Baldacci, hospitals make deal on debt; In 3 years state to pay $300M Medicaid bill

This story was published on Oct. 12, 2006 on Page A1 in all editions of the Bangor Daily News

The Maine Hospital Association and Gov. John Baldacci announced Wednesday a plan to make good on more than $300 million in Medicaid debt owed to Maine hospitals. Hospitals greeted the announcement as good news long overdue and legislative Democrats pledged their support, but Republicans and gubernatorial candidates hoping to unseat the governor in November expressed skepticism and charged Baldacci with electioneering.

The three-year plan calls for the state’s Medicaid program, called MaineCare, to increase the weekly payments it makes to Maine’s 39 nonprofit hospitals for the health care provided to more than 260,000 MaineCare enrollees. The increased payments would start in July 2007 and feed depleted hospital coffers by a total of $221 million in state and federal Medicaid dollars by October 2010.

The plan calls for the Legislature to approve about $204 million in state funding over the next three years, Baldacci said Wednesday.

The state dollars will attract enough federal matching funds to pay the hospitals the $300 million total that they’re owed, Baldacci said, as well as allowing the state to increase hospitals’ MaineCare payments into the future.

“We’ve been working since I became governor to find a way to do this,” Baldacci said, noting that portions of the debt predate his administration. “The hospitals have agreed to do it over a several-year period and to continue to work at controlling their costs,” the governor said. Hospital cost containment has been a contentious cornerstone of Baldacci’s Dirigo Health Initiatives, aimed at improving Maine residents’ access to health care.

At the Maine Hospital Association, Mary Mayhew, vice president of government affairs and communication, said the agreement is “very good news for Maine hospitals.”

The association has been working diligently with the governor’s office for about three months, she said. “The focus is entirely to get hospitals paid the money they’re owed so they can serve their mission of providing health care services in their communities,” Mayhew said. While MHA has worked with Baldacci to hammer out a workable plan, Mayhew acknowledged that upcoming elections could make or break the agreement. The MHA, she said, is not endorsing any candidates.

“Our efforts over the next few months will be to communicate first with candidates and then with new legislators to make sure this is the number one priority when the Legislature reconvenes in January,” she said.

Legislative Democrats were quick to weigh in with their support for the plan. In an emailed response, Senate President Beth Edmunds, D-Freeport, said, “This has been a long time coming, and we are delighted to reach the finish line and honor our commitments.”

Sen. Peggy Rotundo, D-Lewiston, senate chair of the appropriations committee that approves the state budget, said she looked forward to working with other lawmakers in working out the fine points of the plan. Rotundo warned, however, that if the controversial tax-cap initiative known as TABOR receives voter support in the November referendum, “Any funding package for this settlement … would be much more difficult.”

Predictably, legislative Republicans were less enthusiastic. “Republicans have long pressured the governor to pay off his debts to hospitals,” said House leader Josh Tardy, R-Newport. “It seems that if there had been an election a year ago, this problem would already have been solved.”

Assistant Republican Senate leader Carol Weston, R-Montville, likewise questioned the timing of the deal. “It shouldn’t be big news that the state of Maine has decided to pay its bills,” she said.

Blaine House contenders also took shots at the announcement. Independent gubernatorial candidate Rep. Barbara Merrill accused Baldacci of “election eve politics” and said the hospital agreement should have been reached long ago.

Green Party candidate Pat LaMarche said it was “presumptuous” of the governor to assume he’ll be in office long enough to see the agreement reach fruition. The release on Tuesday of a study showing an increase in the number of Mainers living in poverty is evidence of Baldacci’s lack of leadership, she said.

Sen. Chandler Woodcock, the Republican gubernatorial candidate, said, “It is amazing to me that it’s big news in Maine when we pay our bills.” A change in political power and spending habits is needed to assure Maine hospitals get their money, he said.

For their part, Maine hospitals were cautiously optimistic that the money they’re owed will start rolling in over the coming months. At Mayo Regional Hospital in Dover-Foxcroft, Chief Financial Officer Dennis Allen said the hospital is owed about $4 million through the end of the current year. Through careful management, he said, Mayo has avoided borrowing money, but it has meant putting off a number of needed projects, including the acquisition of newer medical technologies. Allen said he was “hopeful” that the plan would pay off as intended. “But why has it taken so long?” he asked.

Carolanne Dube, spokeswoman at Northern Maine Medical Center in Fort Kent, said hospital leaders were “delighted that the governor is listening to the Maine Hospital Association.” NMMC is owed about $2 million and has a long list of projects on hold, including an expansion of the intensive care unit, she said.

At St. Joseph Healthcare in Bangor, President and CEO Sister Mary Norberta said the hospital has had to borrow money to make up for the $7 million it’s owed by MaineCare. The hospital recently invested $500,000 in a new nuclear imaging scanner, she said, as well as having to continuously upgrade and replace more commonplace equipment such as beds. “We’re living in hope” that the governor’s plan will work, Norberta said, adding that many interests compete for available state tax dollars.

The seven hospitals of Brewer-based Eastern Maine Health Care Systems are owed a total of about $100 million, said Scott Oxley, vice president of finance for the corporation. “A lot of our hospitals have had to defer investments and equipment,” he said. At Eastern Maine Medical Center, owed $65 million, a number of projects have been on hold, including replacing outdated equipment in the hospital’s cardiac catheterization labs.

Baldacci’s plan is “a step in the right direction,” Oxley said. “The reality is that the state’s economy is what it is. The state hasn’t been malicious. Baldacci inherited a lot of problems. We’re happy there’s a plan in place, and we hope things can keep moving in the right direction.”

For more information, visit www.themha.org or www.maine.gov/governor

A1 for Thursday, Oct. 12, 2006

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