February 22, 2013

Maine's debt to hospitals approaches $500 million

Hospitals are urging the state to begin making overdue Medicaid payments so they can also collect the much bigger federal match.

By Kelley Bouchard kbouchard@pressherald.com
Staff Writer

(Continued from page 1)

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Maine Medical Center in Portland. Owed $484 million in overdue Medicaid reimbursements, Maine's 39 hospitals are pushing state lawmakers to find a way to start paying off a debt that's forcing some hospitals to reduce staffing, delay capital improvements and borrow money to pay bills. Maine Medical Center is owed $68 million.

Gregory Rec / Staff Photographer

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The Legislature moved the state to a pay-as-you-go policy in July, ensuring that the DHHS would start paying its Medicaid bills on time. The transition had been in the works for a while, said Austin, who credits Republican Gov. Paul LePage and a Republican-led Legislature for making it happen.

Now, with Democrats back in the majority, the Legislature prepares to return in January with a $120 million shortfall in the current MaineCare budget, which the LePage administration has attributed largely to technical miscalculations.

"Certainly the state needs to pay its bills and we are sensitive to the financial challenges facing the hospitals," said Senate President Justin Alfond, D-Portland, in a prepared statement. "It's important that we plan with the hospitals how we are going to pay for the work they've done and continue to do.'

Rep. Peggy Rotundo, D-Lewiston, has served for the last eight years on the Legislature's Appropriations Committee.

"We know we need to pay this debt," she said. "We've been working hard over the last few years to pay it down."

Hospital officials have suggested tapping the state's lucrative liquor distribution contract, which is set to expire in 2014. Lawmakers hope to negotiate a better deal than the current 10-year exclusive agreement, which gave the state $120 million up front and $40 million in revenue sharing.

Senate Minority Leader Mike Thibodeau, R-Winterport, said that whatever the Legislature does may be compounded by federal spending cuts that have been proposed to combat the so-called fiscal cliff.

"We want to be mindful of the fiscal situation in D.C.," Thibodeau said. "Our hospitals have rendered services in good faith that the state of Maine would pay them. It's unconscionable not to pay people the money we owe them."

The federal share of Medicaid reimbursements spiked to nearly 75 percent in fiscal 2009-10 as a result of President Obama's economic recovery funding. It has fallen back to 63 percent for fiscal 2012-13 and is expected to drop to 62 percent for 2013-14, said Adrienne Bennett, the governor's spokeswoman.

"The hospitals are right," LePage said in a prepared statement. "The state needs to pay up. The health care industry is depending on that money and the longer Maine waits to pay its bills, the more our economy struggles."

LePage noted that hospitals, taken as a whole, are Maine's largest employer and could be a source of economic growth.

Hospitals provide jobs for nearly 30,000 people, but several have eliminated a total of nearly 200 positions in recent years through attrition, buyouts and layoffs, according to the Maine Hospital Association.

"Health care careers that Mainers need and are qualified for are not being filled," LePage said. "It's time we make good on what's owed so we can kick-start our economy."

At Maine Medical Center, the state's second-biggest Medicaid creditor, the situation is less dire than at other Maine hospitals, said Al Swallow, vice president of finance.

That's because Maine Med has a larger proportion of patients with private health insurance and is less dependent on Medicaid, Swallow said. However, if the $67.7 million debt remains unpaid, it could hurt Maine Med's bond rating and increase interest rates on future borrowing.

"It's still not good," Swallow said. "It's money that's owed to us."

Swallow said he's concerned about how the Legislature might pay the Medicaid debt, given few public revenue sources.

"We would be worried if that payment came at the expense of a reduction in rates paid for services we provide in the future," Swallow said. "(Legislators may) get to a point where they're stuck between a rock and a hard place."

CORRECTION: This story was updated at 4:30 p.m. on Wednesday, Dec. 19, 2012, to show that in the last fiscal year, the seven hospitals in the Eastern Maine Healthcare Systems lost a total of $4 million in interest they would have earned on savings used to cover operating expenses.

Staff Writer Kelley Bouchard can be contacted at 791-6328 or at:


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Additional Photos

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St. Mary's Regional Medical Center in Lewiston. Owed $484 million in overdue Medicaid reimbursements, Maine's 39 hospitals are pushing state lawmakers to find a way to start paying off a debt that's forcing some hospitals to reduce staffing, delay capital improvements and borrow money to pay bills. St. Mary's is owed $88 million.


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