A repayment formula approved this week by a New Hampshire legislative committee for uncompensated care may be too low to accurately reflect what hospitals in the state spend on uninsured and Medicaid patients. Nine community and inpatient acute rehabilitation hospitals in the state could lose more than $14 million in funding.
"That's simply wrong and will end up costing those of us with private insurance more through higher insurance premiums as those costs get shifted to cover these losses," the New Hampshire Hospital Association (NHHA) said. "This is an unfortunate outcome for hospitals, their patients and the communities they serve."
Some hospitals in the state that provide uncompensated care may receive Disproportionate Share Hospital (DSH) adjustment payments that are significantly lower, officials with NHHA said, after the state Department of Health and Human Services (DHHS) approved a recommendation by the Joint Legislative Fiscal Committee to reformulate its repayment structure.
The move was a response to the Centers for Medicare and Medicaid Services, which had questioned whether the state's process reflected the true uncompensated care costs being incurred by hospitals.
DSH adjustment payments, according to CMS, provide assistance to hospitals that serve a disproportionate number of poor patients. Hospitals receive an annual allotment to cover the costs of providing care to low-income patients who do not have other insurance, such as Medicare, Medicaid or the Children's Health Insurance Program. The annual payment, established by the federal government, includes stipulations that DSH payments to individual hospitals must not exceed the uncompensated costs.
Historically, the state has put 100 percent of the federal matching dollars into the General Fund. "New Hampshire's DSH program was never really intended to do much more than use this federal money to help fund other parts of the state government and to balance the budget," the NHHA said.
The legislative committee's response to the federal directive may still mean funds are diverted to the state's General Fund to support other programs, not uncompensated care, NHHA President Steve Ahnen, said. And, the committee's approval may still face some challenges, he noted, "but as the Health and Human Services Commissioner said [Tuesday], the state needs to find a way to fix this on a long-term basis."
While New Hampshire's approved formula would, for the first time recognize some of the costs of treating uninsured patients, it will continue to impose burdens on hospitals, Ahnen, said. "In turn, communities and patients suffer because of the strain on the health care infrastructure," he said.
"Hospitals in New Hampshire, particularly those who provide uncompensated care, pay a tax at 5.5 percent of net services. I don't know how the state has been able to take these funds and put them into the General Fund, because the hospitals are not being compensated at the level intended by this federal program," Ahnen said.
"The concerns raised by New Hampshire's hospitals over this practice are genuine, significant and continuing. While we understand the proposal will likely move forward, NHHA remains committed to working in the best interests of the patients and communities served by New Hampshire's hospitals," he said.
New Hampshire Health and Human Services Commissioner Nicholas Toumpas said the plan, which still needs CMS' approval, will be revised in the coming months. The differences between the earlier plan and the new one, Toumpas said, is that there cannot be a "hold harmless provision" for what hospitals pay under the Medicaid Enhancement Tax (MET), a hospital assessment levied by the state, based on a hospital's revenue.
Historically, the state used the proceeds from the tax to make DSH payments to hospitals. The state then filed a claim with the federal government for the DSH payment and received matching funds that were about 50 percent of the state's share of the funding, Toumpas said. Those matching funds were designed to further support uncompensated care and make payments to hospitals that qualified for the DSH program.
"The [New Hampshire] hospitals were told that they needed to change the program to be compliant," Toumpas said. "They're doing this to comply with the October 1 change."