Will hospitals voluntarily pay $40M to keep expanded Medicaid going?

Monitor staff
Published: 4/5/2016 5:46:05 PM

New Hampshire’s newly reauthorized Medicaid expansion is riding on a hope that hospitals and insurance carriers will voluntarily help foot the bill, or else it’s doomed.

Legislation Gov. Maggie Hassan signed into law Tuesday, which continues the expansion for two more years, relies on those organizations to voluntarily donate an estimated $40 million to the state to help fund the program’s operation.

If the payments don’t come in on schedule, or in full, the program would end within 180 days under the new law.

“Literally, it’s on them,” said Rep. Joe Lachance, a Manchester Republican and one of the policy’s architects.

More than 48,000 low-income residents are insured under New Hampshire’s Medicaid expansion program, which covers people who make less than $16,000 a year.

The voluntary donations from health care organizations were the linchpin of Republican support, because it means the state doesn’t have to use taxpayer money to cover the program. The federal government pays 100 percent of Medicaid expansion costs. But aid from Washington will start to decline in 2017, and the state is on the hook for an estimated $50.8 million over the next two years.

Under the new law, roughly $14 million of the state’s share would come from insurance premium taxes. The remainder would be made up through the voluntary provider donations.

The payments are not mandatory because they would likely be rejected by federal overseers at the Centers for Medicare & Medicaid Services, the law’s authors said. But since they are voluntary, the state doesn’t have a formal agreement or contract in place to ensure payment from the state’s 26 hospitals and five major insurance carriers.

The law stipulates that donations be deposited in a specific Medicaid expansion trust fund that is managed by the state’s Department of Health and Human Services. Every quarter, HHS Commissioner Jeffrey Meyers must evaluate whether the trust fund has enough money to support the program, and if it comes up short, expanded Medicaid faces repeal.

The law doesn’t lay out when exactly the payments are due or how the donations are split among the groups. Hospitals and insurance carriers have yet to finalize those details themselves and will iron it out now that the legislation has been signed, several industry representatives said.

The law’s authors say there’s no need to worry about the donations coming in, because it’s in the hospitals and insurers best interest to pay for the program.

“The money comes back to them,” said Senate Majority Leader Jeb Bradley, a Wolfeboro Republican, one of the law’s authors. “Insurers are selling 50,000 policies, and the hospitals get reimbursed for uncompensated care.”

The hospitals and insurance companies echo that sentiment, saying the benefits of the programs outweigh any costs they have to pay. The groups are some of expanded Medicaid’s biggest supporters, and say the program will save costs over the long-term by reducing unpaid care. According to the New Hampshire Hospital Association, uncompensated care costs dropped by $142 million last year.

“The benefit for the patients and to our health care providers is going to dwarf any contribution that we do make,” said Henry Lipman, CFO at LRGHealthcare, which includes Lakes Region General Hospital and Franklin Regional Hospital.

But details of the payments are murky. A fiscal note attached to the bill that passed the Legislature says contributions will be split 50-50 between hospitals and insurance carriers. That means each provider group would be responsible for contributing an estimated $18.4 million over the next two years.

Insurance carriers will likely split the payment based on size, and the number of patients they insure, said industry spokespeople. It means, for example, Harvard Pilgrim Health Care would be responsible for roughly one quarter of the insurance carrier donation, spokeswoman Mary Wallan said. She didn’t identify where that money would come from.

The head of the New Hampshire Hospital Association says all 26 hospitals will “absolutely” contribute, but it’s not clear exactly how much or where the money will come from. The donations will likely be based on the size of the organization.

“We will be working those kinds of specifics out over the next coming weeks and months,” said Steve Ahnen, president of the New Hampshire Hospital Association. “We certainly wouldn’t agree to having this kind of approach if we didn’t have the support of all hospitals.”

Officials at Concord Hospital said they anticipate the organization’s contribution will be roughly $1.2 million over the next three fiscal years. The payment will come out of the hospital’s operating expenses, which total $400 million annually. The payments will not trickle into customer rates, said Scott Sloane, vice president of finance.

“We will find a way we will absorb it somehow,” he said, “easier said than done.”

(Allie Morris can be reached at 369-3307, amorris@cmonitor.com or on Twitter @amorrisNH.)


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