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The Los Alamos County Council voted unanimously on Tuesday to support a plan by the New Mexico Association of Counties (NMAC) that would mitigate the impacts of a bid by the New Mexico Human Services Department ‘s (HSD) to intercept all indigent healthcare Gross Receipts Tax (GRT) funds.
According to current state law, counties may assess three 1/8 increments of GRT. The second increment is restricted to use for county indigent programs, which can include the county’s contribution to the Medicaid and Sole Community Provider pools as well as local indigent healthcare programs.
The federal Centers for Medicare & Medicaid Services had some issues with the way the state ran its Medicaid Waiver program. The state negotiated with CMS (without county or hospital participation) and created Centennial Care.
The Centennial Care plan proposes to have two different pools of money.
One fund addresses uncompensated care, and replaces the Sole Community Provider fund.
The other fund is called the Hospital Rate Increase pool. It will be used to adjust Medicaid base rates, which have not been adjusted since 1998.
To pay for these funds, HSD is pushing legislation that would intercept every county’s 1/8 increment healthcare GRT.
NMAC’s Executive Director Steve Kopelman joined Tuesday’s meeting by phone and explained some of the impact on Los Alamos County.
“With Sole Community Provider, Los Alamos made a contribution upwards to the State, to be matched three to one by Federal money. That three-to-one match would come back to Los Alamos Medical Center,” Kopelman said.
“This new program has changed that. So when counties put money into this program, the moneys go into a pool managed by HSD, and then it’s paid out depending on the claims as they come in. Unfortunately, based on the numbers that HSD developed, your county hospital would be one that would actually suffer the most under this new proposal.”
HSD’s analysis of hospital funding under the new system estimates that Los Alamos Medical Center would lose $143,317, while the county’s 1/8 increment would put $1,510, 774 into the Centennial Care fund.
NMAC board unanimously opposes HSD’s move on the grounds that it would preempt local taxing authority and leave no money available for funding local indigent healthcare programs.
Legislators advised NMAC to propose an alternative plan.
The NMAC proposal would commit counties to paying the state the equivalent of a 1/16 GRT increment from a source determined by the county.
That commitment would last for only one year, during which time a commission would be created with representatives for HSD, the counties and the hospitals to conduct a comprehensive study of the issues and make recommendations.
Counties could voluntarily contribute more to the uncompensated care fund, but there is no guarantee that money would come back to the county making the contribution.
NMAC’s proposal has become the foundation for Senate Bill 268, which comes before the Senate Public Affairs Committee on Sunday then moves on to the Senate Finance Committee. Under that bill, counties would commit the equivalent of 1/16 GRT to Medicaid and another 1/16 increment to the Centennial care fund.
Kopelman reported that since NMAC began its protests, HSD has backed down somewhat, and that two additional pieces of legislation will be introduced. One would require counties to pay the equivalent of 1/16 GRT increment and another would divide the requirement for the federal match equally between the state, counties and hospitals.
Kopelman noted that some legislators are still committed to legislation that intercepts counties’ entire 1/8 indigent healthcare increment.
NMAC is urging all 33 counties to back its proposal and SB268.
“I think there’s strength in numbers, and if the counties are in together on this, I think it shows a united front. I think that it will certainly have more influence with the legislature than if we’re going off in 33 different directions,” Kopelman said, adding that a show of solidarity would not guarantee success.
Councilors’ questions revolved around the fact that SB268 leaves no money available for local indigent healthcare.
With the changes underway with the Affordable Care Act, the need for localized indigent care is expected to decrease due to the Medicaid expansion and subsidized health insurance for low income families. However, no one has an estimate of just how much indigent care needs will be reduced. Deputy County Administrator/Chief Financial Officer Steven Lynne said under a best case scenario, the county would need $200,000 to $400,000 for local indigent healthcare needs.
“The greatest uncertainty for us is how the state is actually going to allocate to hospitals. Under the current indigent healthcare, the county has certain responsibilities, and responsibility for indigent claims,” Lynne said.
“If the hospital isn’t being fully compensated by the state under this new program, does that additional shortfall still remain as a county obligation or not? If it is, that could drive up that amount. If the state or federal programs are not efficient, that could drive up that obligation.”
Councilors ultimately decided to support the NMAC goals and SB268, provided that SB268 continues to adhere to the NMAC goals as it works its way through the legislature.
“This is a difficult situation. This compromise changes the approach where the state asks for the entire 1/8, a situation where you have tremendous winners and losers among the counties,” Councilor Pete Sheehey said. “It brings it down to a level where yes, there are winners and losers among the counties, but overall we preserve the matching funds, we minimize the damage and we basically buy some time.”
“What we’re contemplating tonight does buy us time and appears to limit our exposure, and I think those are the two key components we can hope for with as fast as things are moving right now,” Council Chair Geoff Rodgers said. “Plus it limits the damage, hopefully, to one year, whatever that damage is.”
NMAC and county lobbyist Scott Scanland will closely watch the bills progressing through the legislature. Staff will look at options for funding the county’s remaining indigent healthcare obligations based on which piece of legislation is passed and signed by Governor Susana Martinez. Kopelman expects the governor to call a special session to resolve the issue if the legislature fails to pass a bill.