State Cuts Medicaid Reimbursements to Hospitals

EG1: Observers packed a hearing room in the legislative office building in Concord this morning to hear Governor Lynch’s proposed budget cuts.

The room cleared out after the governor left, but the drama hadn’t ended.

The Department of Health and Human Services asked the legislature to approve an additional $29 million worth of Medicaid cuts to hospitals.

A surge in Medicaid enrollment has caused expenses to spike well beyond the department’s ability to pay for them.

More than $25 million of the cuts come from funds paid to hospitals for outpatient services.

Currently HHS reimburses hospitals for 81 percent of the cost of these services.

Under the new plan, reimbursements will fall to 54 percent.

New Hampshire’s 13 critical access hospitals – mostly small rural hospitals -- will not be affected.

The fiscal committee approved the cuts unanimously after HHS Commissioner Nick Toumpas warned that without them, the system would run out of money by next March or April.

If that were to happen, he said, payments to every hospital would fall precipitously, including those to critical access hospitals.

State Senator Lou D’Allessandro said he felt he had no choice but to approve the cuts, which are retroactive to last July.

Dall.viable.wav: We had to do what we had to do in order to keep the system going and to keep it viable. 7 seconds

EG2: But Steve Ahnen, president of the New Hampshire Hospital Association, believes the legislature could have tapped other funds.

Ahnen.rainyday: There is a rainy day fund in this state of around $89 million. Hospitals believe that if we are to be asked to shoulder such a large burden that the state ought to be looking at that rainy day fund as well. 11 seconds.

EG3: Ahnen says the legislature should have held off on the cuts until a federal economic stimulus bill is passed.

Such a package, if passed, could increase federal Medicaid payments to the states.

HHS Commissioner Toumpas told the committee a stimulus package could bring in $125 million– but even that amount would last for only five quarters.

As a result of the cuts, hospitals may well have to reduce some services.

Gina Balkus is director of government relations for Dartmouth Hitchcock Medical Center, which she says sees the largest number of Medicaid recipients in the state.

Balkus says Dartmouth will lose about $3.7 million in outpatient funds.

Balkus.impact.wav: It’s too early to tell whether it would mean longer waits for appointments, longer waits in the emergency room, or cuts in services. It’s too early to tell, but certainly it will have a very negative impact on the institution and our ability to care for Medicaid patients and other patients across the state. 23 seconds

EG4: Other hospitals likely to struggle with the cuts are Manchester’s Elliott Hospital and Concord Hospital, which like Dartmouth serve large numbers of Medicaid recipients.

Even more worrisome is that HHS Commissioner Toumpas warned that his shortfall projection of $25 million may turn out to be optimistic, as growing unemployment boosts Medicaid rolls.
HHS is monitoring Medicaid usage across the state weekly.

It’s possible that HHS will need to ask the legislature for further cuts in reimbursement rates.

Toumpas told the fiscal committee that New Hampshire health care delivery system is fundamentally flawed and economically unsound.
Senator D’Allesandro couldn’t agree more.

Dallesandro.nomoney.wav [There isn’t enough money in the whole world. The government could start printing money and print forever, there’s just not enough money.] 12 seconds

EG5: D’Allesandro says he’s working with legislators in neighboring states to persuade Congress to pass a fiscal stimulus bill.
He is hopeful that more money from the federal government will ease the state’s financial woes.

But, he and others say, the only real solution is to transform entirely the way the state delivers health care.

For NHPR News, I’m Elaine Grant.