Cheshire Medical Center, Dartmouth-Hitchcock sue State of New Hampshire over budgets

Today, Cheshire Medical Center in Keene, NH, joined nine other New Hampshire health facilities, including Dartmouth-Hitchcock, and New Hampshire Medicaid patients to file suit against the State of New Hampshire seeking ‘declaratory and injunctive relief’ from budgeted cuts in Medicaid reimbursements. The lawsuit was filed against Nicholas A Toumpas, in his official capacity as Commissioner of the New Hampshire Department of Health and Human Services, seeking relief from dramatic new NH Medicaid reimbursement reductions.
The suit, filed today in US District Court in Concord, claims that the state is violating the Medicaid Act by not providing sufficient reimbursement to hospitals and their physicians providing care to Medicaid patients. Medicaid is a federal/state partnership and New Hampshire is not fulfilling its legal obligations under this joint program.
‘Cheshire Medical Center entered into this lawsuit on behalf of our patients and all Monadnock Region community members,’ stated James Putnam, Chairman, CMC Board of Trustees. ‘With passage of its new budget, the state has directly impaired the ability of the hospital to provide access to quality health care for all patients. In addition, important inpatient services may need to be eliminated in order to maintain core services for our community.’
Under the current state budget, which went into effect July 1, hospitals are assessed a 5.5 percent ‘Medicaid Enhancement Tax’ (MET) on net patient service revenues. Over the course of the two-year budget, the state’s hospitals would be taxed more than $250 million. Cheshire Medical Center expects to be taxed up to $7.9 million this year alone, and it now faces the prospect of paying more to the state of New Hampshire than it receives in Medicaid reimbursements for caring for patients.
In its declaration in support of the complaint for relief, Cheshire Medical Center alleges that, since 2008, NH Medicaid has implemented multiple reductions in reimbursement rates to CMC without following proper procedures under federal law. Through 2010, CMC saw a reduction of $4.3 million in payments for services to Medicaid patients and it projects that it will lose an additional $7.6 million through 2013 if the State continues these same rate reductions.
Additionally, later this year, the state will eliminate supplemental payments made to some NH hospitals, including Cheshire Medical Center, under the Disproportionate Share Hospital (DSH) program. These payments have been historically funded by hospitals through the Medicaid Enhancement Tax, which remains in effect, but the payment rate will be decreased by 60 percent, costing CMC $14.1 million through 2013.
The total impact of the NH Medicaid rate reductions to Cheshire Medical Center from 2008 through 2013 is a decrease in payments of over $26 million. Cheshire Medical Center will be subject to up to $7.9 million for the Medicaid Enhancement Tax on top of the approximately $5 million it loses in under-compensated care provided to New Hampshire Medicaid patients. New Hampshire, which has one of the lowest Medicaid reimbursement rates in the nation, reimbursed CMC only $3 million of its costs in fiscal 2010, against $8 million in care provided by the hospital to state Medicaid patients.
In preparing its 2012 budget, CMC is targeting a $2 million deficit. To achieve this target, CMC projects that it will need to reduce personnel and non-personnel costs by approximately $4 million. The details of the plans are being developed as part of the medical center’s budget process which concludes in September. Possible future budget reductions include eliminating some inpatient services and limiting acceptance of new Medicaid and uninsured patients for some outpatient programs.
John Schlegelmilch, M.D, Chief Medical Officer for CMC/D-HK, stated, ‘Cheshire Medical Center/Dartmouth-Hitchcock Keene has always provided the same quality care for community members regardless of their ability to pay. The idea that we may need to limit acceptance of new Medicaid patients for certain types of care really upsets me. These changes may be necessary, however, in order to allow us to continue to serve the greater Monadnock community with our core inpatient, emergency, diagnostic and treatment services.’
The nine other health care facilities initiating the suit are Elliot Health System, Catholic Medical Center, Wentworth-Douglass Hospital, Exeter Health Resources, Inc., Southern New Hampshire Health Systems, St. Joseph Hospital of Nashua, N.H., LRG Healthcare, Frisbie Memorial Hospital and Dartmouth-Hitchcock Clinic and Mary Hitchcock Memorial Hospital (d/b/a Dartmouth-Hitchcock). NH Medicaid patients are also a party to the litigation under the name, John Doe. The parties argue that the ability of hospitals to serve Medicaid, uninsured and all patients will be seriously threatened as they cope with and try to absorb over $250 million in spending reductions that were enacted as part of the recent NH state budget.
Steve Ahnen, President of the New Hampshire Hospital Association, stated that, ‘hospitals understand the economic challenges our state is facing and have long sought to create a responsible budget that would spur economic growth, create jobs and maintain essential services to our state’s most vulnerable citizens. Unfortunately, the recently-enacted state budget is simply too great a burden to bear for hospitals, their patients, and the communities they serve.’
Cheshire Medical Center/Dartmouth-Hitchcock Keene is a nonprofit community 169-bed acute care hospital and multispecialty group practice representing twenty-six primary care and specialty areas. Our mission is to lead our community to become the nation’s healthiest through our clinical and service excellence, collaboration, and compassion for every patient, every time.