Across the country, state governments are trying to come up with the most reasonable and effective ways to pay back their Medicaid deficits owed to hospitals.
During a press conference in January, Maine Gov. Paul LePage announced a plan to repay Maine hospitals by leveraging future liquor sales.
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.
"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."
Because Maine's hospitals have gone unpaid by the state, many 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.
"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.
According to Georgia Gov. Nathan Deal's State of the State address in January, many hospital industry leaders and state Republicans support the provider fee bill that would raise an estimated $689 million for the state's Medicaid program and prevent a 20 percent cut to hospital Medicaid reimbursements.
"So far, the provider fees have done a good job for us," said Kevin Bloye, vice president of public relations at Georgia Hospital Association. "We've looked at many alternatives and we are in a delicate situation in the fact that the state budget is really unable to keep up with the needs of the Medicaid program."
Bloye added that many other states have also enacted provider fees due to that fact that the "federal government matches those dollars and sends them back to the state."
"For us it came down to paying a provider fee like this or across-the-board cuts that could go as far as 32 percent, and for hospitals across the state - that could be completely devastating" he said.
In Illinois, hospitals are facing an eight-month waiting period for their Medicaid payments, as the state has a $9 billion backlog of unpaid Medicaid bills, according to Danny Chun, vice president of corporate communication and marketing at Illinois Hospital Association.
"There are various proposals to restructure the state debt being floated around right now, which we are supportive of," said Chun. "Whether the bills will pass in an environment when we do not want to borrow more money, that's an open question. Many lawmakers are saying 'don't dig a deeper hole.'"
Chun added that because the state passed a record-high income tax rate, raising taxes is not an option.
"The problem is when you are $9 billion in the hole, everyone is owed money, and there is no where to get it from. There is just no magical answer," he said.