On Tuesday, Maine Gov. Paul LePage announced at a press conference a plan to repay Maine hospitals the $186 million owed to them by the state for patients covered by Medicaid.
LePage's proposal will authorize the state to immediately issue a revenue bond on its future liquor sales when enacted. The revenue bond would cover the $186 million owed to hospitals while simultaneously triggering a $298 million federal match.
[See also: Maine budget proposal to pay hospitals for old Medicaid bills]
LePage added that since 2009, the state's debt to hospitals has grown due to hospitals continuing to serve MaineCare (the state's version of Medicaid) patients, yet not getting fully reimbursed by the state for providing services to those patients.
"We've gotten in a bad habit of having a very expansive and expensive healthcare system, but we use the hospitals to pay for it. It doesn't work. There's a day of reckoning, and we're at that day," said LePage at the press conference.
"Maine people work hard to pay their medical bills. This plan puts Maine on the right track to doing the same," said LePage. "By paying the state's bills we strengthen our economy and the hospitals that care for and employ Maine people. Hospitals will be able do the same including paying new and existing employees and local vendors, pursuing capital improvements and maintaining the high level of service that has earned the state national recognition for quality care."
As the bills have gone unpaid, many of the state's hospitals have had to lay off employees and reduce benefits; borrow against lines of credit to meet payroll and other obligations; dip into savings and forgo interest; delay payments to local vendors like oil dealers and waste haulers; and eliminate services, including in one case, closing a maternity ward, according to the press release issued by the governor's office.
[See also: Maine community deliberates proposed hospital merger]
"When the state pays the outstanding hospital settlement debt, hospitals will then be able to stem the tide of job losses that have been occurring over the past several years," said Steven Michaud, president of the Maine Hospital Association, at the press conference. "It will also allow us to stop borrowing against lines of credit, which many of our hospitals have been doing just to meet payroll, and make vital investments into hospital facilities and, importantly, to pay local businesses for the services they provide to our members."
"We have had selective layoffs, deferred hiring people, frozen wages and delayed needed capital projects due in part to our tenuous cash situation. Our lack of cash is the direct result of this enormous MaineCare receivable. Payment of the MaineCare debt is the single most effective way to improve the stability of our organization," said R. David Frum, who serves as president of the hospitals in Rumford and Bridgton. "You can count on our support."
According to the press release from the governor's office, under the proposal, three hospitals in Bangor will be reimbursed $90 million, of which $71.9 million will go to Eastern Maine Medical Center. Central Maine Medical Center and St. Mary's Medical Center, both in Lewiston, will receive $50.2 million and $28.85 million, respectively. Portland hospitals would be paid $94.2 million, with nearly $68 million going to Maine Medical Center. A total of 30 other Maine communities will get back a combined $230 million.
Once the funds owed to the state's hospitals are paid off, LePage said he will release $105 million in bonds previously authorized by voters, including $51 million for transportation infrastructure improvements and $53.5 million for conservation, clean water upgrades and construction and energy efficiency at post-secondary educational institutions.
LePage said he aims to get his legislation enacted quickly to ensure the state capitalizes on the current federal matching rate. "With the full support of the Legislature, I intend to pay the hospitals and issue general bonds in a matter of months," he said.
[See also: Maine makes Medicaid payments to hospitals]