Legislative Update – June 21, 2011

House and Senate Budget Package: Severe Hospital Cuts

Last week the Committee of Conference on the budget came to agreement on a $10.3 billion budget for the next two years beginning July 1, 2011. House and Senate budget writers crafted a budget that’s 11 percent less than the current budget which means severe cuts throughout state government.  Hospitals and the State’s university system are hardest hit, and though partial funding was restored for mental health, developmental disabilities, and youth services, the impact of this budget throughout the state will be devastating. 

This budget cuts over $250 million in payments to hospitals – too great a burden to bear for hospitals and the patients and communities who depend on them.  It will wreak havoc on the state’s health care infrastructure and safety net as it increases the cost of health insurance, threatens the availability of essential health care services, and results in the loss of jobs and economic stability.

The following budget summary includes all budget provisions affecting hospitals:

House Bill 1:
With regard to Medicaid hospital payments, the House and Senate agreed on cuts that were engineered by the House back in March:

House Bill 2:
The differences between the House and Senate going into conference were the following hospital-related provisions contained in HB 2:

• Uncompensated Care:  Conferees reverted back to the House definition of “Hospital” (for purposes of DSH and MET) thereby excluding Senate language that would have specified that certain hospitals be excluded from the MET if they meet federal waiver requirements under 42 CFR 433.68.  It now reads, “Hospital means general hospitals and special hospitals for rehabilitation required to be licensed under RSA 151, but not including government facilities.”  We’re not convinced that this change prevents specialty hospitals that meet the federal waiver requirements from being excluded from the MET.
  
  This amendment also retains DHHS’ definition of net patient service revenue, to include DSH payments as well as revenues paid for all inpatient and outpatient services.  This was the definition that DHHS pushed in the Senate and with which we disagree.  In practice, however, we expect CMS’ requirements will supersede the state’s.
  
  In addition, the amendment preserves the Senate’s prioritization of the use of MET funds as follows: Medicaid provider payments; DSH payments to CAHs; General Fund, and DSH payments to PPS hospitals, in that order, depending on availability of funds.  Rep. Kurk had previously proposed reversing the first two priorities.
   

• Uncompensated care payments in the event of excess revenues.  The conferees removed the Senate provision that would have cities and towns competing with hospitals for surplus funds Rainy Day funds, if available.  They preserved the intent to use excess revenues for DSH payments to all other hospitals in FY 2013 if approved by the legislative fiscal committee and Governor & Council.
   

• Certificate of Need:  House conferees attempted to restore the House CON provision that would have required the Insurance Commissioner to review health facility needs and the CON board.  Despite several attempts by Reps. Kurk and Weyler, Senator Odell pushed back and won, based on the fact that a legislative study on CON was completed just last year.

Other budget items:

• Outpatient Hospital Rates: Conferees adopted the Senate’s language requiring a single Medicaid fee schedule for ambulatory surgery, whether performed in a hospital or non-hospital ambulatory surgery center. This fee schedule is intended as an interim measure until DHHS implements an outpatient prospective payment system. A budget neutral provision requires the HHS Commissioner to ensure that payments for outpatient services do not exceed the budget appropriation. This section implements the $12 million cut to outpatient hospital services contained in HB 1.
   

• High Intensive Neonatal and Pediatric Care: Medicaid patients are limited to those New Hampshire hospitals that provide high intensive neonatal and pediatric care unless such care is not available in NH, in which case Medicaid may contract with an out-of-state hospital to provide such care. By August 1, 2011, Medicaid must develop a new rate structure for high intensive neonatal and pediatric care for NH hospitals.
   

• Medicaid Managed Care: DHHS must provide a detailed update on the status of implementation of the Medicaid managed care program at each meeting of the legislative fiscal committee until such time as the contract for managed care is approved in accordance with the requirements of SB 147.
   

• Children’s Health Insurance Program – NH Healthy Kids: Administration of the Healthy Kids Silver program will be transferred to DHHS upon implementation of Medicaid managed care (scheduled for July 1, 2012.) This will leave the Healthy Kids organization with only the self-pay insurance program for children 300%-400% of the federal poverty level.
   

• Cost Containment Plan for Retiree Health Care Program: The state is authorized to use cost containment techniques for the retiree health care program through “the underlying insurer and any additional specialized managed care or cost containment vendors as necessary.” This is intended to be the Compass vendor in NH. In addition, the state may offer financial incentives to encourage the use of lower cost services, as well as to encourage the use of alternative therapies, treatments, services, providers, and facilities that demonstrate better outcomes.
   

NHHA’s complete list of bills is available here.