Newsletter and Subscription Sign Up

Medicaid Hike Critical for Workforce

Published Wednesday May 20, 2020

Author Dave Solomon

Health care workers and service recipients rallied at the State House in May 2019, for a Medicaid increase.

New Hampshire made history on Jan. 1, with an across-the-board increase in the rates Medicaid will pay hospitals, nursing homes, community clinics, home health aides and other health care providers for services to low-income individuals.

The 3.1% increase that took effect at the start of the year, along with a second bump of 3.1% scheduled for Jan. 1, 2021, represent the first time the state has implemented a rate hike across every category of service and for every type of provider.

While there have been media reports that this is the first across-the-board rate hike since 2006, State Sen. Cindy Rosenwald, D-Nashua, says rates were only raised for certain categories in 2006. Rates have been largely stagnant even though health care costs continued to rise.

“This is the first time in the history of the program in New Hampshire,” that such a sweeping rate hike has been passed, she says. “We’ve never before done an across-the-board rate increase. It’s always been this group or that group, but not everyone.”

Rosenwald should know. As the point person for the state Senate Democratic majority on Medicaid issues, she joined with Sen. Jeb Bradley, R-Wolfeboro to promote the bipartisan compromise on rate hikes that was eventually signed into law by Gov. Chris Sununu.

Supporters hope the rate hike will help address a critical shortage of health care workers in NH by enabling employers to increase wages and compete more successfully for workers across New England.

The legislative package also includes measures to reduce student debt for those who commit to specific terms of service in high-need areas; and a less cumbersome process for criminal background checks.

The new rates could also increase the number of health care providers willing to accept Medicaid patients, and reduce cost-shifting by those providers to people with private insurance.

“I think that was a big reason the BIA [Business and Industry Association] signed on to this proposal,” says Jim Monahan, president of the DuPont Group, a lobbying firm in Concord that represented healthcare organizations in the legislative initiative to raise Medicaid rates.

“You’ll probably see it most dramatically in nursing homes where Medicaid pays $160 [a day], while commercial companies pay $350,” he says of the effect of the hike on wages.

The Cost-Shifting Affect
Peter Evers, who stepped down as CEO of Riverbend Community Health in Concord at the end of February for a position in Massachusetts, welcomes the increase and thinks it will have a meaningful effect on retention and recruitment, but is not so sure about whether it’s large enough to have much of an effect on cost shifting to the private market. (Cost shifting occurs when privately insured patients are charged more for procedures than those without insurance or those with Medicaid with its substantially lower reimbursement rates.)

“I don’t think so,” he says. “There’s just such a delta between the two. Medicaid rates still pale in comparison to what can be charged to a certain portion of the population. They’ll just pale a little less.”

Henry Lipman, Medicaid director at the NH Department of Health and Human Services (DHHS), sounds a bit more optimistic. He says premiums for the benchmark plans on the Affordable Care Act (ACA) exchange have already declined two years in a row.

“It certainly helps, and won’t hurt the trends that are already under way,” Lipman says. “It’s definitely putting more money into the system, whether it’s $60 million or whatever the final number is, that’s got to be some help to the [cost-shift] situation.”

Evers is quick to add, “I don’t want to sound churlish and say this isn’t enough. Even if that’s true, this has been one of the most constructive, bipartisan initiatives I’ve witnessed in the legislature over the past 10 years, and a lot of great things were done thanks to a lot of work by an awful lot of people.”

Debate Over Flexibility
It was not an easy path. DHHS Commissioner Jeffrey Meyers wanted flexibility to provide rate increases in some Medicaid-funded services, like home health aides and mental health, but not in others, in a process more consistent with past practices.

A coalition of health care providers organized by Monahan with help from the Bi-State Primary Care Association lobbied hard for the universal increase and stayed united toward that goal despite the sometimes-competing interests of various factions.

The effort was launched with great fanfare on the steps of the State House in May that included joint appearances by Rosenwald and Bradley, along with a rally by healthcare workers and service recipients.

“We made the case for investing in the health care system, and not in individual providers,” says Monahan. “The biggest part of it was everyone sticking together. There were plenty of efforts to peel away certain people, but they stuck together and laid the groundwork for continued cooperation going forward.”

Evers agrees that solidarity within the community of Medicaid providers was key.

“When the governor signed the increase, there was some pressure on him to only make adjustments in certain areas, but I think the pressures from everyone … the coalition of the willing, the alliance of people … sent a message that you have to make the whole system well, you have to raise all the boats, and that’s what we’ve done,” Evers says.

Raises in the Works
However, some will benefit more than others, depending on how much of their business comes from Medicaid patients. A hospital in a fairly affluent part of the state may rely on Medicaid for as little as 10 to 15% of its business, while that percentage would be much higher in an area with more poverty.

A community mental health center like Riverbend relies on Medicaid and Medicare for 85% of its revenue, according to Evers. In anticipation of the new revenue, Riverbend has already added $100,000 a month to payroll with raises ranging from 5 to 13%, he says.

Some of the lowest paid workers should get raises better than 5 or 6% over the two years, according to Monahan. “There was some push to say the 3.1 percent each year has to be used for wages applied across the board. That was pushed aside so individual nonprofits can take the benefit and target it at workforce where needed,” he says, meaning that some employees could get more than 6.2% over the two years, while some would get less.

The NH Health Care Workforce Coalition initially proposed a 12% increase over two years, with 5% in year one and 7% in year two. That would have cost $110 million over the two years, compared to the estimated $60 million impact of the 6.2 percent increase.

“Senator Rosenwald worked closely with us to say, ‘Let’s take a look at what might be a reasonable number that would be sustainable,’” says Monahan. “We didn’t want to see it reduced because the budget couldn’t handle it in the future.”

The rate hikes were supposed to take effect at the start of NH’s fiscal year on July 1, but were delayed by the budget veto and subsequent negotiations. When the budget compromise was reached in September, the deal included an agreement that the Medicaid rate hikes would be put off until January of each fiscal year, shaving $30 million off the original total.

A Positive Outlook
Despite having seen their initial proposal cut in half, with implementation delayed by six months, providers are mostly pleased with the outcome. “People appreciate the fact that the legislature and governor saw this as a system-wide issue,” says Steve Ahnen, president of the NH Hospital Association, which represents all 31 hospitals and medical centers in the state.

“We’ve known for a long time that New Hampshire has had some of the lowest Medicaid reimbursement rates in the country, not only for hospitals but all providers, and that was creating some real challenges. We have more work to do, but we think this is a good start,” Ahnen says.

Medical costs have increased by 26% since 2006, while the state’s Medicaid rates have stagnated. “It would be nice if we could catch up on more of the percentage we lost over the years,” says Evers.

The coalition of health care providers will continue to press that case, but to what extent is unclear. “We haven’t really decided yet,” says Monahan. “But I think there is some understanding you can’t come back and ask for 6 percent every two years.”

All Stories