The Maine Department of Health and Human Services and Maine Hospital Association have agreed on a proposal that they say will reform hospital reimbursement rates and improve the health of residents in the state.
Under the proposal, every hospital in Maine would receive roughly the same or higher reimbursement, based on information available in the fall of 2023. The proposal applies to all hospitals except for four psychiatric facilities that are categorized differently under Medicaid.
State officials argue that hospitals would see improved reimbursement because the payments will better align with Medicare, improved outpatient rates to encourage more community-based care and improved transparency and uniformity for similar hospitals across the reimbursement system overall.
"This proposal provides our members with needed Medicaid rate increases at a critical time," Steve Michaud, president of the Maine Hospital Association, said in a Feb. 6 news release. "Drawing down additional federal Medicaid dollars helps hospitals and their caregivers, eases the burden of escalating costs on Mainers and businesses who are paying for care, and helps the Maine economy at the same time."
Specifically, the proposed initiatives in the supplemental budget would:
- Support MaineCare rate reform for hospital services by investing $90.3 million in federal and state dollars in state fiscal year 2025, beginning July 1, 2024.
- Finance most of this rate investment by increasing the hospital tax rate from 2.23% to 3.25%, raising $29.5 million in SFY 2025, starting January 1, 2025.
- Repeal both the tax on and supplemental payment to critical access hospitals effective Dec. 31, 2024 while adjusting cost reimbursement from 109% to 104.5% beginning July 1, 2024.
- Add $2.5 million of general funds to the $6.3 million in the fiscal year 2024-25 biennial budget to help with rate reform. This includes a transitional payment to assist York Hospital — which has a unique grandfathered funding structure — in moving to the new system with all other acute care hospitals in the state. The payment to York Hospital is based on data shared with hospitals to total $5.6 million annually for the next five years.
York Hospital CEO Patrick Taylor, MD, is pushing back against the proposal, according to seacoastonline.com. If the enacted as is, Dr. Taylor argues that York Hospital would, after five years, lose a multimillion-dollar exemption because of its location in a tourist community with fluctuating population near competing hospitals in New Hampshire.
"It will be detrimental to the communities we serve," Dr. Taylor told the publication. "We want to keep care locally, so people do not have to travel for routine care and especially for emergency services."
The proposal, which is subject to CMS approval, maximizes the available funding under federal payment limits.