March 11, 2013

Democrats unveil own plan to repay Maine hospital debt

By Steve Mistler smistler@pressherald.com
State House Bureau

AUGUSTA — Democratic legislative leaders Monday revealed a plan that would repay Maine's hospitals in $484 million in backlogged Medicaid reimbursement payments by September this year.

The plan was unveiled 30 minutes before a full day of public hearings on Gov. Paul LePage's proposal to use a renegotiated liquor contract and revenue bond to repay the state's share of the hospital debt.

Unlike the governor's plan, the Democratic proposal includes no borrowing. Instead, it would use an upfront payment from the liquor contract to pay the hospitals by September.

The current liquor contract doesn't expire until 2014.

Democratic leaders touted the proposal, saying it would pay the hospitals by a specific date. They added that the timetable for LePage's plan was uncertain given its use of a revenue bond and concerns that the plan as currently written may violate a provision in the state constitution.

The Democratic plan will be accompanied by several measures designed to address the high cost of health care, including billing transparency and cost containment. 

"It's important to remember that this issue is not just about debt, it's also about high health care costs," Senate President Justin Alfond said. "And, any plan to pay off debt to the hospitals should also address the cost drivers and reforming our system to prevent this debt from building up again."

Democratic leaders also said the repayment plan should coincide with state participation in Medicaid expansion included in the federal health care law.

Jodi Quintero, a spokeswoman for House Speaker Rep. Mark Eves, D-North Berwick, said the other reform efforts were not included in the debt repayment plan.

A no-strings proposal appears to key to support from Maine's hospitals. 

Jeff Austin, the lead lobbyist for the Maine Hospital Association, said the debt payment plan should be separate from any other reform efforts. 

"The debt was accrued when we provided services at terms that we’re in law at the time," Austin said. "We shouldn’t have to go back and bargain for that, meaning we shouldn’t have to agree to support or oppose anything else." 

Austin also refuted claims that the hospital association, considered a key voice in the Medicaid expansion debate, has publicly wavered on expansion because it's waiting for lawmakers to settle the debt. He said Monday that the Maine's hospitals were "very interested" in Medicaid expansion, however, it was waiting for a specific proposal before weighing in on the issue. 

Rep. Linda Sanborn, D-Gorham, has submitted a bill that proposes expanding Medicaid eligibility, but it's details have not been published.  

LePage said in December that he doesn't support participating in expansion. However, hospital support for the program could change the conversation. Republicans have been urged to reject the program because it's included in President Obama's Affordable Care Act.

However,  several high-profile Republican governors have agreed to participate because the federal government has agreed to pay 100 percent of the state's costs for the expansion from 2014 to 2016. In subsequent years, reimbursements would gradually decline to 90 percent of the state's costs.

Skeptics, including the LePage administration, question whether the federal government will maintain the 90 percent reimbursement.

Adrienne Bennett, LePage's spokeswoman, said it "is very clear that the federal government intends to back off full payment over time."

"With record deficits in Washington and a promise that states will have to pick up at least 10 percent of an expansion tab in the future it is unfair to put higher welfare costs on the back of the Maine taxpayers when those costs could skyrocket in the future," Bennett said. 

In each state where Republican governors have agreed to participate in expansion, hospital groups have backed it.

Last week the Maine Medical Association, the group representing the state's doctors, expressed its unqualified support for expansion, but acknowledged that wouldn't go forward without the backing of Maine's 39 hospitals.

The Maine Hospital Association supported Medicaid state-led expansion in 2003 because increasing eligibility held the promise of reducing the number uninsured, and the amount of charity care that hospitals provide.

Eves emphasized the charity care argument on Monday. He also noted that the conservative Heritage Foundation recently reported that Maine could save $690 million over the next 10 years if it participated in expansion. The Heritage report used the same savings estimate contained in an analysis by the Kaiser Foundation. 

The expansion would make 55,000 more people eligible for MaineCare, the state's Medicaid program, according to an analysis by the Kaiser Family Health Foundation.

Those people would be "able-bodied" parents, and adults who have no children and earn up to 133 percent of the federal poverty level -- just over $20,500 a year for a two-person household.

In addition to expansion, Democrats also expressed the need for billing transparency and cost containment. 

Billing transparency would affect the charge differential on hospital bills. Democrats said that patients currently only know what a hospital charges for services, procedure or treatments, not what the hospital actually paid for them. 

The issue was raised in a 36-page Time Magazine report that detailed a host of exorbitant charges, including $77 for a box of gauze pads. 

Austin said billing transparency is a complicated issue. However, he said, the association is open to discussing it. He also applauded Democrats for making a serious effort to repay the Medicaid reimbursement debt.

"We haven’t see the details but we’re appreciated that they’re seeking to earnestly to pay us back as the governor has been for the past several months," Austin said.

LePage testified in support of his own proposal Monday morning. Asked after the hearing what he thought of the Democratic proposal, he said he hadn't seen it. He was also asked what he thought of Democratic leaders unveiling the plan 30 minutes before lawmakers were scheduled to review his proposal. 

"Hey, it's a free country - for now," he said. 

Elements of the Democratic proposal will be included in an amendment to a bill sponsored by Sen. Seth Goodall, D-Richmond. Goodall's bill initially proposed taking an upfront payment from the liquor contract and dumping the money into the general fund.

Democrats have argued that the LePage's plan does not include a time line to repay the hospitals. They've also questioned whether the governor's proposal violates the Maine constitution.

This story will be updated.

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