CONCORD, N.H. — Lawyers for 10 New Hampshire hospitals argued in federal court Tuesday that the state did not assess the impact that $130 million of Medicaid budget cuts would have on patient care as legally required and should restore the funding.
Hospital finance officers testified about closing psychiatric units and a facility dedicated to caring for those on ventilators and dismissing patients from primary care rolls to cope with the fiscal 2012 cuts that took effect last July.
Psychiatrist Philip Sullivan, director of the Behavioral Health Unit at Southern New Hampshire Medical Center, said the unit has dropped from 30 to 10 beds due to the Medicaid cuts. He estimates 237 patients with serious psychological problems will be denied a bed at his facility this year because of the reduction in beds.
“Realistically, they don’t have any options,” Sullivan said, when asked where else those patients might turn for treatment.
In addition, Sullivan testified, the medical center laid off 19 full-time employees who worked in the unit.
Lawyers for the hospitals say the state violated Medicaid requirements that it assess patient impact before making any cuts and that it provide health care providers a chance to object.
Testimony for the plaintiffs resumes Wednesday. Afterward, the state could begin calling witnesses.
State officials say in court documents that no legal ground exists for the court to issue an injunction restoring the funds. They also say the hospitals have not demonstrated irreparable harm to patients and restoring the funds “would cause fiscal and administrative crisis” in the state.
Henry Lipman, chief financial officer of Lakes Regional General Hospital in Laconia, testified Tuesday that more than 6,700 patients served by his facility could be denied primary health care as a result of the cuts.
Exeter Health Care director Frances Gaffney testified her nursing home unit that treats ventilator-dependent patients will close as soon as the nine long-term patients could be placed elsewhere. Her facility lost about $13 million in Medicaid subsidies. One of her patients looked on from a wheelchair as she testified, his ventilator’s rhythmic hiss of air audible.
Hospital lawyers say other services that could be closed or suspended to Medicaid patients include neonatal intensive care at Dartmouth-Hitchcock’s Children’s Hospital and the helicopter rescue program at Dartmouth-Hitchcock.
Under the state budget that took effect July 1, the state is taxing hospitals 5.5 percent on net patient revenues while reducing payments for caring for the poor. For many years, the state taxed the hospitals to gain matching federal Medicaid funds, then returned the amount of the tax to the hospitals so they effectively lost no money. From 1991 through 2009, the lawsuit estimates the st ate acquired $1.8 billion in matching federal money this way.
After a federal challenge to this arrangement in 2009, New Hampshire can no longer reimburse hospitals dollar-for-dollar what they are taxed. The hospitals say the Medicaid Enhancement Tax is forcing many of them to go into the red.
The 10 hospitals estimate they will be taxed $250 million over the two-year budget. Dartmouth-Hitchcock estimates it will be assessed $40 million this year alone and could pay more to care for Medicaid patients than it gets in reimbursement.
Besides Exeter Health Care, Southern New Hampshire Health Systems, Lakes Region General Hospital, and Dartmouth-Hitchcock, hospitals listed as plaintiffs include Elliot Hospital and Catholic Medical Center in Manchester, Wentworth-Douglas Hospital in Dover, St. Joseph Hospital in Nashua, Cheshire Medical Center in Keene and Frisbie Memorial Hospital in Rochester. Several Medicaid patient s are also listed as plaintiffs and have filed affidavits that were sealed by the court.
U.S. District Chief Judge Steven McAuliffe set aside two days for the hearing but said additional days may be needed.