NH owes DHMC $74 million in payments
By Zan Song, The Dartmouth Staff
Published on Thursday, February 21, 2013
For the second consecutive year, Dartmouth-Hitchcock Medical Center received no reimbursements for its pro bono care of Medicaid patients, vice president of government affairs Frank McDougall said. Although the federal government requires state Medicaid programs to make partial reimbursements to hospitals that serve a large number of Medicaid patients, the state cut off payments to large hospitals for these services in 2011.
In 2012, DHMC provided $74 million in free health care to Medicaid patients, the largest amount spent by any hospital in New Hampshire, McDougall said. After the state legislature passed a two-year budget in July 2011 that eliminated Medicaid reimbursements to hospitals with more than 25 beds, the state retained federal funds originally intended to reimburse DHMC.
“A hospital’s mission is to take care of people,” McDougall said. “It’s very, very unfortunate that those that provide the most charitable care, those that turn no one away, are literally punished by the state. It’s a very shortsighted policy.”
Under the current budget, “critical access” hospitals, those with fewer than 25 beds, continue to receive federal funding for 95 percent of their Medicaid care expenses, State Sen. David Pierce, D-Hanover, said.
DHMC administrators were aware of the impending changes during the last budget discussions, which took place from January to June 2011, and sent representatives to the state legislature to lobby against the changes.
“We were screaming bloody murder the whole time,” McDougall said.
DHMC is part of a group of 10 New Hampshire hospitals that is suing the state in the federal district court, McDougall said.
The suit argues that the federal court has the power to order New Hampshire to dispense the funds since they are allocated by the federal government. The case was filed in July 2011 and hearings are ongoing.
While DHMC has reduced its staff in order to cut costs, the state’s decision to halt reimbursements for Medicaid care has not yet affected the quality of patient care, DHMC spokesperson Rick Adams said.
“In the interest of our patients, we have to force the question of how the state distributes the money,” Adams said. “We are providing care, and unless we are compensated for that care, it will impact our ability to serve patients who need care the most.”
The hospital currently employs 400 fewer people than it did when the budget first took effect, McDougall said. A mixture of layoffs and voluntary early retirement programs contributed to the deep personnel cuts. More than 300 employees across the DHMC system chose to retire early, and nearly 60 other employees were laid off, Adams said.
None of the eliminated positions, however, had direct contact with patients.
The hospital administration also reduced funding to clinics in Concord, Nashua and Manchester in addition to the main campus of DHMC in Lebanon.
“To the best of our knowledge, we did not impact direct patient care in our facilities at all,” Adams said.
The layoffs at DHMC did not affect College personnel, as the College and hospital have completely separate financial and leadership systems, Adams said. The only connection between the College and DHMC is that medical students at the Geisel School of Medicine perform clinical work at DHMC.
DHMC managed to maintain a small surplus during the 2012 fiscal year despite the lack of Medicaid reimbursement, McDougall said.
On Feb. 15, Gov. Maggie Hassan, D-N.H., released recommendations for the 2013-2014 state budget. New Hampshire’s current rate of Medicaid reimbursement is the lowest in the nation, and Hassan spoke about her desire to change the rate in the upcoming cycle.
Despite discontinuing payments to hospitals that serve large numbers of Medicaid patients, the 2011 state budget retained its Medicaid enhancement tax, Pierce said. In the past, the federal reimbursements for Medicaid cushioned the impact of the tax, which is levied at 5.5 percent of gross patient revenue. In 2012, DHMC contributed more than $43 million to the state due to this tax, Adams said.
Hassan plans to give a portion of this taxed money back to the hospitals in the upcoming fiscal cycle, Pierce said.
“It’s a small step in the right direction, but it’s certainly not $75 million,” Adams said.
Pierce said he plans to argue for increased funding for hospitals that provide Medicaid services in the upcoming budget discussions.
“I definitely support full reimbursement for all the hospitals,” Pierce said. “There are no public hospitals in my district, so all the private hospitals essentially function as public access hospitals. The state should pay for that.”
Pierce voted against the measures to stop reimbursements and levy new taxes in the last budget.
DHMC is located in New Hampshire’s fifth district, which is represented by Pierce. The district’s economy lost nearly $100 million as a result of the tax and other withheld payments in the past year, Pierce said.
“My job is to build up economies, not tear them down,” he said.