Gov. John Baldacci is close to an agreement with the state’s hospitals on paying an estimated $200 million for overdue and anticipated Medicaid bills over the next four years – a deal that could steal thunder from his opponents on the campaign trail.
While an announcement was expected Tuesday at the Health and Human Services Committee, that turned out to be premature.
“It’s pending,” said Finance Commissioner Becky Wyke. “It’s very close.”
Wyke was reluctant to put out bottom-line numbers, but the Maine Hospital Association has said the settlement should be in the $550-million range, for both state and federal Medicaid payments. That would include $330 million for past debts and $220 million for increasing payments in the future to better reflect patient volume.
The state’s share of that is $204 million, according to the Maine Hospital Association, and the governor has promised to have everything current over the next four years or two biennial budget cycles. Once the state pays its share, that triggers the federal matching funds.
“The governor is committed to a four-year plan, but the actual agreement may be something different,” Wyke said, referring to the possibility that the debt could be paid off a bit faster. “The outer limit is four years.”
Despite Tuesday’s delay, Mary Mayhew of the Maine Hospital Association said she’s optimistic that a deal is imminent.
Baldacci has been under pressure to come up with an agreement, because the hospital association and its members have successfully pushed the debt as a campaign issue heading into the November election.
Health and Human Services Committee Chairman Hannah Pingree, D-North Haven, said the strategy was a good one, since it seems to have created bi-partisan support for a payoff. “I’m encouraged about where we are,” she said.
That payoff, estimated at $102 million for the state’s share in the first biennial budget and another $102 million in the second, would add to a budget shortfall already being projected for fiscal years 2008 and 2009.
The administration earlier this month said state government faces a potential gap between revenues and program and department demands of $570 million for 2008 and 2009 and that was without the hospital payments.
Rep. Kevin Glynn, R-South Portland, a member of the Health and Human Services Committee, said he wanted assurances the governor would not try to borrow the money to pay the hospitals.
“I don’t’ want to see a big debt component to this,” Glynn said.
Wyke said there is no borrowing involved in the plan, and that more details would be available as soon as the governor and the hospital association agree on the final numbers.
The owed payments range annually from hundreds of thousands of dollars for smaller hospitals with low Medicaid volume, to more than $22 million for Eastern Maine Medical Center.
They have accumulated because the state underestimated Medicaid volume at the state’s hospitals, and has been slow to make up the difference when audited reports show the shortfall. The problem started to snowball when the state expanded the Medicaid program to include more adults in 2002.
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