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Medicaid managed care plan gets boost as N.H. hospitals sign up

New Hampshire’s planned switch to a managed care system for Medicaid, which has been stalled for the last year, is getting back on track after the state’s hospitals agreed to participate in the program.

“We can definitely see the movement taking place and expect that to continue,” said Dawn Touzin, an attorney for the Department of Health and Human Services.

Gov. Maggie Hassan last night announced that all of the state’s hospitals have either signed up for the program or have agreed to do so.

“The goal of New Hampshire’s care management program is to improve outcomes for patients and to reduce costs for taxpayers, and I want to thank New Hampshire’s hospitals for moving forward with this important effort,” Hassan said in a statement.

But Hassan didn’t say, and Touzin declined to predict, when the managed care system will actually be up and running.

New Hampshire plans to replace its current fee-for-service Medicaid system with managed care, which would emphasize preventive care and, in the process, save the state money.

The Executive Council in May 2012 approved contracts worth $2.2 billion over three years for three companies to run the managed care system, which will be implemented in two stages. The first will cover most Medicaid enrollees and the second, a year later, will cover long-term care services.

The first stage had been expected to launch last December but was delayed in part because providers balked at signing up, citing concerns including reimbursement rates.

There’s a reason hospitals are now suddenly eager to join: Under the new state budget, a hospital can only receive uncompensated care payments from the state if it participates in the Medicaid managed care system.

Yesterday was the deadline for hospitals to produce “written proof of an agreement in principle,” with final agreements due by Aug. 1. Otherwise, hospitals risk losing millions of dollars in payments from the state that help defray the cost of providing charity care to uninsured and low-income residents.

“Certainly the provision that was included in the budget served as a spark and a catalyst for those negotiations to get done by a certain date,” said Steve Ahnen, president of the New Hampshire Hospital Association.

Concord Hospital signed on last week. And the state’s largest hospital system, Dartmouth-Hitchcock, joined yesterday.

That’s a good sign, said Sen. Chuck Morse. A Salem Republican, Morse chairs the Senate Finance Committee, which added the uncompensated care/managed care provision to the state budget.

“This is a huge undertaking that has now been made easier with our state’s largest healthcare provider on board,” Morse said in a statement. “This type of coordinated care will create tremendous savings for our taxpayers as well as better care for those on Medicaid.”

The new state budget assumes managed care will save the state $47.5 million over the next two years, with $24.4 million coming in the second year of the biennium from the second stage of managed care, which will cover long-term care services.

Ahnen said hospitals were warming up to managed care even before yesterday’s deadline was set by the state budget, which passed the Legislature last week before Hassan signed it into law.

“Well in advance of the budget passing and that provision being added to the Senate budget, hospitals were moving in the direction of signing contracts with the managed care organizations,” Ahnen said. “It’s an opportunity to move forward and be ready for Medicaid expansion, should the state choose to do that.”

Expanding Medicaid to extend coverage to an estimated 58,000 low-income New Hampshire residents is an option under President Obama’s 2010 health care reform law. Hassan, a Democrat who supports expansion, has said she expects a special session of the Legislature to vote on Medicaid expansion this fall.

The hospitals support Medicaid expansion, and HHS officials have said the managed care system must be in place for expansion to work.

Broader reform

Managed care isn’t the only potential change in the works for New Hampshire’s Medicaid program.

Since 1991, the state has levied a tax on hospitals known as the Medicaid Enhancement Tax. The revenue goes both to the state’s general fund and back to hospitals, matched with federal funds under the Disproportionate Share Hospital, or DSH, program.

Originally, the DSH payments reimbursed hospitals every cent they had paid under the MET. Over time the system changed and for the last two years, those payments were cut, especially for larger hospitals.

The new budget keeps the MET in place, though a study commission this year will study ways to reform the tax. But the budget also uses $20 million from the general fund to make additional DSH payments to hospitals, which means they’ll receive an extra $40 million with the federal match.

Hassan said that helped get the hospitals to sign up for managed care.

“The return of uncompensated care dollars in this budget was crucial to our efforts to gain hospital participation in the care management program, and I want to thank the legislature for their support of those efforts,” she said.

But, Ahnen said, it isn’t a permanent fix and the system needs broader reforms.

“There are lots of challenges that need to be addressed,” Ahnen said.

A broad overhaul could come under a Section 1115 waiver, which would allow the state to redesign its Medicaid system in ways not typically allowed under federal law.

A commission to study such a waiver, which would have to be approved by the federal Centers for Medicare & Medicaid Services, was proposed by Senate budget-writers but didn’t get into the final document. Hassan’s office has said she still wants to pursue the idea.

“We are interested in pursuing an 1115 waiver in order to increase innovation and help strengthen our health care system,” said spokesman Marc Goldberg in a statement, “however it will be more difficult to get the federal government to sign off on a productive 1115 waiver without Medicaid expansion.”

Also in play is a lawsuit filed by hospitals in 2011 against the state over cuts made in 2008 to the Medicaid program.

The hospitals recently proposed settling the case, but Hassan’s office “responded that aspects of what we had put on the table were not negotiable as part of a settlement,” said Scott O’Connell, an attorney for the hospitals.

“The case is ongoing,” he said.

(Ben Leubsdorf can be reached at 369-3307 or or on Twitter @BenLeubsdorf.)

Legacy Comments1

""Under the new state budget, a hospital can only receive uncompensated care payments from the state if it participates in the Medicaid managed care system."" It's always been that simple, the hospitals and doctors are not going to lose their share of a couple billion dollars. If the profits are not high enough to support the salaries those at the top want then let them find some cuts. It's way past the time for the state to learn they control the purse not the doctors and hospitals.

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