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MET settlement improves hospitals' outlook

State House Bureau

June 12. 2014 9:32PM

CONCORD — The state’s recent agreement with 25 of New Hampshire’s 26 hospitals improves the facilities’ long-term outlook, but does not relieve short-term financial pressure according to Moody’s Investors Services in a weekly report.

Under the Medicaid Enhancement Tax agreement, hospitals will continue to pay the tax under guidelines the state issued, but all the money will be used to restore uncompensated care payments to hospitals or for health care services.

In the report, the agency lists New Hampshire’s bond rating as Aa1 with a stable outlook. In April the agency issued a credit negative report after two superior courts found the MET unconstitutional.

That did not change the state’s bond rating or its outlook, but it did connote a warning to the state to address the problem, which the state did by reaching agreement with the hospitals at the end of last month.

In the rating agency’s credit outlook, the organization says resuming the payments to hospitals is positive, but notes the funds will not be returned to hospitals until fiscal year 2016.

The payments were stopped during the 2011-12 biennial budget when lawmakers decided to stop returning what was collected to hospitals.

The same budget also slashed state aid to higher education and reduced or eliminated some social service programs.

According to Moody’s, the elimination of the state money left the largest hospitals paying a tax ranging from $9 million to $17 million.

Many hospitals resorted to drastic expense cuts in fiscal year 2011, including elimination of services and hundreds of layoffs.

The agreement calls for the MET rate to reduce slightly over the next four years and for state and federal money for uncompensated care to gradually decrease as more and more people have health insurance through the Affordable Care Act.

The Moody’s report covers four hospitals: Catholic Medical Center, Elliot Hospital, Concord Hospital and Exeter Hospital.

Information indicates that Elliot paid MET taxes between $16.1 million and $17.2 million during the last three fiscal years, Concord between $16.2 million and $16.5 million, CMC between $9.8 million and $15.3 million, and Exeter between $8.7 million and $10 million.

The only hospital not to agree to the settlement, which guarantees hospitals will receive between 50 percent and 75 percent of the uncompensated care, is St. Joseph’s in Nashua.

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