begin at 10:30 a.m. Wednesday in Rooms 210-211 of the Legislative Office Building.

Senate Runs and Rumors: Two candidates to replace Sen. Jim Rausch, R-Derry, who is retiring at the end of the term, have their official announcements in the same place and one day after the other.

Republican Jim Foley of Derry kicks off his campaign Tuesday at Halligan Tavern in Derry at 7 p.m.

The next day, former Sen. and current Rep. Frank Sapareto, R-Derry, will hold his event at the same place, beginning at 6 p.m.

Rep. Regina Birdsell, R-Hampstead, is also running for the Republican nomination for the District 19 seat.

The district includes Derry, Windham and Hampstead and is heavily Republican.

And now for the rumors.

Rep. Mark Warden, R-Goffstown, is likely to challenge longtime District 20 Sen. Lou D”Allesandro, D-Manchester. D’Allesandro has one of the biggest campaign warchests of anyone in the Senate.

District 16 Sen. David Boutin, R-Hooksett, may have a primary challenge from current Rep. Jane Cormier, R-Alton, who recently moved to Hooksett.

The Republican Liberty Caucus is recruiting candidates to run in primaries against Republicans who voted for the state’s Medicaid expansion program.

Another conservative group, Citizens for a Strong New Hampshire, began running radio ads targeting Boutin this month, along with Senate Majority Leader Jeb Bradley, R-Wolfeboro, and Sen. Nancy Stiles, R-Hampton, over the Medicaid issue.
North Hampton businessman Steve Kenda has already said he will challenge Stiles in a primary.

Liquor bottle: Sales from the Liquor Commission’s Old Man of the Mountain Commemorative bottle have generated more than $66,000 for preserving the Hall of Flags in the State House.

The campaign kicked off in December to preserve the 115 historic flags, and now nearly 80 percent of the 9,000 commemorative bottles have been sold.

The Hall of Flags features war-time flags, including 88 Civil War flags, as well as flags from World Wars I and II and the Vietnam War.

The goal for the commemorative bottle sale is $85,000, which Liquor Commission officials say they will have no trouble raising.

“The Hall of Flags, which is essentially New Hampshire’s Civil War memorial, is such an important beacon of freedom here in New Hampshire,” said state Sen. David Watters, who spearheaded the effort to preserve the Hall of Flags.

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