Concord, N.H. — Dartmouth Health, alongside other prominent hospital groups in New Hampshire, has initiated a legal battle against the state over what they claim are unconstitutional practices related to the Medicaid Enhancement Tax (MET). Hospitals assert that the tax, which was first implemented in the 1990s, unfairly burdens them financially. They argue that while the tax is designed to attract federal matching funds for Medicaid, the formula for redistributing these taxes is flawed, disproportionately impacting certain hospitals.
Filed this past Tuesday, the lawsuit includes Dartmouth Health and its affiliates, Concord Hospital with its affiliates, and the New Hampshire Hospital Association (NHHA). The bone of contention is how the MET’s proceeds are utilized and distributed, particularly after recent changes proposed by former Governor Chris Sununu and the current administration led by Kelly Ayotte. Sununu suggested alterations to how the tax amounts were calculated and redirected, increasing the financial strain on hospitals.
Hospitals had been negotiating with the state for a better arrangement since last year without coming to a conclusion, pushing them to resort to legal action. The NHHA expressed continuous willingness to collaborate on finding an equitable solution beneficial to all parties involved but to no avail, resulting in the legal challenge as their next course of action.
In a prepared statement, the hospital association criticized the increased tax burden on hospitals as an unsustainable approach that ultimately harms patient care and access to necessary health services. Dartmouth Health CEO Joanne M. Conroy specifically noted the severe financial implications of the newest MET payment proposal under Ayotte’s administration. According to Conroy, Dartmouth Hitchcock Medical Center suffers due to its location by the Connecticut River where approximately 40% of its patient service revenue comes from Vermont – an aspect not accommodated by New Hampshire’s payment model.
Ayotte defended the state’s stance by accusing the hospitals of engaging in political gamesmanship and misleading the public. She argued that the latest proposal aimed to support mental health services and funding for smaller critical access hospitals, which include several establishments in the Upper Valley.
The controversy also involves discrepancies in payment calculations, with the NHHA highlighting that under Ayotte’s proposal, hospitals would sustain a collective annual loss of $70 million to the state’s advantage, undermining patient care in local communities.
Additionally, the association emphasized that the MET helps generate approximately $485 million for the state’s Medicaid program. Without a new agreement, the association warned that legislators, currently drafting the next biennial budget, would be pressured to address the funding shortfall, creating even more financial complications.
This lawsuit showcases the ongoing tension between state financial policies and healthcare providers, underlining a broader debate over appropriate funding mechanisms for medical care, particularly for low-income patients dependent on Medicaid.
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