Maine hospitals and health care providers are warning of significant financial challenges if lawmakers can’t resolve a partisan stalemate over emergency funding for the MaineCare program.
The Maine House of Representatives and Senate each gave initial approval Tuesday to a $121 million supplemental budget, including $118 million to close a gap in MaineCare funding, but without the two-thirds bipartisan support in each chamber that is needed in order for the plan to take effect immediately.
If the money isn’t approved on an emergency basis, the state could have to implement a plan to withhold certain payments from MaineCare providers starting in March as they wait for the funding that ends up getting final approval to take effect.
And providers and advocates say that could bring serious financial challenges and make it harder for people to access care, especially in rural areas with smaller hospitals and clinics that rely more on the state program for payment.
“It can’t be (overstated) right now the importance of providing predictability for the health care system in Maine that relies upon MaineCare funding to serve vulnerable patients,” said Katie Fullam Harris, chief government affairs officer for MaineHealth, the largest hospital system in the state. “It is critical that we not face delays in getting paid for the services we are providing.”
Hospitals already facing fiscal straits
MaineHealth estimates that it could see about $100 million in delayed payments if the budget isn’t approved as an emergency. Republicans have opposed the supplemental budget that includes the funding and without two-thirds support from lawmakers, the proposal won’t take effect until 90 days after the Legislature adjourns in June, meaning that the funding likely wouldn’t be available until September.
Fullam Harris said she couldn’t speculate as to when hospitals would end up getting paid, but she assumes the state would try to pay them back in a timely way.
The $100 million represents about 2.5% of the hospital system’s $4 billion annual budget, but Fullam Harris said all hospitals and clinics that receive government funding are currently facing difficult financial times, with labor and supply costs rising dramatically in the aftermath of the COVID-19 pandemic.
The delayed payments would restrict the system’s cash flow and could affect its credit score.
“While an administrative burden and credit ratings may not reflect an urgency in some people’s minds, it really does result in a lot of challenges for a health system that is working diligently to provide access to high-quality care for our communities,” Fullam Harris said.
“We rely upon our payers paying in a timely way and that includes MaineCare. A sudden change does have an impact on us, though we can’t necessarily identify yet how that impact will be absorbed.”
Officials from Northern Light Health, the state’s second largest hospital network, have also warned of financial challenges that would be exacerbated by delayed payments to providers of MaineCare, the state’s Medicaid program that provides health insurance for adults and children with limited income and resources.
Northern Light’s operating loss totaled $156 million in 2024, creating tremendous financial pressure on the organization, Lisa Harvey-McPherson said in testimony the hospital network provided to lawmakers on the budget last month.
“It is critically important that the Legislature pass the supplemental budget to allow for emergency implementation,” Harvey-McPherson wrote. “We do not have fiscal tolerance to absorb reduction in payments nor delayed payments for the health care services we provide as we work to stabilize our financial performance.”
She said hospitals throughout the state are being challenged daily to provide nursing facility patients with acute care beds and young people with behavioral health needs ending up in emergency departments when they are in need of community-based services.
“These providers are highly dependent on MaineCare payments, and funding disruption to community-based services simply exacerbates the access challenges for patients clinically qualified to be discharged from the hospital,” Harvey-McPherson wrote.
The impact may be most severe on the state’s smallest hospitals and providers, said Jeff Austin, vice president of government affairs and communications for the Maine Hospital Association. “I don’t have a prediction as to what hospitals would do,” Austin said in an email. “But some hospitals would have a very hard time managing a short-term reduction from Medicaid.”
State plans to withhold payments
The Maine Department of Health and Human Services said in a memo to MaineCare providers on Monday that if the budget isn’t passed on an emergency basis, it will need to temporarily withhold certain payments from providers starting in March in order to ensure that at least a percentage of claims are paid until the department receives sufficient funding.
A plan has been developed that includes holding payments for hospital claims greater than $50,000, holding payments for large retail pharmacies and large medical equipment suppliers, holding payments for out-of-state providers of hospital, ambulance, pharmacy and medical equipment services, and paying hospitals at a lower rate for weekly payments based on estimated MaineCare services billed.
For most other provider and claim types, the department said it would set a cap on payments and pay on a “first-in-first-out” basis depending on the date and time of submission, up to a weekly cap.
In a statement Wednesday, Darcy Shargo, chief executive officer of the Maine Primary Care Association, said the potential payment caps could have serious impacts for the community health centers the association represents.
“At a time when the payment system for federally qualified health centers is already extremely fragile and unreliable, MPCA strongly opposes any further strain on health centers, who collectively serve 1 in 6 Medicaid beneficiaries across the state and yet account for only 2% of the MaineCare spend,” Shargo said.
“Health centers operate in small, rural towns in each county, and are also present and essential in Maine’s bigger cities; like many other health care providers, they are not designed to weather endless instability in payments.”
Would services be impacted?
Ann Woloson, executive director of Consumers for Affordable Health Care, a nonprofit that advocates for the health care rights of Maine people, said Wednesday that the group is worried that delayed payments could result in cuts to services at hospitals and clinics, especially those in rural areas that serve smaller populations and higher percentages of MaineCare patients.
“They may have fewer privately insured people, so those reimbursements in those areas where there is a higher MaineCare census could drastically impact the providers and their ability to keep their doors open,” Woloson said.
That could mean services could be cut back or unavailable for privately insured patients as well as MaineCare recipients.
“As providers have to limit what they’re doing because they’re not getting paid, it’s not just MaineCare recipients who will lose access, it’s the general population as well,” Woloson said.
At MaineHealth, Fullam Harris said they would work hard to keep all services going and people shouldn’t worry, for example, about not being able to get treatment at the emergency room or in intensive care units — two areas that tend to generate the type of high-cost claims the state said it would hold payments on.
But she said the system would have to think twice about growing services, continue to put off capital investments and take other steps to save money, such as not investing in new technology.
“That can also result in delayed care,” Fullam Harris said. “If you have an MRI machine that’s down and you can’t replace it, the result is patients waiting longer for an MRI on a machine that does work.”
What will lawmakers do?
Republicans lawmakers have said that they are eager to continue negotiating on a budget proposal after introducing a series of unrelated proposed amendments Tuesday. Senate President Mattie Daughtry, a Democrat, said Tuesday night that her party is “hoping to be able to continue the conversation.”
Lawmakers are expected to take up the proposal again when they next meet as a full Legislature on Feb. 25.
Democrats could make the fund available somewhat sooner even without Republican support.
After passing a state budget with a simple majority in 2023, Democrats adjourned the legislative session to start the clock on the 90-day waiting period. Then Gov. Janet Mills called a special session so the Legislature could finish its work. The brief adjournment allowed the party-line budget to take effect before the start of the fiscal year.
Republicans called the move unconstitutional. But the Maine Supreme Court dismissed a lawsuit that was filed over the procedural move.
Asked Wednesday if Democratic leaders would consider such a move again to speed up the timeline for MaineCare funding to take effect, a spokesperson for Daughtry said only that, “We are very hopeful that our colleagues across the aisle will vote with us to achieve the two-thirds vote that is needed to address these emergencies now.”
