Committee hears Senate bill to restore higher hospital MET/DISH payments amid litigation and budget concern

Senate Bill 249, a proposal to set Medicaid Enhancement Tax (MET)‑related hospital payments and return a larger share of collections to hospitals, received extensive testimony during a House Ways and Means public hearing on May 1. The bill would establish a hospital payment pool based on MET revenue from the prior state fiscal year and makes temporary changes intended to increase the dollars returned to hospitals while capturing additional federal matching funds.

What the bill would do: Sponsor Sen. Regina Birdsall (District 19) and co‑sponsor Sen. Cindy Rosenwald described the bill as an interim, two‑year framework to increase the portion of MET receipts returned to hospitals and to change the distribution methodology (from primarily disproportionate‑share payments to a mix that includes Medicaid rate and directed payments) to leverage higher federal match. Witnesses and agency staff explained that the MET is a 5.4% assessment on hospitals’ net patient service revenue; fiscal‑year 2024 MET revenues were cited at approximately $319.2 million and nonbinding estimates for FY25 were about $348.3 million.

Why it matters: Hospitals, and the New Hampshire Hospital Association, argued that lowering the share returned to hospitals is effectively a tax increase on hospitals that risks destabilizing inpatient and community services. Steve Onan, president of the New Hampshire Hospital Association, said hospitals pay the MET and receive federal match; the overall distribution historically returned about 91% of the MET pool (state + federal) in the aggregate to hospitals; a lower return rate would result in tens of millions of dollars in reduced revenue to hospitals. "Hospitals lose money serving Medicaid patients," Onan said; the MET/DISH structure is used to offset under‑reimbursement and uncompensated care.

State analysis and revenue mechanics: State Medicaid officials (Deputy Medicaid Director David Chorney and Rob Berry, general counsel) told the committee that the bill ties the hospital payment pool to prior‑year MET receipts and that shifting some payments from DISH to Medicaid service rates or directed payments can increase the federal match and thereby allow a larger total pool (in dollars) while reducing the state general‑fund share. The agency said the bill as drafted could be implemented for FY26–FY27 and that the governor’s budget contained an 80% return level for hospital payments, while other proposals and the bill’s negotiated language offered approaches to increase the overall dollars hospitals would receive to levels closer to the historical 91%.

Budgetary stakes and litigation: Witnesses said the numbers are large and time‑sensitive. The House fiscal note attached to the bill projects roughly $19 million per fiscal year in additional general‑fund cost versus the governor’s 80% baseline (the exact number depends on distribution methodology and federal match assumptions). Hospital witnesses said the 80% implementation directive ordered by the governor after last year’s negotiations broke down would reduce hospital revenues materially—estimates offered in testimony ranged from tens of millions to about $100 million for larger hospitals if the 80% plan remained. Several large hospital systems said they have withheld MET payments pending resolution and some have sued the state, creating litigation and collection uncertainty.

Stakeholder positions and next steps: Hospitals, Dartmouth Health and other systems urged a negotiated settlement and proposed using enhanced federal match to increase hospital payments without increasing state general‑fund outlays as currently budgeted. State Medicaid staff said federal policy uncertainty (possible limits on MET percentages at the federal level) argues for a temporary two‑year approach. Committee members from finance emphasized the need to reconcile the bill’s costs with House budget actions and suggested either moving the policy into the budget process or pressing for precise amendment language that would be revenue neutral to the general fund. Several members said they would prefer to see technical amendment language and financial modeling before a vote.

Ending note: The committee closed public testimony after receiving requests from numerous institutional stakeholders for additional negotiation and for the department to provide clarified fiscal modeling. Lawmakers and hospital representatives signaled willingness to continue talks to craft amendments that could increase hospital payments while minimizing or eliminating additional general‑fund cost.