West Lebanon
A letter to New Hampshire Attorney General Joseph Foster on Wednesday from a lawyer for the hospital association and some of its 26 members, including Dartmouth-Hitchcock Medical Center, said New Hampshire will owe the hospitals some $224 million in so-called “disproportionate share hospital” payments later this spring, but has only budgeted $191 million, a $33 million shortfall.
Similarly, first-term Gov. Chris Sununu, a Republican, this month released a budget plan that provides only $166 million in DSH payments in each of the next two fiscal years, far below the $241 million the hospitals had been expecting from the agreement reached in 2014, according to the hospital association.
After a Republican-led Legislature dramatically cut funding to hospitals in 2011, the hospitals sued over the state’s Medicaid enhancement tax, revenue Concord received from hospitals and used to leverage a similar amount from Washington.
Two Superior Court judges sided with the hospitals, putting in jeopardy $200 million in federal matching funds and leading to a downgrade at the time in the state’s bond rating.
To preserve stability, the state and the hospitals reached an “MET agreement” in which the hospitals would continue to make the tax payments — ensuring the revenue match from Washington — in return for guaranteed levels of DSH payments from New Hampshire for caring for patients on Medicaid, which covers lower-income residents and generally pays hospitals at a lower rate than commercial insurance.
The letter to Foster from Scott O’Connell, a Nixon Peabody lawyer in Manchester who represents the hospitals, referred to the 2014 agreement as the “Grand Bargain” and said the hospitals are prepared to relitigate the issue.
“If the state does not meet its obligations under the MET agreement, challenges to the unconstitutional MET tax will resume and the state’s bond rating and the federal match will be placed in jeopardy again,” O’Connell’s letter said.
Hospital association President Steve Ahnen said in a phone interview on Friday that the letter “is really attempting to seek assurances that the state will comply with the agreement, and we anticipate and certainly hope that they will.”
The dispute also is critical to Lebanon-based Dartmouth-Hitchcock Medical Center, the state’s largest hospital.
John Kacavas, Dartmouth-Hitchcock’s chief legal officer and general counsel, said D-H estimates it would make a $50.1 million payment in April for the Medicaid enhancement tax, but should receive some $45 million in DSH payments under the 2014 deal.
The O’Connell letter hinted that the hospitals might balk at making their estimated $227 million in MET payments if the issue isn’t resolved in the next two months. That in turn could jeopardize another $227 million in federal funding to the state.
“With MET payments from hospitals due on April 15, it is critical we receive timely assurances from the state that it intends to comply with its DSH payment obligations,” the letter said. “We look forward to hearing from you.”
Asked about the possibility of withholding payments, Ahnen and Kacavas both said the hospitals want assurances the state will comply with the agreement.
But Kacavas acknowledged withholding payments could be an option, though there isn’t consensus yet on that topic.
“We haven’t gotten there completely yet, but that’s certainly an option if the state has repudiated the agreement,” Kacavas said.
Two emails sent to a Sununu spokesman seeking comment on Friday were not returned.
Senior Assistant Attorney General Nancy Smith said the Attorney General’s Office had received the letter.
“We are reviewing it, and of course we certainly will be discussing it with a number of state officials but beyond that, our advice to various state officials involves attorney-client (privilege), and I can’t get into it,” she said.
News staff writer John Gregg can be reached at jgregg@vnews.com or 603-727-3217.