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State and hospitals reach agreement on MET battle
Under the agreement, hospitals would receive more money for uncompensated care, which would be matched dollar-for-dollar by federal money. Hospitals would abide by state tax guidelines, which would increase their tax liability.
In 2011, state budget writers decided to keep about $250 million of tax revenue and use it for other purposes. Ten of the state’s largest hospitals sued in federal court over Medicaid reimbursement rates going back to 2008. Hospitals claim the changes in rates threaten the stability of the Medicaid program.
Hospitals will not ask for MET refunds for fiscal years 2014 or 2015 under the agreement. Refunds could have put about $375 million in state revenue at risk this biennium — about $145 million of that general fund money.
“You have to do charity care to be reimbursed for it,” Walsh said.
The changes are expected to shore up the state’s claim the MET is constitutional and allowed under both federal and state law. The changes would redefine several taxpayer classes and would put MET money into a special fund to be used only for health care services and not the state’s general fund.
“This settlement agreement will provide critical stability to our state budget while bringing us nearly all the way back to the situation that existed before funding to hospitals was cut in 2011,” Hassan said. “I am hopeful this settlement, combined with our efforts to expand access to health insurance coverage, will allow us to resume the important and productive partnership that existed between the state and our hospitals for so many years.”
The four-year agreement is contingent on legislative approval.
Hospitals agree to put their litigation over the constitutionality of the tax on hold, but could reinstitute the suits if the state fails to abide by the agreement or cuts funding. Hospitals would end federal litigation over the rates if the state meets the agreed-to funding levels in the 2016 and 2017 fiscal years, Dempsey said.
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