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State Human Services Department makes grab at indigent healthcare fund

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By Arin McKenna

Los Alamos County, in tandem with the New Mexico Association of Counties (NMAC), is opposing a move by the New Mexico Human Services Department (HSD) to intercept the 1/8 percent increment of Gross Receipts Tax that counties are allowed to assess for healthcare. 

State statute specifies how many 1/8 percent increments of gross receipts tax counties are allowed to assess (with voter approval) and also how each increment may be spent. The second increment is dedicated to healthcare.

“Realistically, these services vary county to county, because under state law each county gets to determine its own program. So it looks different here than it does elsewhere, by design,” said County Administrator Harry Burgess. 

Each county is required to pay into the state Medicaid fund and the Sole Community Provider (SCP) fund, which supports indigent healthcare services at hospitals throughout the state. That money may or may not come out of the second tax increment. 

Los Alamos allocates 50 percent of its healthcare increment to Medicaid, 25 percent to the SCP, 15 percent to indigent healthcare within the county and the remaining amount to administrative costs. 

Now HSD is trying to “redirect” the entire 1/8 increment or its equivalent for a restructured SCP program, which would leave counties without funding for other obligations such as Medicaid payments and indigent healthcare. 

“A question is how does local authority get preempted and sucked into state coffers? The state doesn’t have authority, in essence, to collect that tax, so how can they just retain it?” Burgess asked.

“Our big concern is that counties are charged with providing indigent care. These are locally approved increments of the taxes. The hesitation on the counties’ part statewide are concerns about how do we continue to provide the services that we have implemented without the taxes that we implemented.”

“What the state fails to understand is if we give over all of those funds, we’re still on the hook to now enact another tax,” said Social Services Manager Kim Gabaldon. “Our best guess is we would be stuck finding funding to continue to provide Medicaid dollars and to continue to provide money that we know we need to run our (indigent) programs, which we’ve already scaled back.”

Despite the fact that the HSD plan would intercept 100 percent of all 33 counties’ healthcare increment (an increase of 75 percent for Los Alamos alone), HSD Communications Director Matt Kennicott insisted the state is not asking for more money. 

“The state is not requesting more money from counties. In fact, in aggregate, we have proposed getting less money from counties than we have received in the past.  

“Counties have historically sent money to the state for matching payments to local hospitals.  That program, the Sole Community Provider, is changing, and the state simply needs to receive the money in a different way for the replacement program(s).  

“The state role has been to try to preserve payments to local hospitals.  Counties were key to funding the old program and key to funding the new program.”

Figures provided by Deputy County Administrator/Chief Financial Officer Steven Lynne contradict that statement. Los Alamos County’s healthcare increment totaled $1,595,000 in 2012. The county’s SCP payment was just $274,000.

Under the HSD restructuring, SCP as it exists today would be replaced by a Safety Net Care Pool, which would consist of an uncompensated care pool (basically the SCP program) and a new incentive pool for hospitals. 

The incentive pool would pay for an increased rate for Medicaid services to hospitals.

Kennicott also stated that the request for the 1/8 increment is unrelated to the expanded Medicaid program, which the federal government is funding 100 percent for the first three years and dropping to 90 percent by 2020.

But both programs the increment would be redirected to are part of the state’s new Centennial Care program. The HSD website says, “Centennial Care is the new name of the New Mexico Medicaid program.”

At least one HSD representative told Healthcare Affiliate representatives that some smaller hospitals could go under without the interception. 

“The underlying message is that we are going to be responsible for hospitals closing if we don’t do this,” Gabaldon said.

According to Gabaldon and Liza Gomez Akley, who chairs NMAC’s Healthcare Affiliates group, the counties are not opposed to the theories behind the HSD restructuring or to finding ways to support the hospitals, but to the proposal for how to pay for it. 

“We do not want to be pitted against the hospitals in any way or seen as just being ornery or not supportive,” Gabaldon said. “It’s that each of our counties would have to be convincing voters that it was good to enact more tax and give what we currently have away.”

“I think it’s a good idea to increase the Medicaid rate to hospitals,” Gomez Akley said. “Right now it’s so far less than even their costs that it adds to the uncompensated care problem for hospitals. So if they increase the Medicaid rates that should relieve the uncompensated care. We like the idea in theory.”

HSD contends that with expanded Medicaid and more people becoming insured under the Affordable Care Act, counties will not need as much money for indigent healthcare. 

“It is important to note, however, that with the expansion of Medicaid, the caseloads for county indigent programs will be reduced, because more people (205,000 statewide) will have access to Medicaid,” Kennicott wrote. 

Los Alamos County expects to have between 300 and 600 residents eligible for expanded Medicaid. 

However, the HSD theory does not take into account how counties will meet their other Medicaid obligations or healthcare for those who earn above 138 percent of poverty level (the new baseline for expanded Medicaid) and may still be struggling despite the ACA. The county currently provides indigent healthcare funds for those with incomes at 225 percent of poverty level. 

“We don’t fund only people who are going to be on Medicaid on January 1,” Gomez Akley said. “We have other programs that aren’t going to be covered by Medicaid. Their proposal takes all of our funds; they put it all in the Medicaid bucket. 

“There’s no funding for non-hospital services. There’s no funding for non-Medicaid eligible people. That leaves a big hole for each of our counties in meeting our priorities.” 

The current uncertainties regarding ACA and Medicaid enrollment also leave counties unwilling to comply.

“With any change to Medicaid you always have to do considerable outreach and hand holding. You will still have people going to the ER because they didn’t know they didn’t have to go there to get health care,” Gabaldon said. “We are still responsible for looking after our residents.

“My concern, and also that of older, wiser healthcare administrators, is that it makes no sense to pull funds from something until we have something else underway. I don’t think any of us know if it will take six months or three months.”

Gabaldon is also concerned that there will be residents unable to afford healthcare premiums despite the subsidies. 

“People live so close to the edge sometimes. Who will pick that up? It will be still burdened and uncompensated care at the hospital,” Gabaldon said. 

According the Burgess, HSD would have to change state statute in order to intercept the funds, and NMAC will oppose such a move.