Maine Hospital Association,

MEMORANDUM

TO: Senator Joseph Brannigan, Chair
Representative Anne Perry, Chair
Members of the Health & Human Services Committee

FROM: Mary Mayhew, Vice President

DATE: March 21, 2007

RE: Testimony in Opposition to LD 551,

As a follow-up to our oral comments during the public hearing, I wanted to submit a summary of our concerns regarding the proposed legislation and some background on similar legislation that was voted on by this committee last January.

I've attached to this memo the legislation that was submitted in 2005 and voted on by the Health & Human Services Committee in January 2006. LD 846, as proposed by Representative Arthur Lerman, was quite similar to LD 551. The committee asked us to work with Representative Lerman to reach a compromise. I've attached the compromise which included a regulatory increase to the state's minimum charity care guidelines from 100% FPL to 150% FPL and a voluntary agreement with MHA that our hospitals would provide a 10% discount to anyone who is uninsured or a sliding fee scale. Again I have attached the list of hospitals and their current charity care policies.

As we mentioned during the public hearing, we regret having to oppose this bill. The problem which the bill seeks to address is real and significant. There is no doubt that our healthcare coverage system and healthcare financing system are broken. It is fragmented and fails to ensure that all have access to coverage. But this bill is not the answer. Maine's community hospitals are on the front lines every day and witness the realities of a system that leave many without appropriate access to the healthcare system. Coverage is critical. Without coverage, individuals will not seek the right care at the right time and in the right setting.

But LD 551 is not the answer. In fact it exacerbates the financial challenges that already exist. It uses MaineCare rates or for that matter Medicare rates as discussed in the public hearing, as the basis for reimbursement for providers. These rates are established as a result of crisis oriented budget negotiations……not based upon actual costs. Medicare reimburses nonCritical Access Hospitals 88 cents on the dollar of cost and MaineCare reimburses nonCritical Access Hospitals 76 cents on the dollar of cost. These losses affect what hospitals and other healthcare providers must charge in order to recover some of these losses. Moreover this bill begins to move in the direction of rate setting which was abandoned by Maine in the mid1990s for various reasons - this least of which is that the state cannot keep pace with medical advancements in recognizing costs……hospital MaineCare rates are based on 2000 and prior to that rebasing were based on 1983 costs.

There have been numerous commissions designed to address this very issue not the least of which was Governor Baldacci's Health Action Team that was convened in 2003 and brought forward the legislation that led to the enactment of the Dirigo Health law of 2003. Not only did this new law create DirigoChoice as a means of providing insurance to those uninsured individuals that largely fall into the category identified in this bill but also looked at cost containment initiatives. Maine's community hospitals are the only provider group that adhere to voluntary cost and margin caps first established in 2003 and then passed again in 2005. Maine's hospitals for the last three years have complied with these cost caps and the 5 largest hospitals have either frozen their charges, reduced them, or increased them less than trend. The 5 largest hospitals represent more than 50 % of hospital expenditures in Maine.

We are trying to address these issues by expanding charity care, subsidizing physician programs, providing sliding fee scales and discounts, operating free clinics, and providing numerous other programs to assist people in getting access to care. There are no easy answers to further resolve the challenges we face in the healthcare delivery system. But we must do more to provide coverage and access. We have significant concerns LD 551 will do the exact opposite.

We would encourage the committee to vote Ought Not to Pass. Thank you for your consideration of our concerns.

Advocacy