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Lawmakers explore ways to fix Medicaid tax shortfall
Two superior courts have ruled the Medicaid Enhancement Tax is unconstitutional because it taxes hospitals but not other health care providers for the same services. The rulings put about $185 million to $190 million at risk in this and the next fiscal year.
“I remain focused on negotiating with all relevant stakeholders, including legislators from both parties, hospitals and providers,” Hassan said, “and it is critical that we take steps that will allow these ideas to move through the legislative process as quickly as possible.”
Morse wants to reduce the money hospitals would have to pay, while boosting what they are paid to provide Medicaid services. The state has the lowest reimbursement rate in the country, paying about 50 cents on the dollar for Medicaid services.
Under Morse’s plan, the MET would be phased out by reducing the rate one-quarter of 1 percent a year for four years; the legislature would have to decide whether to continue the tax. The current tax rate is 5.5 percent. It would be reduced to 4.5 percent by 2019.
Morse’s plan would remove the state’s two rehabilitation hospitals from MET liability. It also clarifies and narrows what out-patient services are subject to the tax.
New Hampshire Hospital Association President Steve Ahnen said he had not had enough time to review the proposal, but acknowledged hospitals are split over the need to continue the Medicaid Enhancement Tax. Some want it eliminated, but others see it as a way to increase federal payments, he said.
Ahnen said the underpayment for Medicaid services is a significant challenge to hospitals.
But Morse warned Ahnen that expecting additional revenue beyond what he outlined through his amendment would not happen.
The Senate Ways and Means Committee voted unanimously for the proposal, which the Senate will debate May 15.
“I would submit that is not the way it should be done,” Johnson said. “I don’t know of any other (state) tax municipalities pay.”
Opposition also came from representatives of several ambulance companies and laboratories.
“The more approaches to solving the problem as we go forward,” Kurk said, “the more likely we will be able to find a solution.”
Established in 1991
The MET was established in 1991. The state used the money generated by the hospital tax to match federal money earmarked for the Disproportionate Share Hospital program for facilities treating a large number of Medicaid patients. The state collected the money and then returned it to the hospitals after the federal match.
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