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County officials up in arms over Medicaid proposal

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A proposal to send county-raised funds directly to the state’s Medicaid program has some county officials up in arms, including in Santa Fe County.

One of the major concerns for local officials is that the money raised locally wouldn’t necessarily be spent on local health care needs.

“Part of the problem is that some counties win and some counties lose if the state will take it,” said Paul Gutierrez, head of the New Mexico Association of Counties, who plans to testify on the issue today before the interim legislative Revenue Stabilization and Tax Policy Committee.

“It’s hard to say we’ll tax our citizens and then give it to another county for their (federal) match.”

The money in question is a one-eighth of 1 percent gross receipts tax that counties can impose for indigent health care. Much of that money goes to local hospitals, in turn attracting just short of a 3-1 match from federal Medicaid funds under the “sole community provider” program.

The program applies to many hospitals around the state, including Christus St. Vincent Regional Medical Center, that are the only local source of care for low-income, uninsured residents.

Santa Fe County Commissioner Liz Stefanics noted that county voters were asked to approve the GRT tax under the understanding that it would help fund county-level health care needs. “For the state to just take away that money, we don’t think it’s appropriate,” she said.

“The state is usurping and eroding county authority,” she added.

Gutierrez noted that county officials already are smarting over a late-session move by the Legislature earlier this year that eliminated “hold harmless” reimbursements they were getting from the state to make up for losses they suffered since medicine and food were exempted from gross receipts taxes in 2004. The loss of that reimbursement to county and city governments would start phasing in in 2016.

But there is some logic in redirecting the indigent care monies directly to the state, according to a presentation Brent Earnest, deputy secretary of the Human Services Department, made to the Association of Counties last month.

The proposed payment structure for the sole community provider program addresses the fact that, although originally the county dollars offered to hospitals would have made $246 million in federal funds available through the program for the state fiscal year that just ended, a formula adjustment on the federal level made only $69 million available – a significant loss to local hospitals, Earnest noted.

This formula adjustment was tied into controversy over how counties leveraged those funds, in some cases making deals the federal government has labeled as improper, allegedly using payments from the hospital or similar provider to balance out the county tax money. Last year, the state reached an agreement to repay $8 million to the federal government for the questionable matches, with the counties bearing the burden for that repayment.

The federal audit determined that nine hospitals, including Christus St. Vincent, were involved in those disallowed “deals.” The hospital has denied any improper activities.

Also, since 2005, the U.S. Department of Justice has joined with a whistleblower in court challenging such deals, claiming that hospitals essentially funneled money to county governments that were then donated back to them, attracting the federal match for the sole community provider money. That lawsuit, directed against Community Health Systems Inc., and its hospitals in Roswell, Deming and Las Vegas, N.M., as well as a provider in Arkansas, has been inching its way through federal court in New Mexico ever since then.

The state’s new proposal for sole community provider funding would provide “clear legal authority” for those funds, eliminate “incentives that caused (the) initial (federal) review,” and ensure that the higher federal funding level for the program would be restored, Earnest argued in his presentation, a copy of which he provided to the Journal .

Also, with Medicaid expansion under the federal Affordable Health Care Act, more New Mexicans will have health care coverage and health care providers would be caring for fewer people with no way of paying their bills, perhaps lessening the pressure for counties to help pay for local health care, according to an argument for the state gaining control of the funds.

Both Gutierrez and Stefanics said Earnest told them the state plans to introduce legislation next year enacting this change.

“We’re concerned about it … but we’re continuing our dialogue with HSD,” Gutierrez said.

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