Court Battle Slows N.H. Medicaid Plan

Lebanon — The fallout from a fight over Medicaid reimbursement rates involving New Hampshire’s largest hospitals, including Dartmouth-Hitchcock Medical Center, has become something of a roadblock for the state as it rolls out a program aimed at saving New Hampshire millions of dollars a year.

The timeline for moving New Hampshire’s Medicaid program toward a managed care arrangement continues to get pushed back as the three organizations hired to handle the transition struggle to get hospitals and other providers to sign on.

The managed care companies must build a network of doctors, hospitals, pharmacies and other providers to cover the roughly 125,000 Medicaid patients seeking care every month.

Only two of the three managed care organizations must prove their networks can cover everyone, but six months after the original deadline has passed, those companies are still working to get buy-in from hospitals, according to state Health Commissioner Nicholas Toumpas.

DHMC, which is the largest provider of Medicaid services in the state, is among the holdouts as it and nine of New Hampshire’s largest hospitals continue their legal fight against the state over Medicaid reimbursements.

Until some of the questions raised in that lawsuit are answered, DHMC is unlikely to sign any contract with a managed care company, said Frank McDougall, DHMC’s vice president of government affairs.

The holdout has little to do with disagreements over managed care itself, in which third-party organizations coordinate care within a defined network of providers. Rather, McDougall said the concern lies with the underlying problems of low reimbursement rates within New Hampshire’s Medicaid system. Nothing has changed on the payment front, he said, effectively giving these managed care organizations no more money to dole out than what the state had — an approach that has amounted to a $100 million annual financial drain for Dartmouth-Hitchcock.

“The state hires managed care companies, which in a sustainable health Medicaid system, in a fully funded, legitimate health care system, it’s a good idea. We’d embrace that if we had a real system,” McDougall said yesterday. “But if you have the lowest rates in the country and you’re literally paying for the privilege of taking care of Medicaid patients, why would you enter into a contract that paid you less?”

Managed care has been touted as a way to find more efficiency in the Medicaid system and save money, and nearly every other state, including Vermont, has a managed care program. New Hampshire officials have estimated it could lead to $15 million in annual savings.

Medicaid is a program in which states use federal dollars to provide health insurance for people who cannot afford health care. The state has an annual Medicaid budget of around $1.3 billion, which includes federal and state dollars, Toumpas said.

Last year, Dartmouth-Hitchcock and nine other hospitals sued New Hampshire over changes that essentially meant it would lose $46.7 million in uncompensated care claims, and then get charged a “Medicaid enhancement tax” on top of that. In the past two years, Dartmouth-Hitchcock has paid $80 million toward that Medicaid tax, McDougall said. The next hearing on that lawsuit is scheduled for Dec. 20.

A few hospitals have been willing to negotiate with the managed care companies — Granite State Health Plan, Well Sense Health Plan and Meridian Health Plan of New Hampshire — though Toumpas declined to name the providers. However, it would be impossible to launch a managed care program without including some of the hospitals that are now suing the state, he said.

“You can’t have an adequate network without having a number of those hospitals in the mix,” Toumpas said. “If we don’t have those hospitals in the mix, then basically the program doesn’t really get off the ground.”

Toumpas wouldn’t speculate on whether the program could go forward without DHMC, but conceded it would be difficult to do so.

DHMC’s decision to hold out on signing a managed care agreement is having a trickle down effect, even among hospitals that are not involved in the lawsuit.

Alice Peck Day Memorial Hospital in Lebanon and Valley Regional Hospital in Claremont also have not signed a contract with a care management organization.

Evalie Crosby, APD’s chief financial officer, said the decision came down to a simple calculation.

“If Alice Peck Day signs on to the network and Dartmouth-Hitchcock does not sign onto the network, then Medicaid patients in the area will all be directed to APD,” she said. “And APD cannot financially sustain a transfer of Medicaid business of that magnitude.... Everybody has their reasons for not signing on, but ours is that simple.”

Valley Regional has similarly been reluctant.

“There’s just too much up in the air right now,” said Steve Monette, Valley Regional’s chief financial officer. “We’re just a little nervous about signing onto something and getting locked in” before the lawsuit over rates is resolved.

Even if two of the managed care organizations had their networks ready by the New Year, there is still a 90-day “readiness review” period during which the proposed network is reviewed by the state. That pushes the earliest launch date for the managed care program into spring.

Mental health organizations also have refused to sign on, but not because of Dartmouth-Hitchcock’s lawsuit. Rather, many are concerned about the prospect of additional administrative burdens within managed care, said Suellen Griffin, president and CEO of West Central Behavioral Health in Lebanon.

So far, none of the state’s 10 community mental health centers have signed on, she said. However, she said progress was being made.

“I would say it’s an ongoing discussion,” she said. “Nobody’s at a stalemate. ... I think it’s going to take some more time and I think it’s justifiable in this case.”

Calls and emails sent to the three care management organizations yesterday were not returned.

Chris Fleisher can be reached at 603-727-3229 or