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State asked Health Sciences Center for Medicaid bailout

The University of New Mexico’s Health Sciences Center turned down a request during the closing days of the Legislature to give the Human Services Department $50 million to help with the state’s Medicaid funding shortfall.

David Harris, UNM’s executive vice president and chief financial officer, confirmed the state’s Human Services Department and the Department of Finance and Administration met with UNM President Bob Frank, Health Sciences Chancellor Paul Roth and Steve McKernan, chief executive officer of UNM Hospitals, during the second week of February. New Regent President Rob Doughty attended by telephone.

Harris, who also attended the meeting, said the state officials sought $50 million to help cover shortfalls in the state’s Medicaid fund – with the caveat that they were not in a position to promise to repay the money.

UNM’s Health Sciences Center has more than $200 million in reserves from its various operations, part of which it wants to use for a proposed new hospital to replace its aging facilities.

Not the first time

Harris said it’s not uncommon for the state to ask the university for money to cover shortfalls.

“It’s important to understand this is not the first time this has ever occurred,” Harris said.

The HSC and the state approved a transfer for about $5.8 million in 2015, according to documents obtained by the Journal.

But unlike previous deals, the state said it couldn’t promise to pay back the millions it was requesting in February for the 2016-17 budget, according to Harris.

In the just-ended legislative session, HSD came up $86 million short of what it projected it needed in state funds for the next 15 months. The federal government matches $3 to $4 for every dollar the state spends on Medicaid, so the total shortfall balloons to $417 million when the missing federal matching funds are factored in.

Gov. Susana Martinez elected to include New Mexico in Medicaid expansion and the rolls have expanded far beyond projections, with 850,000 enrolled as of early March.

Harris said the February meeting occurred right about the time the Legislature was coming to a close and lawmakers were struggling to balance the budget.

Roth said he wanted to help but couldn’t do so immediately, according to Harris.

“I think Dr. Roth felt he didn’t have authority personally to make a decision, and that’s where it ended up,” Harris said.

Roth declined to comment to the Journal and deferred questions about the conversation between university officials and state administrators to Harris.

Harris said after that initial meeting, the state dropped its request and said it would try to secure money to cover the shortfall elsewhere.

Governance change

A little over a month after the request was turned down, regents led by Doughty and Marron Lee pushed for a change of governance that brought Health Sciences under more direct control of the regents and Frank.

The regents eliminated a seven-member HSC Board of Directors that, in addition to five regents included two voting community members, and replaced it with a subcommittee of three regents Doughty, Lee and Lt. Gen. Brad Hosmer.

Hosmer opposed the change and the fact it was first unveiled on Friday and voted on the following Monday.

Critics have protested the new governing structure as a “power grab” by the regents, but Doughty, who proposed the policy changes, has said the restructured governing body is an attempt to streamline the way the university operates.

Doughty reiterated that position Monday and said the funding issue had nothing to do with the governance change. He added that he had been talking to UNM lawyers about policy changes before he knew about the meeting between the state officials and UNM.

The University of New Mexico Hospital, according to an earlier version of the House budget bill, had agreed to transfer $20 million to the state to help with Medicaid expenses, but legislation authorizing the transfer didn’t specify the agency from which the money would have come. That money has not been transferred, said Billy Sparks, a HSC spokesperson, and at this point has not been included in the Human Services Department budget. That money was supposed to be repaid.

The Human Services Department on Thursday confirmed it met with UNM officials during the session to seek more funding than what had been allocated in the House budget bill.

“HSC declined the request and the discussion ended,” said Human Services Department spokesman Kyler Nerison.