New Bill Proposed To Help Maine’s Rural Hospitals

May 5, 2019

Rural hospitals across the country say they are being been hurt by increased costs and inadequate Medicaid reimbursement rates. Maine’s rural hospitals are facing the same pressures, and state lawmakers are considering a bill to ease financial woes.

Shawn Anderson of the Houlton Regional Hospital says those clinics need help that goes beyond the Medicaid expansion that is now underway in Maine.
Credit Houlton Regional Hospital

The legislation, which has bipartisan support, addresses three areas that hospitals say are critical for them to continue operating. The first is a straight-forward increase in the Medicaid reimbursement rates for doctors employed by hospitals. The second would boost the rates paid to rural health clinics owned by the hospitals.

Shawn Anderson of the Houlton Regional Hospital says those clinics need help that goes beyond the Medicaid expansion that is now underway in Maine.

“The much-anticipated recent Medicaid expansion will certainly help improve the hospitals financial situation, but it’s critically important to note that Medicaid expansion alone will have no impact on the losses incurred at Houlton Regional Hospitals health clinics,” Anderson says.

The third part of the bill addresses the tax burden that doctors and other health care providers get when a hospital “forgives” all or part of their student loans. In an effort to recruit physicians, hospitals often advance them loans to pay of student debt, and then forgive the loan, which generates a sudden tax bill for the employee.

The Maine Hospital Association estimates that its members forgive about $20 million per year in loans. The legislation would abolish the state income tax due on the value of the loans that are paid off by the hospitals. The bill has a total price tag of about $5 million per year, and hospital association estimates that it will bring in over $12 million in Medicaid matching funds from the federal government. None of the fiscal requirements in the bill are included in Gov. Janet Mills proposed budget.

But Senate President Troy Jackson, a Democrat from Allagash, believes that there is bipartisan support to make the legislation a spending priority.
Credit Mal Leary / Maine Public

But Senate President Troy Jackson, a Democrat from Allagash, believes that there is bipartisan support to make the legislation a spending priority.

“People want to make sure that they gave their health care in rural Maine and you know many of my republican colleagues live in those areas so I think we can do this,” says Jackson.

The measure is before the legislature’s Health and Human Services Committee. If passed by the legislature, it will have to be funded and will be competing with scores of other spending bills.