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Medicaid Tax Confusion Hits November Revenues

On first glance, New Hampshire’s November revenue numbers look terrible.

For the month, the state is $57 million dollars in the hole.

But NHPR’s Dan Gorenstein reports, there may be room for optimism.

You’d think, given November’s shortfall, Administrative Services Commissioner Linda Hodgdon would be alarmed.

But Hodgdon, the head of what is effectively the state’s finance office, is actually pretty bullish about last month’s report.

“We were pretty pleased with how revenues were looking. The business tax certainly being above plan, we are encouraged by that. They are up on a year-to-date basis $13 million dollars. So that’s a very good sign.”

But wrapped into Novembers numbers is something called the Medicaid Enhancement Tax, it’s a tax paid by hospitals.

“That’s definitely a real concern.”

Here’s why.

Up until this budget, the state essentially reimbursed hospitals the cost of what’s called the Medicaid Enhancement Tax.

When lawmakers put the budget to bed in June, they ended that practice, which cost hospitals $120 million dollars a year.

A coalition of hospitals is now suing the state over those changes.

In the meantime, the Medicaid Enhancement Tax bill has come due.

But now that the tax hits hospitals in their wallets, Hospital Association President Steve Ahnen says his members are being careful.

“Now it becomes extremely important how you calculate that tax, how you pay that tax; wanting to make certain that you pay the appropriate amount, not paying less, not paying more.”

That may sound simple, but here is where the story gets complicated.

The federal government and the state of New Hampshire are telling hospitals conflicting advice on how to calculate the tax. Ahnen says it’s all very confusing.

“Hospitals have been put in an awful position having to make this choice. But that’s the dilemma we are in. Do you file one way or the other based on federal guidance?”

Right now, the federal Centers for Medicare and Medicaid Services and state officials are trying to get to the bottom of the issue.

But until that’s resolved, here’s the situation- the state is $50 million in the hole because hospitals haven’t paid as much as budget writers anticipated.

Senate Finance Chair Chuck Morse says that’s a big number.

He says when lawmakers were building the budget they were told hospitals would pay $97 million dollars.

Instead, they’ve only sent in about $47.

“We don’t speculate, we don’t over-estimate. And we don’t under-estimate. We try to do it as close to exact as we can do. And that’s exactly what we did. So coming up with a percentage of half, that’s unheard of. We in the Senate want to know why.”

To answer that, Senators have scheduled a meeting with state officials for Thursday. At the same time, conversations between Concord and Washington will continue.

Commissioner Hodgdon says there’s a chance before this is all over, the state could see some new money from the hospitals come in and wipe out most of the shortfall that’s here today.

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