Maine Gov. John Baldacci signed a $45 million financial order Tuesday to pay a portion of the state's obligation to hospitals under an October 2006 settlement agreement.
"We are fulfilling the promise of the Recovery Act by protecting jobs and protecting access to healthcare for our most vulnerable neighbors,” said Baldacci at the signing ceremony in Augustal.
The financial order enables Maine to use $45 million of its General Fund money made available by the federal Recovery Act. The money will draw down federal dollars for a total payment to hospitals of $163 million.
"Paying these past-due bills will in no way resolve all of the challenges that face hospitals in Maine," said Steve Michaud, president of the Maine Hospital Association, who joined Baldacci at the signing ceremony. "But it is an important step in stemming what is becoming a rapidly increasing tide of bad economic news that has been hitting them."
Baldacci has submitted a proposal to the state legislature that includes an additional $57 million for hospital payments. The $57 million will draw down federal matching dollars for a total payment in 2010 of $210.7 million.
All told, Maine's hospitals will receive payments in 2009 and 2010 toward old settlements totaling $373.7 million in federal and state dollars.
"In October 2006, I committed to an aggressive four-year schedule to increase hospital reimbursements and repay Maine's hospitals for settlements owed to them," said Baldacci. "Despite difficult budget times, working with the Legislature we have been able to meet that commitment. The agreement I signed in 2006 was to bring Maine current through fiscal year 2007. With these payments, we will go beyond what we agreed to."
The Maine state legislature reached a bipartisan agreement ensuring that the first General Fund dollars freed up by increased federal support for Medicaid would be directed toward hospital settlements.
"In the agreement, both sides agreed to a target of 3 percent growth in hospital costs," said Baldacci. "As important as these payments are, we also know that our current rate of healthcare spending is not sustainable."
Baldacci said Maine needs to replace its current payment method, which involves interim payments followed by settlements, with a system that is more accurate and timely.