Lawmakers Approve Settlement with Hospitals

Good News for the Present – But Uncertainty for Future Budgets

Earlier this week, the NH legislature, by bipartisan vote, resoundingly approved an agreement reached between the state and 25 of the state’s 26 hospitals related to recent NH Supreme court decisions that the Medicaid rates and a tax on hospital revenues was unconstitutional.  Had an agreement not been reached, the decision would have caused a $375 million budget shortfall this biennium.  St. Joseph Hospital in Nashua, which has sued over the tax, is the only hospital that didn’t sign onto the agreement.

The tax brought in about $185 million this year and was used for Medicaid and other state spending. The agreement calls for all of the money to be spent on health care after the current budget, sparing the state from making deep spending cuts. The hospitals would get more state aid starting in 2015.

Under the settlement, critical care hospitals are guaranteed to get back 75 percent of uncompensated care costs, and, starting in fiscal year 2016, noncritical access hospitals will get 50 percent back.

Another stipulation of the agreement is that the state’s two rehabilitation hospitals will no longer pay the Medicaid Excise Tax.

With this plan in place, the state won’t lose any money in this year’s budget because the hospitals will stop looking for refunds and will pay what’s due in October. But in future years, the state will get between $45 million and $95 million per biennium.

“What’s not said today is the impact this is going to have (on future budgets),” said Jeff McLynch, executive director of the New Hampshire Fiscal Policy Institute. It has been estimated that the agreement could cost the state up to $100 million in the next biennium and up to $87 million in the 2018-19 biennium.

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