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New Hampshire Healthcare Reform Update


Email Alert

By Barbara J. Greenwood*

July 13, 2009

Though the focus was on budgetary concerns and other matters, a number of noteworthy healthcare reform initiatives emerged from New Hampshire's 2009 legislative session.

Budget Provisions Affecting Healthcare

The state's $11.5 billion budget was narrowly approved by the New Hampshire Legislature. To address a shortfall of roughly one half billion dollars, the budget contains numerous tax and fee hikes such as increases in the tobacco tax and the meals and rooms tax, and the taxation of certain distributions from LLCs under the state's interest and dividends tax statute. The budget relies on certain one-time funding such as American Recovery and Reinvestment Act stimulus money.

The 2010/2011 budget bills (HB 1 and HB 2) contain a number of critical provisions relating to healthcare funding and have generated controversy in the healthcare sector. For example, the New Hampshire Hospital Association is concerned that the budget for Medicaid is based on unrealistic caseload and utilization projections, and thus will result in underfunding for the state Medicaid program. Also controversial is the budget's transfer of a $110 million surplus in the state-run malpractice fund to the state's general fund. The malpractice fund was established in 1986 to provide malpractice insurance for New Hampshire physicians who were unable to obtain coverage elsewhere. Having contributed to the fund over the years, the physician policyholders regard the surplus as belonging to them. They filed suit to challenge the transfer.

In addition:

  • HB 2 re-establishes the uncompensated-care fund. The bill requires the commissioner of the Department of Health and Human Services (HHS) to establish an uncompensated-care payment system within the parameters of state and federal law, to submit an amendment to the state Medicaid plan regarding the system, and to make a report to the oversight committee on health and human services on or before January 1, 2010. The uncompensated-care fund will consist of monies collected under the state's Medicaid-enhancement tax statute, and no less than 50% of it is required to be used to support the uncompensated-care costs of certain hospitals, either through Medicaid rate adjustments, DSH payments, or a combination thereof. The schedule of payments must be structured so as to reduce to the greatest extent practicable the disproportionate impact among hospitals of uncompensated-care costs. The bill requires that available funds be allocated first to ensure that critical access hospitals and rehabilitation hospitals receive reimbursement for reported uncompensated care costs at 100% of the individual hospital limit for DSH payments.

  • HB 2 requires HHS to establish a medical home pilot program.

  • HB 2 requires the commissioner to submit amendments to the state Medicaid plan to implement prior authorization of wheelchair van services, non-emergency ambulance services, occupational therapy services, and methadone clinic services.

  • HB 2 also requires the state to submit an amendment to the state Medicaid plan that will suspend direct graduate medical education payments to hospitals until the end of fiscal year 2011, and to submit an amendment that will create a Medicaid provider classification system for critical access hospitals in Coos County.

Although the budget bills establish a two-year budget, it is widely expected that there will be a supplementary budget, necessitated by the significant economic challenges faced by the state.


There were several bills dealing with health insurance matters, most notably:

  • SB 102, which relates to managed care and patient choice. SB 102 allows patients to have access to any provider or facility within their network regardless of their provider's referral. Language must also be included in provider contracts stating that any provider employed by a certain hospital or affiliate is not obligated or required to refer patients to other providers employed by the same hospital or affiliate.

  • SB 138, the "New Hampshire Telemedicine Act," which addresses payment for services provided via telemedicine, i.e., the use of audio, video, or other electronic media for the purpose of diagnosis, consultation, or treatment. The bill prohibits an insurer that offers a health plan in the state from denying coverage on the sole basis that the coverage is provided through telemedicine if the healthcare service would be covered if it were provided through in-person consultation. SB 138 will be particularly helpful in the rural and underserved regions of New Hampshire, allowing patients to be treated without having to travel considerable distances for services.

  • SB 119, relating to provider contract standards. The bill requires that all health coverage and dental and prescription benefits coverage offered separately be identified as being under the jurisdiction of the commissioner of the Department of Insurance. Such identification must be clearly printed on a member's identification card and on the policy issued to an insured after January 1, 2010. The bill gives the commissioner rulemaking authority to designate the form and manner of the required identification.

Certificate of Need

Two bills relating to certificate of need (CON) matters were passed:

  • HB 113, which extends the moratorium on new nursing home and rehabilitation beds to 2012. The bill also contains a provision that allows for CON to be issued for construction and/or renovation purposes, for repairs or refurbishment of an existing facility, for beds transferred from another facility, or for repairs or renovations necessary to meet life safety code requirements or to remedy deficiencies noted in a licensing inspection. In these cases, costs in excess of the capital expenditure threshold will not be reflected in the state Medicaid reimbursement rates.
  • HB 234, which establishes a committee consisting of both House and Senate members to study the CON process (a recurring subject of discussion in the Legislature) and report its findings and recommendations by February 1, 2010. The bill directs the committee to study the scope of regulation, standards of need, procedures, board membership, services regulated, financial thresholds for regulation, and any other aspect of the CON process that the committee determines warrants review.

Adverse Events and Hospital Infections

For a number of years the Legislature has been concerned about healthcare quality issues. Three bills from this year's legislative session address adverse events and hospital infections:

  • HB 592, which relates to "adverse events" in hospitals and ambulatory surgical centers. The bill requires hospitals and ambulatory surgical centers to report adverse healthcare events to the commissioner of HHS. The commissioner must publish an annual report (1) describing, by facility, adverse events reported; (2) outlining, in aggregate, corrective action plans and the findings of root cause analyses; and (3) and making recommendations for legislation relative to state healthcare operations.

  • HB 40, which requires hospitals to submit regular reports regarding hospital-acquired infections, and provides for sanctions for failure to report.

  • HB 433, which relates to funding the law requiring reporting of hospital infections. The bill directs HHS to assess a fee on hospitals based upon a percentage of the inpatient census—the average number of inpatients per year at each hospital.

Status of Bills

HB 234 (establishing a committee to study the CON process) was signed into law by Governor John Lynch on June 9, 2009. The other bills discussed are expected to be signed by Governor Lynch.

*AHLA wishes to thank Barbara Greenwood, Esquire (Rath Young & Pignatelli PC, Concord, NH) for providing this email alert.

For summaries of other state healthcare initiatives, please visit the Healthcare Reform Educational Task Force's website and click on Email Alerts in the left-hand navigation menu.

The Healthcare Reform Educational Task Force is a joint endeavor of the Healthcare Liability and Litigation; Hospitals and Health Systems; In-House Counsel; Payors, Plans, and Managed Care; Physician Organizations; Regulation, Accreditation, and Payment; and Teaching Hospitals and Academic Medical Centers Practice Groups.

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