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House approves its Medicaid enhancement tax fix

State House Bureau

May 14. 2014 9:25PM

CONCORD — The House on Wednesday voted 247-28 to approve its two-step plan that extends the Medicaid enhancement tax to more health care providers to address recent court decisions.

The House’s plan, Senate Bill 369, would begin to answer two superior court decisions finding the MET unconstitutional because it taxes hospitals, but not other providers of the same health care services.

The rulings put about $185 million to $190 million at risk this and next fiscal year.

The plan clarifies lawmakers’ intent when they approved the MET and dedicated its revenue for health care programs. The bill also eliminates a provision that allows the money to go into the state’s general fund.

The two-step House plan would also expand the base to include other health care providers beyond hospitals if the Supreme Court upholds the superior court rulings.

“This puts more cards on the table from the House. If you have more cards on the table, you can play more cards and if you play more cards you have a better chance of winning,” said Deputy House Minority Leader David Hess, R-Hooksett, who offered the plan. “This takes us to the committee of conference with the Senate with more cards on the table.”

However, several House members were concerned the bill would expand the tax instead of eliminating it as the court decisions suggested.

“The whole thing is this is a shell game that increases by 5.5 percent the cost of medical care across the board,” said Rep. Jordan Ulery, R-Hudson. “This will give us more cards on the table, but the entire concept needs to be examined.”

The House amendment is a combination of two plans presented by House Finance Committee Chair Mary Jane Wallner, D-Concord, and Hess.

The Wallner proposal clarifies lawmakers’ findings and intent when the tax was first imposed in 1991 and reiterates why hospital in-patient and out-patient services are unique.

In- and out-patient services are among the 19 classes of health care the federal government allows states to tax to match federal money through the Medicaid program.

Hess’s amendment would add four more classes to the MET: ambulatory surgical centers, therapists, laboratory and radiation, and emergency ambulance services, all mentioned in Superior Court Judge Philip Mangones’s ruling declaring the tax unconstitutional.

Hess says his plan would be revenue neutral by dropping the rate from 5.5 to 5 percent. The plan exempts home health agencies, private duty nursing, hospice, personal care services, college health centers and nursing home and congregate living facilities from the tax.

The Senate votes today on its preferred plan to fix the MET problem.

The Senate plan would reduce the current tax rate from 5.5 percent over the next three years to 4 percent with an eye to eliminating it in the future.

The plan would use insurance tax revenues generated when 50,000 of the state’s adult poor join the state Medicaid program and others buy private insurance under the Affordable Care Act, and additional federal matching money to offset the loss of MET revenues.

The Senate and House are expected to negotiate the two plans with the hope of finding a compromise before lawmakers go home June 5.

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