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  • N.H. House Speaker William O'Brien testifies Tuesday.
  • Photo by Bruce Preston. Senate President Peter Bragdon, R-Milford, is pictured in his Statehouse office. Bradgon put a stop last week to a bid to block Secretary of State Bill Gardner’s investigation into the Local Government Center’s abuse of its risk pool funds.
Sunday, August 7, 2011

Legislators: Medicaid money meant for charity care

CONCORD – House Speaker William O’Brien has an easy explanation why a complicated lawsuit by 10 New Hampshire hospitals over Medicaid funding is off base: He doesn’t think it’s about Medicaid funding at all.

The hospitals’ suit, filed last week at U.S. District Court in Concord, alleges the Legislature’s plan to cut so-called “disproportionate share hospital” program payments is illegal because it makes non-Medicaid use of Medicaid funds.

O’Brien said hospitals may have used the money to cover Medicaid shortfalls, but the money comes from another part of the state budget and therefore the Legislature is allowed to use it to balance the budget.

“At some point, spending has to stop,” he said. “This is what it looks like when a state stops overspending. It’s really not a Medicaid lawsuit.”

The hospitals allege in their federal lawsuit that whatever the payment mechanism, state reimbursements to hospitals for the care of Medicaid patients has fallen significantly over the last several years.

The DSH payments are part of a two-decade program under which the state reimbursed hospitals for a 5.5 percent Medicaid Enhancement Tax, also called the bed tax.

Those payments were made to the state so the federal government would pay a one-to-one match to the state. Once that federal match was received, the state reimbursed hospitals via the DSH payments.

This year, to help make up an $800 million budget shortfall, the Legislature decided to collect the bed tax and get the federal matching payments, but not reimburse hospitals. Many other cuts to state and local agencies and programs were part of that plan.

The numbers involved are huge: Hospitals will lose about $230 million over the two-year budget. The cuts have triggered significant layoffs at local hospitals, among others around the state.

Southern New Hampshire Medical Center announced last week it will lay off 100 people and close its 30-bed behavioral health unit. On Monday, St. Joseph Hospital announced it will close Rockingham Regional Ambulance and a medical equipment supplier, costing almost 175 people their jobs.

Greg Moore, the state House of Representatives policy director, said the bed tax payments aren’t Medicaid money because, by statute, they’re deposited into the uncompensated care fund. That fund is meant to reimburse hospitals for caring for uninsured patients and other charity care.

Hospitals may have used those payments to make up for other Medicaid reimbursement reductions, but that doesn’t change where the money came from, O’Brien said.

“It doesn’t make it Medicaid money,” he said.

The hospitals are “conflating the two separate issues,” he said.

O’Brien said Republicans’ dramatic sweep into power was a clear sign that voters wanted spending cuts.

“That’s the commitment we made to them,” he said. “We’re keeping the promises we made, and I think appropriately so.”

Senate President Peter Bragdon took a similar view.

“The Legislature was faced with a formidable task of an $800 million deficit if we did nothing,” he said. “Everybody had to make some difficult decisions. We did just like businesses and families across the state have over the years.

“There’s nothing that says that patient services have to be affected.”

The suit, filed at U.S. District Court in Concord, alleges the plan violates federal law and threatens “immediate and irreparable injury to the public.” It asks that the plan be halted immediately.

Joseph G. Cote can be reached at 594-6415 or jcote@nashuatelegraph.com. Also, check Cote out on Twitter (@Telegraph_JCote).