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Hospitals threaten to revive lawsuit, charge 'reckless' state dug itself $38M hole

State House Bureau

April 25. 2018 3:27AM

CONCORD — Senate President Chuck Morse has proposed setting aside $38 million to settle a dispute with New Hampshire hospitals over how much money they are owed for uncompensated care, but wants to put the money in escrow pending the outcome of lawsuits.

Hospitals on Tuesday cried foul, saying they thought they’d be getting the money by the end of May, subject to refund if the state prevails.

Steve Ahnen, president of the N.H. Hospital Association, said the amendment proposed by Morse at a public hearing before the Senate Finance Committee, “is a blatant breach of law and will be challenged in court.”

“We cannot and should not be expected to solve the state’s budget problems on the back of our patients,” he said.

Morse countered that his proposal is designed to protect the smaller hospitals in the state from having to come up with the cash if some repayment is necessary. He also pointed out that the state has still not collected $9 million in overpayments to hospitals from past years.

The hospitals say they desperately need the money now, in some cases to cover loans they took out to pay hospital taxes to the state.

Congress is expected to take up a bill to change the law so that Medicare and other third-party payments are included in the calculation of uncompensated care, in the hope of settling the matter once and for all.

Until that happens, representatives for the hospitals say the state has to pay up, not put the money aside just in case.

The Senate president presented his concept to put the money in escrow as an amendment to HB 1102, a bill relating to medication assisted treatment for opioid addiction in New Hampshire.

A long-running battle

The state has been at odds with hospitals over the amount of money owed for uncompensated care for several years.

Last year, the state was forced to pay $33 million more than it had budgeted to the 26 hospitals for uncompensated care. This year, a similar amount of state money is at issue, as hospitals claim to be owed $36 million, due by May 31.

The point of contention, this year as it was last year, is whether Medicare payments on behalf of patients who are also covered by Medicaid should count.

The hospitals have not been including those Medicare payments in their calculation of uncompensated care, while the state has been budgeting uncompensated care with the assumption that they would.

The courts have ruled in favor of the hospitals but the matter is on appeal.

Deputy Attorney General Ann Rice wrote the hospitals on April 10 to say the state intends to comply with the law, although she noted appeals are pending. She stopped short of promising a $36 million settlement.

“The state fully intends to follow the law in the amount of payments that will be made by May 31,” she wrote.

The hospitals took that as a promise that the state may now be trying to break, setting the stage for some heated exchanges at Tuesday’s hearing.

Morse said he is confident that court rulings or federal legislation will eventually support the state’s position that the hospitals are not owed the extra $36 million, which is not currently budgeted.

“In the long run, I believe common sense will prevail and then what are we going to do?” he said. “Claw the money back from people who can’t afford to pay it?”

Morse said New Hampshire hospitals initially operated under the assumption that the Medicare money should be counted, resulting in lower payments for uncompensated care, but later joined a lawsuit with Texas challenging that notion.

“Why would the hospitals go join a fight with Texas?” he asked Ahnen. “It was to get more damn money. That’s what it was about.”

‘No double-dipping’

The hospital representatives argued they lose money on Medicaid payments, and the uncompensated care payments only help mitigate those losses.

“We are not getting paid twice. We are not double-dipping,” said Ahnen. “We are losing money every time we treat a Medicaid patient.”

John P. Kacavas, chief legal officer and general counsel for Dartmouth-Hitchcock, said his hospital and many others budgeted conservatively, as if they would lose the case, while the state crafted its budget under the assumption it would win.

“I suggest the state was reckless in consciously ignoring the possibility that it would lose this federal lawsuit,” he said. “We are now being asked to pay for that reckless budgeting.”

The new tension between state government and the 26 hospitals comes just weeks after Gov. Chris Sununu joined the hospitals in announcing a partnership with the state to fully finance the state’s alcohol and drug recovery fund.

“I was very disappointed in this amendment, given that progress,” said attorney Scott O’Connell, who has represented the hospitals in lawsuits against the state. “It felt like a stick in the eye.”

The Finance Committee took no vote on Morse’s amendment. “I still have some more work to do,” he said.

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