On April 15, Dartmouth Health joined the New Hampshire Hospital Association and other regional hospitals in a lawsuit against the state of New Hampshire to challenge the constitutionality of the Medicaid Enhancement Tax, a tax levied on New Hampshire hospitals that helps pay for the state’s Medicaid program.
The MET system taxes hospital revenues and reimburses hospitals for uncompensated care provided through Medicaid. Last year, former Gov. Chris Sununu, R-N.H., proposed changes to the MET system that would decrease the funding that hospitals receive.
In an interview with The Dartmouth, NHHA president Steve Ahnen said the proposed cuts under Sununu would lead to large financial loss for the hospitals.
“Hospitals in total would lose $70 million by the way the state is looking to pay us back,” Ahnen said in an interview with The Dartmouth.
The MET was already declared unconstitutional by two superior court judges in 2014, according to New Hampshire Public Radio. The judges ruled that the MET violated the equal protection clauses in both the U.S. and New Hampshire Constitutions, as the tax is not required for non-hospital healthcare providers. After the ruling, the state and hospitals continued the tax under a newly negotiated settlement, which was renegotiated in 2018 and expired in 2024. The current lawsuit is the result of failed renegotiations of the 2018 settlement.
The organization joined the lawsuit because Dartmouth Health pays about 30% of the total state MET payment under the current MET agreement but “would carry approximately 75% of the burden of lost revenue from the state.” This discrepancy is largely due to Dartmouth Hitchcock Medical Center’s close proximity to Vermont.
“Vermont residents comprise 40% of the patient service revenue on which the MET payment for DHMC is calculated, yet the state of New Hampshire does not provide supplemental payments on that portion of the MET,” the press release wrote.
In an interview with The Dartmouth, state senator Cindy Rosenwald, D-13, said there was a “budget shortfall” when hospitals did not pay due MET on April 15.
“Not receiving all of the projected tax revenues and drawing down the federal matching funds will have a negative effect, not only on Medicaid patients but on all patients,” Rosenwald said. “We will have less money to put into the Medicaid system. A lot of it flows back to hospitals.”
Ahnen said while hospitals involved in the lawsuit “believe that [it] is important” to support New Hampshire’s Medicaid program, current state proposals place unfair financial burdens on the hospitals.
“If patients who are on Medicaid aren’t able to get the ongoing, routine, primary, preventive care that keeps them healthy, we know that they’re going to end up at some point in the emergency room in a crisis,” Ahnen said. “And we’ll take care of them, but we likely won’t get reimbursed for that.”
Funding cuts are even more perilous because of potential Medicaid slashes from the federal government.
“We’re trying to figure out ways to stabilize things here, knowing that we’ve got more change on its way, coming from Washington [D.C.],” Ahnen said.
State senator Timothy Lang, R-02, who is a member of the state’s Senate Finance Committee, said that not having the federal matching funds will “have an impact on patient care as it relates to what the state could afford to pay for, what programs the state can offer.”
“I can completely understand the lawsuit,” Lang added. “Nobody likes paying taxes. If there’s a way of getting a reimbursement or refund, you want it to be as big as possible.”
However, Lang believes the hospitals and the state will eventually come to an agreement.
“I think this will be resolved,” he said. “It is not the end of the road.”
