Governor Sununu Rejects Compromise on Medicaid Tax Assistance to New Hampshire Hospitals

Governor Chris Sununu has dismissed the possibility of changing his proposal to cut Medicaid tax assistance to New Hampshire’s acute care hospitals by $35 million annually. Despite some Republican legislative leaders hoping for a compromise, Sununu stated that his final offer was to provide hospitals with 91% of what they pay the state under a Medicaid tax on hospital revenues. However, the hospital lobby rejected this offer. In response, Sununu directed Health and Human Services Commissioner Lori Weaver to submit a plan amendment to the Biden administration, which guarantees hospitals 80% of the Medicaid tax revenue, with the remaining 20% allocated to other Medicaid providers such as mental health centers, community health care centers, and addiction recovery programs.

The New Hampshire Hospital Association (NHHA) expressed disappointment that an agreement could not be reached, but remains hopeful that talks could be revived. NHHA President and CEO Steve Ahnen stated that hospitals have been willing to find reasonable solutions in the best interest of the state, the Medicaid program, patients, and hospitals. Ahnen argued that Sununu’s plan would increase costs for patients and jeopardize the entire healthcare system.

The state of New Hampshire imposed a Medicaid Enhancement Tax (MET) on hospitals in 1991 to qualify for bonus matching grants from the federal government. Under this arrangement, the state reimburses hospitals for almost all the taxes they pay, often on the same day. The state receives over $300 million in annual reimbursements from Washington, which must be spent on the federal/state Medicaid program. The Biden administration has ordered New Hampshire and all states to change their disproportionate share hospital payments (DSH) plans, requiring direct payments to hospitals to receive federal assistance.

Senate Assistant Democratic Leader Cindy Rosenwald highlighted that 17 out of 26 hospitals would receive less money under Sununu’s plan compared to their current reimbursements. Senator Lou D’Allesandro expressed concerns that this could lead to significant cuts in hospital services. Senate President Jeb Bradley proposed a compromise guaranteeing hospitals 93% reimbursement, which would have reduced the state’s reimbursement by $5.2 million. However, House Republican leaders rejected the offer, leading to the collapse of negotiations.

House Finance Committee Chairman Kenneth Weyler criticized Sununu for not addressing the controversy earlier and failing to bring the House into the discussion. Senate Ways and Means Committee Chairman Tim Lang suggested that if talks resumed, lawmakers could approve a new deal when they reconvene in the fall. Governor Sununu emphasized that the time for negotiations has ended, and the state needs to implement his new program.

Medicaid Director Henry Lipman explained that hospitals and other Medicaid providers will benefit from rate increases in the short term. However, the financial impact on hospitals will be felt when they pay the Medicaid tax under the new system in spring 2025. At that point, hospitals will receive a net reimbursement of $255 million, down from $290 million in the previous spring.

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