Amid growing uncertainty around New Hampshire’s Medicaid expansion program and a looming 2018 deadline, Department of Health and Human Services Commissioner Jeffrey Meyers is exploring a new potential fix: provider taxes.
In an interview with the Monitor editorial board last week, Meyers said he disagrees with a letter sent to the state criticizing the state’s current model of paying for expanded Medicaid with voluntary funding from hospitals and health care providers, which raised concerns that the practice “may be out of compliance with federal requirements.”
But just in case the program does need to be amended, Meyers said, a fee or tax on the hospitals and insurance companies might be a suitable alternative.
“You could call it a participation fee, you could call it a tax – you could call it probably other things as well,” Meyers said. The key, he noted, is that it would be mandatory.
The proposal has been approved by the Centers for Medicare and Medicaid Services in conversations with his department, Meyers said. A representative for CMS, which wrote the letter criticizing the payment model, could not immediately confirm Meyers’s account Monday.
The potential fix, publicly floated two months after the concerns were first raised by CMS, comes at an uncertain time for the program. First authorized in 2014, New Hampshire’s Medicaid expansion program was initially funded entirely with federal money.
But under the terms of expansion, participating states are required to gradually pay more into the program – up to 10 percent in 2020. The first state contribution – at 5 percent – kicked in earlier this year.
That arrangement proved a tough pill for many legislators. In a razor-thin 2016 reauthorization vote, the state House of Representatives allowed the program to continue under a voluntary funding structure in which providers and hospitals would contribute part of the state’s share, ensuring that taxpayers would not be directly impacted.
Now, CMS says, the voluntary contributions violate federal Medicaid rules by allowing providers to make donations from which they stand to benefit. In its letter, the agency said the arrangement must be fixed by the start of 2019 – weeks after the latest two-year authorization runs out.
Speaking last week, Meyers brushed off the CMS warnings, saying the present arrangement is “perfectly legal and meets all federal requirements.” He said the anonymous nature of the donations means his department can’t make special arrangements to favor certain providers, adding that the multitude of provider networks means providers can’t know who’s benefiting.
But Republican Gov. Chris Sununu is taking the letter seriously, and a legislative task force chaired by Senate Majority Leader Jeb Bradley, R-Wolfeboro, is exploring alternative funding options ahead of what may be a bruising legislative fight over the program’s future next year.
Looking to that effort, Meyers said a mandatory tax would address the concerns with voluntary contributions. Forcing hospitals and insurers to pay the fees would eliminate the ethics concerns, while allowing the providers to continue paying into system, he said.
“I don’t know what the appetite of the Legislature is for a mandatory fee or tax, but I think Senator Bradley is now chairing this commission, and it’s being explored,” Meyers said.
Politically, the proposal is likely a long shot. A spokesman for Sununu was quick to dismiss it.
“Governor Sununu remains firm in his position that he will oppose any new tax or fee that has the potential to downshift costs on to Granite Staters,” Sununu spokesman Ben Vihstadt said Monday. Vihstadt added that a full solution would be best sorted in the Legislature.
Bradley was not available for comment.
If the arrangement were approved by the Legislature – not to mention providers – it would also need a green light from CMS. Greg Moore, a director of public affairs and government relations at the state DHHS from 2003-07, warned that that might not be a safe bet.
CMS largely prefers that states shoulder their share of the cost of federal programs, rather than providers, said Moore, now the director of Americans for Prosperity New Hampshire.
“The nature of provider taxes is not uncommon, but fundamentally it’s generally frowned upon by CMS,” he said.
New Hampshire has other provider taxes in place. The Medicaid Enhancement Tax has been imposed on hospitals since 1991; in return hospitals receive “disproportionate hospital share” (DHS) payments meant to cover the cost of uncompensated care for hospitals who need it. County nursing homes have a similar provider tax, established in 2003.
Many provider taxes, however, have been subject to conflict. In 2011, a number of hospitals sued the state after budget cuts reduced the level of DHS payouts to the facilities. Those payouts were partially subsidized by provider taxes; hospitals claimed that when the budget was cut, providers were paying the tax without getting the benefits.
Meanwhile, a 2007 review by the New Hampshire Inspector General recommended that DHHS refund $35.3 million in DHS money to CMS. That time, the fingers pointed to New Hampshire hospitals, which the report accused of fraudulently claiming uncompensated care to increase their payouts.
Meyers said this proposal is far more airtight. According to CMS, a provider tax to fund Medicaid expansion would pass muster as long as it is mandatory, applies to all hospitals, and is imposed at a uniform rate, Meyers said.
As for the plan’s feasibility?
“I think that’s a conversation we’re going to have with the Legislature,” Meyers said.
(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at
@edewittNH.)