Bill could divert funds from hospital budgets
By Kristin Yu
Published on Wednesday, February 22, 2012
House Bill 1642-FN, which would exempt for-profit cancer treatment centers in the state of New Hampshire from state regulatory procedures and taxes to which existing hospitals are subject, is currently being debated in the New Hampshire House of Representatives. The bill has the potential to tilt the playing field unfairly in favor of for-profit cancer treatment centers, Dartmouth-Hitchcock Medical Center Interim Director of Communications Rick Adams said. Subversion of the established legal channels for health care facilities in New Hampshire by for-profit “destination cancer hospitals” is fundamentally unfair, Adams said.
HB 1642 applies directly to for-profit cancer treatment centers such as the facility that the Cancer Treatment Centers of America hopes to establish in southern New Hampshire. Such centers would be exempt from needing state Certificate of Need board approval to construct new facilities and would not be subject to paying the Medicaid Enhancement Tax if the bill were passed.
Proponents of the the bill argue that it will create over 500 jobs in the state of New Hampshire and point to the success of for-profit treatment centers in other areas of the country.
The current procedures are in place to regulate the growth of health care facilities in New Hampshire to check the costs of health care services, Adams said.
While the lead sponsor of the bill is State Rep. Marilinda Garcia, R-Salem, HB 1642 is also supported by Speaker of the House William O’Brien, R-Hillsborough, House Majority Leader D.J. Bettencourt, R-Rockingham, and Chair of the House Health and Human Services Committee John Reagan, R-Deerfield.
At last week’s public hearing, health care professionals from DHMC and several of the other 26 New Hampshire hospitals testified in opposition to HB 1642.
“One of the goals of the CON process is to hold down health care costs and do away with unnecessary duplication of services,” Adams said. “If someone can come in and build without going through that same regulatory process, we believe that it will drive up the costs of health care.”
The Certificate of Need process is in place to determine whether the expansion of a hospital or the introduction of expensive equipment and procedures is truly necessary or a potential contributor to the rising costs of health care, Alan Hartford, DHMC radiation and oncology section chief said.
The CON state board meets regularly to review hospitals’ expansion plans. Currently, CON approval is required for the creation of new health care treatment facilities. Exempting a new class of for-profit centers, such as CTCA facilities, from this process would affect the future of health care growth in New Hampshire, according to Hartford and Norris Cotton Cancer Center Director Mark Israel.
“The current Certificate of Need process, under which all New Hampshire health care providers are bound, takes into account the present but also looks toward the future, anticipating both the demand for services and the supply of those services,” Israel and Hartford said in a joint testimony at the Health and Human Services Committee hearing on Feb. 7. “On a level playing field, all participants are involved in the process, ensuring that a comprehensive approach to health care is maintained.”
The organization of the New Hampshire health care system has succeeded in providing quality care for the citizens of New Hampshire thus far and therefore should not change, according to Hartford. The CON process is part of the planning that keeps the system running, Hartford said.
“We are strong believers in [the CON] process because it allows us to think about what technologies and treatments are available, how populations are changing and how resources are distributed across the state,” Hartford said. “The CTCA legislation totally bypasses that process. The new cancer hospital would be brought in and totally ignore how the CON process works, which is not good for the state or people of the state because CTCA would not be scrutinized in the way that most procedures are scrutinized.”
The potential exemption of for-profit cancer centers from paying the Medicaid Enhancement Tax would also upset the balance between New Hampshire hospitals, Adams said. Currently, all 26 of New Hampshire’s hospitals are subject to the tax, equivalent to 5.5 percent of each hospital’s net patient service revenue. The money is collected by the state and proportionally distributed in order to reimburse hospitals that service greater numbers of Medicaid and charity case patients, Adams said. Under HB 1642, CTCA facilities would not be subject to the Medicaid Enhancement Tax because CTCA does not accept Medicaid patients. This could threaten the paying hospitals’ ability to pay the tax amid shifting patient populations, Adams said.
“Because CTCA does not take Medicaid patients, many of the patients for whom reimbursements are better will go to a facility like CTCA and that will lower the reimbursement numbers for us,” Adams said. “We would have to rely more heavily on Medicaid reimbursements, which are extremely low. Basically, this can be referred to as ‘cherry picking.’ When a for-profit like CTCA comes in, they will take only the patients with the best reimbursement, so the higher-paying patients go out of our system, leaving us with more debt.”
Last year, the DHMC treated about 41,000 Medicaid patients and paid $43 million in the Medicaid Enhancement Tax, according to Adams. Compounded by the fact that New Hampshire has the lowest rate of Medicaid reimbursement in the country, DHMC serviced Medicaid patients at an operating loss of $60 million last year, providing $88 million in health care services to Medicaid patients but having received $28 million through reimbursements, Adams said. This deficit forces the hospital to run on a small operating budget, with payments from patients fully able to pay for care subsidizing losses from Medicaid patients, according to Hartford.
Health care professionals in opposition to HB 1642 argue that high-quality comprehensive cancer care centers already exist in the state of New Hampshire. Although the bill has the potential to create 500 jobs, it does not take into account the economic impact across the state on providers and the additional pressure of Medicaid patients on the system, Hartford said.
“From the point of health care providers, it’s a triple whammy,” Hartford said. “DHMC’s medical system balances on a very fine financial tightrope and what CTCA plans to do is shaking that tightrope.”
Representatives from the New Hampshire Hospital Association also testified in opposition to the bill, as did representatives from the New Hampshire Business and Industry Association, New Hampshire Medical Society, the American Red Cross, members of the CON board and representatives from the health care provider Anthem, according to Hartford.
“The impact will be felt in the health care industry, but more importantly, by the citizens of New Hampshire,” Israel and Hartford said. “If any provider, for-profit or non-profit, believes in the care they plan to offer care in New Hampshire, they should be willing and able to go through the process in which all other providers in the state participate.”