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Garry Rayno's State House Dome: Senator says budget plan shy $200m in revenues

New Hampshire Union Leader

February 23. 2013 10:23PM

Lawmakers have had more than a week to peruse Gov. Maggie Hassan's proposed $11.1 billion budget for the next two years, and the key Senate budget writer believes he has discovered a $200 million problem.

It involves the Medicaid Enhancement Tax (MET) hospitals pay on the services they provide.

The tax was created in 1991, and the state used the revenue from it to match federal funds for use in reimbursing hospitals for the care they provide to people who can't pay for it themselves, known as Disproportionate Share Hospital payments (DSH) under the Medicaid program.

The tax money hospitals paid was sent back to them by the state, and the state put the DSH money into its general fund. The feds eventually decided they didn't like that system - often referred to as "Mediscam"' - and it was changed over the years so that the money a hospital received back from the state for its MET payment was proportional to the amount of uncompensated care the hospital actually provided.

In the budget passed by the previous Legislature, the state's largest hospitals received no DSH money and the state kept their tax money for other purposes. The state's smaller "critical assess hospitals" continue to receive DSH payments based on the amount of charity care they provide.

Because hospitals no longer received the DSH payments, they looked at the letter of the state's MET statute and, with the help of federal Medicaid officials, significantly reduced what they pay the state.

As a result, the state now asserts the hospitals owe about $110 million more than the hospitals think they owe.

Hassan's budget projects MET revenue of $232 million in fiscal 2014 and $250.4 million in fiscal 2015. The $110 million hospitals are expected to pay under Hassan's budget plan would be matched with a like amount of federal funds, accounting for $220 million of the $11.1 million budget total.

Senate Finance Committee Chairman Chuck Morse, R-Salem, says Hassan inflated revenues by $200 million.

"We have hard data on what the MET tax raised in 2012 and 2013," Morse said. "It is fiscally irresponsible to include revenue projections that anticipate $112 million in growth over what the MET tax is expected to raise in the current budget. Combined with a federal match, this one area inflates Gov. Hassan's budget over $200 million."

Compared with the current budget, Hassan's budget would allocate about $50 million more for uncompensated hospital care over the two years, but in return, hospitals would have to pay the $110 million the state believes it's owed. In other words, the hospitals would have to pay about $110 million more to get about $160 million back.

They may do that, which would make Morse's point moot, but they may not, and then there would be a problem.

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USNH CHANCELLOR'S OFFICE: Last year, Rep. Robbie Parsons, R-Milton, sponsored a bill that would have eliminated the University System of New Hampshire's Chancellor's Office and spread its responsibility over the four college presidents and the board of trustees. The money saved would have lowered tuition for in-state students.

Since then, the board of trustees has embarked on a plan to give the four colleges greater autonomy and flexibility while reducing the responsibilities of the chancellor's office.

"The board is changing, but not changing fast enough," Parsons said. "Even though they say they are efficient, they are one of most expensive in the country."

This session, Parsons introduced a bill that would retains the chancellor, but limit his office to a financial officer and 11 other administrators.

The bill had a public hearing last week, and Parsons said he was pleased with the results, although two of the system's trustees turned out to oppose the bill.

House Education Committee Chairman Mary Gile, D-Concord, appointed a subcommittee to work on the bill.

Parsons said he looks forward to working with the subcommittee to help speed up the university system's transition.

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TWO HOUSE DEMS RESIGN: Although Democrats won a special election in a House race in Nashua last week, they lost two more members of their majority with the resignations of longtime Nashua Rep. Roland LaPLante and Claremont Rep. Thomas Donovan.

Both representatives cited health reasons for their resignations.

Claremont and Nashua will have to seek special elections to fill the seats, and approval by the Governor and Executive Council will be needed.

With the resignations, Democrats now number 217 and Republicans 179, with four vacancies.

A special election will be held March 19 to fill the Hillsborough District 9 seat representing Ward 2 in Manchester, with Republican Win Hutchinson and Democrat William O'Neil facing off.

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NEW DRED COMMISSIONER: Although opponents of the Northern Pass power line project turned out to question Jeffrey Rose of Goffstown about his past support of the project, expect Rose to be confirmed as commissioner of the Department of Resources and Economic Development at the Executive Council's March 6 meeting.

Rose has too much support among the business community and constituencies he would serve at the department to not be easily confirmed.

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