New Hampshire’s 26 hospitals stand to lose millions in state payments for uncompensated care with the collapse Thursday of negotiations between the governor, lawmakers, and the hospitals. With a deadline fast approaching and a legislative fix seemingly off the table, a frustrated Gov. Chris Sununu has ordered the Department of Health and Human Services to arrange even deeper cuts to the hospitals than he initially offered.

By one estimate, the loss to hospitals could reach $35 million a year.

Steve Ahnen, president of the New Hampshire Hospital Association, called Sununu’s plan a “direct threat” to the hospitals. 

“The governor scuttled a bipartisan solution on (Medicaid tax payments)  in favor of massive, arbitrary and punitive cuts to hospitals,” he said in a statement Thursday evening. “In doing so, the governor is effectively raising the tax paid by hospitals, driving costs up for patients, and destabilizing our entire health care system.”

Ahnen did not say how hospitals intend to respond or whether they will take the state to court as they have twice before. 

Senate President Jeb Bradley, who shepherded the now-failed compromise through the Senate, warned the same. “The viability of hospitals is at stake,” he told his House counterparts Thursday. “At the end of the day, our health care system, I think, is at stake.”

At issue is the nearly $320 million hospitals pay the state in Medicaid Enhancement Taxes (MET) annually. The state receives a federal match on that money and returns 91 percent of it to hospitals to help them cover primarily uncompensated medical care costs. This money is separate from the Medicaid reimbursements they get that cover part of their treatment costs.

The current arrangement, which was reached in 2018 as part of a lawsuit filed by the hospitals, expires at the end of June. Hoping to avoid another lawsuit from the hospitals, Bradley began negotiating late last year with hospitals, the governor, and other stakeholders on a legislative fix. Those negotiations took far longer than expected, Bradley said, so much so that the Senate passed its legislation just two weeks ago without time to let the House review it and hold its own public hearing.

Had that legislation succeeded, it appeared unlikely Sununu would have signed it.

Sununu said he was willing to continue returning 91 percent of the MET revenue to hospitals but wanted to distribute it differently. Those changes would have allowed the state to get a more generous match from the federal government, money Sununu wanted to give to non-hospital providers who care for Medicaid patients but do not pay the tax, including community mental health centers and substance use disorder clinics.

But Sununu’s plan would have left some hospitals with more money and some with less. For example, under one proposal, Lakes Regional General Hospital would have lost $2.5 million a year while Elliot Hospital would have gained nearly $2.9 million. 

The hospitals objected to Sununu’s proposal and reached a compromise with the Senate. Under that deal, they would continue getting the 91 percent and an additional $14.3 million to make up for the lost revenue. About $5.7 million of that would have been state dollars, the rest federal.

Sununu said in a statement this week he was “fundamentally opposed” to using state money to boost the hospitals’ payments.

That deal fell apart Thursday when House and Senate negotiators decided they could not reach an agreement before they meet a final time next week. For House members, it was largely because the Senate’s legislation, tacked onto House Bill 1593, reached them so late.

“Everybody knew this deadline was coming,” Deputy House Speaker Steve Smith, a Charlestown Republican, said Thursday during negotiations. “Why didn’t you start working earlier so that it could have gone through the proper process and maybe I’d be sitting here with a smile and a yes today. But that’s not what happened.” 

Like Sununu, Smith said the House could support much of the bill but not the measure giving hospitals an additional $5.7 million in state money.

Bradley acknowledged Smith’s complaint about the late hour but implored his House counterparts to sign on, warning them it would cost the state far more if the hospitals take it back to court. 

“It’s really nobody’s fault that we are here on June 6 at the deadline (for negotiations),” Bradley said. “This is complicated. It’s contentious. It’s been subject to litigation. A lot of money is at stake.”

Sununu weighed in on the Senate’s proposal indirectly Wednesday in a letter to DHHS Commissioner Lori Weaver, which he shared publicly. He directed Weaver to tell federal Medicaid officials that the state would be returning only 80 percent of the MET revenue to hospitals.

He did so, he wrote, in anticipation of legislation failing. And as he has done consistently, Sununu blamed the hospitals for insisting on a deal that he said would prevent the state from giving non-hospital providers Medicaid funding and leveraging a higher financial match from the federal government.

“The hospitals have remained insistent upon an arrangement which crowds out other providers and greatly diminishes general fund savings.”

Ahnen responded in a statement late Wednesday.

“The proposal put forward by the governor results in an effective tax increase to those New Hampshire hospitals losing money over the current agreement, at a time when they are struggling financially,” he said.

This story was originally published by the New Hampshire Bulletin.