Hospital exec adds up effects of House’s Medicaid maneuver

After drawing on federal Medicaid funds to balance budgets for the past two decades, the state is preparing to more than double its take from the program while adding to the losses hospitals incur from treating Medicaid patients and providing uncompensated care.According to Henry Lipman, senior vice president and chief financial officer of Laconia-based LRGHealthcare, in 2011 the state collected $364 million in revenue to pay for services provided to Medicaid patients and to fund so-called “disproportionate share hospital,” or DSH, payments to hospitals treating significant numbers of indigent patients.The revenue consisted of $178 million in federal funds and $186 million in proceeds from the Medicaid Enhancement Tax levied on hospitals at 5.5 percent of net revenues. However, the state distributed $322.7 million to hospitals, leaving a balance of $41.3 million, which was added to the general fund.Meanwhile, the state Department of Health and Human Service reported that hospitals posted $277 million in losses incurred from treating Medicaid patients and another $150.2 million in losses from providing uncompensated care to the uninsured and indigent.These losses, along with the $186 million the hospitals paid in Medicaid Enhancement Tax, amount to $613.2 million, which was offset by payment of the $322.7 million from the state, leaving a net loss to the hospitals of $290.5 million. Lipman called this loss “an obfuscated tax,”The 2012-13 budget proposed by the New Hampshire House would increase both the gain to the state and the loss to the hospitals. The House budget would reduce DSH payments to hospitals by $148.7 million, bringing the amount to $174 million, while continuing to levy the Medicaid Enhancement Tax at a rate of 5.5 percentThe DSH payments would be evenly divided between $87 million in federal funds and $87 million in Medicaid Enhancement Tax receipts.By reducing payments to hospitals while continuing to tax them, the net gain to the state general fund would rise to $99 million, or $12-million more than its share of DSH payments to hospitals. In other words, the state nets $99 million from the program without contributing so much as a dollar toward the losses from Medicaid or uncompensated care.With the conservative assumption that the hospitals’ Medicaid losses and uncompensated care remain constant, the $148.7 million in foregone payments from the state would increase to $439.2 million.Lipman said that cuts can only be addressed by shifting costs and reducing programs. He said hospitals would be driven to seek higher reimbursement rates from commercial health insurance carriers, which in turn would likely pass the increases to employers and individuals, prompting employers to pass them to their employees or drop their health insurance.Lipman estimated the impact of cost shifting would increase base premiums by about 10 percent.The prospect of cost shifting and its impact on employers has captured the attention of the business community. Recently the Business and Industry Association of New Hampshire joined those urging the state Senate to restore funding to hospitals in order to forestall sharp increases in health insurance costs to employers, which would only heighten their caution about increasing payrolls and slow the return to full employment. — MICHAEL KITCH/LACONIA DAILY SUN