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Senators Diamond and Brannigan, Representatives Cain and Perry, and Members of the Appropriations and Health and Human Services Committees, my name is Mary Mayhew and I represent the Maine Hospital Association. The Maine Hospital Association represents 39 acute care and specialty hospitals and their affiliates. I am here today to express our strong opposition to the various cuts proposed to hospital services and the proposed limits for various hospital MaineCare services.
Maine's 38 community and psychiatric hospitals are all nonprofit. Their mission is to provide high quality affordable care to the communities they serve with a fundamental goal of improving community health status. In Maine, and it is certainly true of other rural states, our hospitals play a much broader role in the delivery of health care services. To ensure access to critical health care services, hospitals throughout the state are engaged in the delivery of long-term care services, home health, mental health services, public health, and most especially physician services. In terms of the cut to Critical Access Hospitals, Critical Access Hospitals were cut by $9.8 million in the biennial budget last year and this budget includes another $6.8 million in cuts for a total reduction from their payments in 2009 of a 16% reduction. For background purposes, there are 15 Critical Access Hospitals in Maine. This is a program that was originally created by Congress in 1997 in recognition of the financial challenges faced by small rural hospitals and the importance of providing additional financial support to these hospitals in order to preserve access to vital health care services including 24-hour emergency services. These hospitals are limited to 25 beds and a 96-hour average length of stay along with other criteria. In exchange for these limitations, hospitals that are designated as Critical Access Hospitals are reimbursed 101% of their allowable costs by Medicare and currently are reimbursed at 109% by MaineCare. In 2005 the Maine Legislature increased the MaineCare reimbursement for Critical Access Hospitals by 16% in order to provide the "match" to these hospitals under the State's "tax and match" program. During the supplemental budget discussions, we provided the committee with a report on the MaineCare hospital tax program that was authored by Commissioner Harvey and Trish Riley in 2005 that acknowledged the cash flow impact of the tax on critical access hospitals and as the basis for the additional 16% reimbursement. This proposed cut would severely impact the State's smallest hospitals, but it is completely contrary to the Legislature's own acknowledgement a little over three years ago of the need for this additional reimbursement for these hospitals. And the Department cited the work of McKinsey as the basis for bringing this cut forward. In our research 7 of the 9 states cited by McKinsey, in comparing Maine's reimbursement for Critical Access Hospitals, either do not have a hospital tax or have exempted the CAHs from the tax, which is permissible based on a test established by CMS. The other two states have a hospital tax and provide supplemental payments that are not reflected in the base rate. It is also critically important to understand that the additional $10.5 million in MaineCare reimbursement paid to Critical Access Hospitals, $6.9 million is paid by the federal government. Moreover, these 15 hospitals are playing a vital role in supporting primary care services in rural Maine. By becoming a CAH, these hospitals have down-sized and have reduced the types of services they are providing. Consistent with so many of the discussions around health care reform, these hospitals are providing necessary emergency services and supporting the provision of basic health care services close to home. We all know the challenges Maine faces in continuing to support and expand access to primary care services. Our current health care payment system does not reward primary care. During the supplemental budget there were questions raised about whether all of these small hospitals should continue to exist. While I understand that tendency, it is not nor should it be viewed as a possible answer to these challenges. First of all these hospitals represent 12% of all hospital spending in Maine and the 2008 general fund MaineCare payments to Critical Access Hospitals represented 4% of all MaineCare general fund spending and 7% of MaineCare payments to providers. Further, without these hospitals it is difficult to determine whether the employed physicians would be picked up by other hospitals or whether without a hospital, physicians would continue to practice in the area. Secondly, the costs of caring for the patients at these hospitals do not go away when the hospital goes away - the vast majority of the expenses are associated with patient care and would follow the patient. Finally such questioning fails to appreciate the comprehensive role these hospitals play as the foundation for health care services in their communities, the value of proximity to emergency room services and the difficulty of travel for many in these areas to get basic primary care services. As caregivers, we know how important this program is to ensuring that the neediest Mainers, both children and adults, receive the care they need when they need it. MaineCare must be preserved to ensure the health of our most vulnerable citizens, but such preservation must be done by fairly covering the cost of providing high quality care to the program's patients. I appreciate the opportunity to present our comments to you today. I would be pleased to respond to any questions you may have. Thank you.
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