Hospitals could cut services, jobs over Medicaid debt

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AUGUSTA – Maine hospitals are owed $300 million in back Medicaid payments and unless the state can raise its $100 million share next year, some hospital administrators say they will start cutting back services and laying off staff.

“We’re OK right now in terms of (drastic measures), but we do have many hospitals that are on their line of credit to make payroll,” Steven Michaud, president of the Maine Hospital Association, said Tuesday.

“Some (hospitals) have maxed out their credit lines and have gone to the state” to demand the back payments, he said.

“They’ve got to resolve it in the next budget (next year) or there will be significant cost-shifting to those people who have private insurance, and significant dislocation of services and jobs,” Michaud said.

The hospital association’s estimated $300 million shortfall dates back to fiscal year 2003. The shortfall is blamed on several factors, the biggest being that the state bases its estimated weekly Medicaid payments to hospitals on 2-year-old cost data.

But, according to Michaud, the problem quickly mounted when the state added 80,000 more people to the Medicaid program beginning in 2002 without providing enough money to cover them.

“We estimate that we are going to serve 40,000 people without any pay before this gets resolved,” he said.

Medicaid is a state-federal program that provides free health care to the poor, but also covers families and individuals who earn up to 200 percent of the federal poverty line. For every dollar the state pays into the program, the federal government pays roughly $2. Under Medicaid law, the state must pay its share before the feds will send the matching money.

Michaud said the state is aware of the jump in volume since the latest expansion, but has promised services to citizens without raising the money to pay for them.

“We know what the volume has been (since the expansion). By the way, (state officials) know what the volume is themselves,” Michaud said. “They know the debt is consuming them.”

The Medicaid program, known as MaineCare, currently covers about 250,000 Maine people through 7,000 providers.

“There is a big effort going on to catch up on what is owed to hospitals,” said Geoffrey Green, deputy commissioner for operations and support with the Maine Department of Health and Human Services.

Green acknowledged this week that the state has fallen behind in its payments because costs have increased more quickly than DHHS estimated, but he said other forces also have exacerbated the problem.

Green said the state was being sued by some hospitals for late Medicaid payments that, in some cases, went back 15 years. The state budgeted about $32 million in the current budget to settle with the hospitals. That money leveraged another $65 million from the feds to pay the debt.

“We have cleaned up nearly $100 million in settlement payments” that date back to 1993, Gov. John Baldacci said Tuesday through a spokeswoman. “My administration has made progress and closed the gap. We are also increasing provider payments by 25 percent. This demonstrates our commitment to the hospitals.”

But in order to catch up with the hospital payments just for the period of 2003 through 2005, the state needs to budget $100 million in the new budget next January, according to Michaud.

Green said DHHS pegs the current shortfall at about $280 million, not the $300 million being used by the hospital association. He agreed with Michaud’s overview of the problem, but said rising hospital costs also have contributed to the payment shortfall.

Chuck Gill, vice president for public affairs, Central Maine Medical Center in Lewiston, said during a recent interview that the state consistently underfunds Medicaid. He said the amount of money budgeted for the program is driven by the state’s financial condition and not on real costs.

CMMC is owed nearly $27 million in old Medicaid claims, Gill said, and expects a shortage next year of $6 million.

CMMC will first consider cutting outreach programs and then the most expensive procedures if the state doesn’t settle its debt soon, Gill said. The hospital also will most likely not be able to pay its own bills within the typical 30-day cycle. The growing debt also could force CMMC to avoid capital equipment purchases and repairs, Gill said.

For CMMC, the existing weekly estimated payments from DHHS total about half of the expense of providing the Medicaid services, Gill said.

“You can’t pay your bills with someone’s debt,” Gill said.

“…This issue is not going away. It has to be dealt with.”

Attempts to get information and numbers from St. Mary’s Regional Medical Center were unsuccessful.

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