The state of New Hampshire has reached a settlement with the state's hospitals on a tax to leverage federal Medicaid funds, the Associated Press reported.
The state's House of Representatives voted last week 278-72 to approve the settlement, and the Senate approved it on a voice vote.
The tax, which has been on the books since the early 1990s, brought in about $185 million last year. State Medicaid officials used the monies to receive matching funds from the Medicaid program. Many other states use a tax levy on hospital beds or hospital revenue to increase Medicaid payments, including Georgia and Arizona, while California recently expanded its existing bed tax.
However, New Hampshire began holding back some of the tax refunds in recent years after federal officials ruled in 2011 that hospitals could not be reimbursed the entire tax, New Hampshire Public Radio reported. At about the same time, the Republican-controlled legislature voted to cut Medicaid funding to hospitals by $130 million without providing any tax relief.
That prompted St. Joseph Hospital in Nashua to sue, claiming the tax was unconstitutional. It won in the courts, essentially forcing lawmakers to negotiate.
Under the terms of the bill, brokered with the cooperation of most of the hospitals in the Granite State, the tax will be reduced from the current 5.5 percent of net patient revenues to 5.45 percent in 2016 and 5.4 percent in 2017. It could drop further if the total costs of uncompensated care drops below $375 million, about $50 million below current levels, according to the Associated Press.
St. Joseph did not sign onto the agreement, claiming the lower levels of charity care it provides makes it impractical to agree to changes, according to New Hampshire Public Radio. It also excludes New Hampshire's two rehabilitation hospitals, which a court ruled are exempt from the tax.
The bill will now move to Gov. Maggie Hassan's (D) desk for a signature, but since she brokered the settlement, industry insiders expect she will sign it into law.