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NH panel finishing report on hospital tax

CONCORD, N.H. (AP) -- A special commission charged with recommending whether New Hampshire should change how it taxes hospitals is expected to offer suggestions to lawmakers, rather than recommendations.

The commission meets Wednesday in hopes of wrapping up its report on the tax, which produces $176 million for Medicaid services and other state spending. New Hampshire applies the 5.5 percent tax to two categories: inpatient and outpatient hospital net revenues. The state also taxes two other categories — nursing homes and intermediate care facilities — under a different law.

The commission is reviewing more than 30 suggestions ranging from repealing the tax to taking more providers.

In 1991, hospitals began paying the tax so the state could gain matching Medicaid funds to pay for caring for the poor. For many years, they got all their taxes back dollar-for-dollar in a refund from the state. That changed in 2011 when the federal government said states could no longer give hospitals the taxes back dollar-for-dollar and had to apply a formula that distributed the money according to hospitals' Medicaid costs.

Then the Republican Legislature in charge two years ago cut Medicaid funding to the hospitals more than $130 million, but lawmakers maintained the tax. Ten of the state's largest hospitals sued the state over changes in Medicaid policies and reimbursements.

Since then, the state and hospitals have differed on which revenues can be taxed.