NH hospital tax review goes to lawmakers

CONCORD, N.H. (AP) — A special commission studying a tax on New Hampshire hospitals offered mostly suggestions to lawmakers Wednesday that ranged from eliminating the tax to removing two specialty rehabilitation hospitals from being subject to the levy.

The tax produces $176 million for Medicaid and other state spending, and the state and hospitals have differed on which revenues can be taxed.

The commission voted unanimously to adopt a report that included the suggestions and only one recommendation, which all the panel members agreed on — to collect the tax quarterly to help hospitals manage their cash flow.

Senate Ways and Means Chairman Bob Odell said a bill would be introduced in the Senate to look at expanding taxes on the state’s Medicaid population beyond services performed at hospitals. He said that would include about 49,000 low-income adults who would qualify for Medicaid if New Hampshire decides to expand its program. The Legislature meets next month on whether to authorize the expansion.

Odell, R-Lempster, said the bill would apply a 2 percent insurance premium tax now paid by private insurers to include coverage offered to the Medicaid population. Managed care companies providing government-subsidized Medicaid services would not be exempt. He said the proposal has bipartisan support as a possible option to raise money that can be used to reduce or eventually eliminate the hospital tax.

New Hampshire applies the 5.5 percent hospital tax to two categories: inpatient and outpatient hospital net revenues. Under a different law, the state also taxes two other categories — nursing homes and intermediate care facilities.

Odell and several other commission members suggested basing the tax on a report on the hospitals’ Medicare and Medicaid costs to bring uniformity to what the state considers taxable revenue. The federal government audits the report.

“Otherwise, we’re going to have a continual battle over what is taxed,” said Odell.

In 1991, hospitals began paying the tax so the state could gain matching Medicaid funds to pay for health care for the poor. For many years, they got all their taxes refunded dollar-for-dollar from the state.

In 2011, the federal government said states could no longer refund all the money and, instead, had to apply a formula that reimbursed the funds according to hospitals’ Medicaid costs. The Republican Legislature in charge two years ago then cut Medicaid funding to the hospitals more than $130 million, but retained the tax. Ten of the state’s largest hospitals later sued the state over changes in Medicaid policies and reimbursements.

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