Smaller Maine hospitals would be adversely affected by proposed payment reform
Proposed changes in MaineCare reimbursement rates are intended to benefit hospitals, but some facilities says it would cause financial harm.
Under the reforms, Maine hospitals would be taxed at a higher rate. It may sound counter-intuitive, but those higher taxes would allow the state to draw more federal dollars to raise reimbursement rates and give many hospitals an overall boost. But not for York Hospital, says President and CEO Patrick Taylor.
"I'd like to believe that if DHHS and even Gov. Mills fully understood the detrimental impact that this proposal would have to both York Hospital and the communities that we serve, that this decision wouldn't stand," Taylor says. "This proposal wouldn't stand."
Taylor says York Hospital would have to pay an additional $2.4 million each year in taxes. And he says they wouldn't see the benefit from higher reimbursements because the hospital doesn't have a large number of MaineCare patients. And that already causes reimbursement issues. So much so, that for years, the hospital has received an extra $5.6 million annually from the state. But under the new proposal, that funding would expire in five years.
"So now we have 2.4 from the tax increase. And the reimbursements going to down by 5.6 million dollars," says Taylor. "Now you have $8 million of additional impact to York Hospital. That's huge."
The president of the Maine Hospital Association, Steven Michaud, acknowledges that York Hospital would be adversely affected.
"Let there be no doubt. If there's an $8 million hit to York, whether it's now or five years from now, that's a significant threat to their viability," he says.
Michaud says other hospitals - mostly small critical access facilities - would also see negative effects from the proposal.
Down East Community Hospital says its two facilities in Machias and Calais would see an overall reduction in reimbursements of more than half a million a year. Spokesperson Julie Hixson says it's another negative blow to financially vulnerable hospitals "and will drive rural hospitals to reassess the breath of services that can be provided and still remain viable."
Despite these concerns, Steven Michaud says the MHA supports the reforms.
"Because of all of the money that's coming into the state that benefits so many hospitals, that is so needed, especially coming out of the Covid pandemic, we got to yes," he says. "Because of the agreed-upon five year reprieve for York."
Michaud says that reprieve will buy time to figure out how to improve the situation for York. If there isn't a solution, says York Hospital president Patrick Taylor, he would have to cut staff by 20 percent to account for the $8 million hit.
And Julie Hixson at Down East Community Hospital says the best they can do is to encourage community members to use their hospitals' services "because volume from local community support is what it will take to regain strength."