Maine’s ‘Enron’ accounting is victimizing hospitals

On Feb. 9, the Sun Journal reported on two lawsuits by Franklin Memorial Hospital against Maine’s Department of Health and Human Services regarding MaineCare. This issue affects more than just our hospital. It also impacts many of you.

Franklin Memorial Hospital is owed $10 million for services we provided to MaineCare clients from 2003 to the present. We have resorted to suing in state and federal courts to get payment for these delinquent bills.

How can the state claim to balance the budget each year, when it owes so much money to Franklin Memorial and other Maine hospitals? The state has a simple – albeit unethical – way of calculating its debt: they intentionally fail to complete the year-end paperwork about what they owe hospitals. This way, the debt doesn’t appear on the state budget.

Since the debt is invisible, Maine appears to fulfill its constitutional requirement to balance its budget without having to finish paying what it owes to the hospitals. Each year, the state sweeps many tens of millions of dollars of MaineCare liabilities under the rug this way, leaving the problem to be dealt with in the future.

Enron essentially did the same thing. The leadership of Enron intentionally understated its debt, and, as a consequence, creditors, customers, retirees, employees, and stockholders eventually suffered great losses.

Maine’s strategy for obscuring its debt is technically legal – as Enron’s was – but it is still unethical and terrible public policy. The legacy of these accounting gimmicks is part of the reason Maine now faces a $200 million budget deficit. And the millions of dollars of unfunded and unrecorded MaineCare liabilities building up out of sight will cause even bigger problems in future years.

When MaineCare patients are treated by doctors and hospitals, and the state delays final payments of their bills for five to ten years, hospitals must still find the money to keep our doors open. Unfortunately, the only option available is to shift costs to patients with regular health insurance. Businesses and employees are routinely charged more than their costs of care by health insurance companies to make up for the failure of state government to adequately and promptly pay under MaineCare.

This is one reason why health insurance costs in Maine are the highest in the nation.

In order to pay for MaineCare expansions, the state has thus shifted social costs to businesses and employees. In effect, this is a hidden cost of living or doing business in Maine. Not to call it a “tax” is only a semantic difference. The MaineCare program should be properly funded by the state’s general fund, not by hidden cost shifting.

In addition to demanding payment for delinquent bills, Franklin Memorial Hospital has issue with DHHS over how the amount we are paid is calculated, a matter which we have brought to Federal court.

Currently, the higher the costs are at a hospital, the more they are paid under MaineCare. The differences for the same service from hospital to hospital vary dramatically – as much as 400 percent.

Franklin Memorial Hospital is currently credited $2,327.76 from MaineCare for delivering a baby – the lowest rate in Maine. Meanwhile, other Maine hospitals will be credited four times this amount for the same delivery. This inequity applies to every inpatient service. Because we are efficient and have lowers costs, we get paid much less. As the state struggles to control expenses it hardly makes sense to pay the highest cost providers four times more.

The DHHS commissioner has informed us that if we don’t like the present way they pay for services, we can simply stop participating in MaineCare.

But the idea our participation in MaineCare is optional is absurd. Franklin Memorial Hospital is the sole hospital serving an area of 2,500 square miles – two and a half times the size of Rhode Island – home to over 40,000 people. Over 20 percent of these people are on MaineCare.

What, then, should we do if a MaineCare client is injured in a car accident in Farmington? What about a pregnant woman with MaineCare who rushes an hour to Franklin Memorial Hospital from Rangeley in labor? Do we apologize and tell them that they will need to travel another hour for the care they need? Of course not.

To do so would be not only illegal; it would be unethical. Refusing care to any person would violate the central values and purpose of our hospital, our community, and our state.

DHHS also said if we stop serving MaineCare clients, we won’t have to provide charity care under state rules, and could personally bill MaineCare patients who receive care at our hospital. And yet the law – and DHHS’s own rules – don’t state this. We have been left wondering whether anyone at DHHS can defend the logic of their payment system – inside or outside of court – with a straight face.

Franklin Memorial is one of the finest hospitals around, and our medical and nursing staff are second to none. We work very hard every day to serve our community with caring and dignity. We, and other Maine hospitals, deserve the simple courtesy of being paid as agreed, fairly, equitably, and on time.

Rick Batt is president of Franklin Memorial Hospital in Farmington.