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Federal Cuts Leave Maine Hospitals Facing Deficits
03/14/2014   Reported By: Jay Field

Eastern Maine Medical Center in Bangor is facing a $7 million deficit, due in large part to lower reimbursement rates from the government and a larger-than-expected surge in charity care. It's a similar story at medical centers across the state. Hospitals knew that certain Medicare cuts were coming under the Affordable Care Act. But enrollment in the new health insurance exchanges - at least so far - hasn't led to the reduction in charity care that was expected.

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At EMMC, that expected reduction in charity care has turned into something else. "We're seeing a significant increase in the cost of charity care," says Debbie Johnson, EMMC's president.

Johnson says the hospital is already five months into its fiscal year. And so far, it's been hit with a $27 million bill for free care and bad debt. That's an $8 million increase over the same time period a year ago.

Johnson says the hospital had hoped that enrollment in new health insurance exchanges, under the Affordable Care Act, would lessen EMMC's charity care burden as its fiscal year wore on.

"We just don't know what our experience will be. We're sort of in a wait, wait and watch, wait and see mode," she says. "We are working to encourage people to sign up for coverage."

But this is only part of the the financial challenge EMMC is facing. The hospital has also been hit with an estimated $10 million decrease in reimbursements under Medicaid and Medicare compared to last year.

"I think the Affordable Care Act is only part of it," says Steven Michaud, who heads up the Maine Hospital Association. Michaud says medical centers statewide have been struggling with declining reimbursement rates for years. Hospitals got money for some of their outstanding debt last year, when the Legislature passed - and Gov. Paul LePage signed - a bill authorizing a bond to be paid off with future state liquor revenue.

But that transaction doesn't account for current Medicaid debt that continues to accrue, and Medicare cuts used to pay for parts of the Affordable Care Act.

"And this is what we were always concerned about with that law - the Medicare cuts that were put into effect - and they were put into effect immediately - didn't wait for 2014, when coverage was supposed to start," Michaud says. "And we were always worried, would the coverage be there to balance that off? Because that's what the whole point was."

The money from the Medicare cuts is being used to provide insurance subsidies to people signing up with health care exhanges and to allow states to expand Medicaid coverage. Hospitals, the thinking went, will be able to absorb the Medicare cuts, "as long as they're getting new revenue, from newly insured people," Michaud says. "Well, as we feared, the cuts were guaranteed and we're not seeing the coverage to offset them."

Earlier this week, the Maine Senate passed a measure, for the second year in a row, to take the federal government's offer to expand Medicaid coverage in the state. But Gov. Paul LePage opposes the idea, and there isn't enough support in the Legislature to override his expected veto.

Franklin Memorial Hospital, which employs 40 providers and serves around 38,000 people in and around Franklin County, is losing millions of dollars a year. I asked the hospital's president and CEO, Rebecca Arsenault, if she thinks the Affordable Care Act will begin to work in a way that takes some of the pressure off hospitals like hers.

"I think it has to," she said. "I think to dismantle it completely and start over would set us back a decade."

Arsenault says the federal govenment needs to fix glitches in the law, like one that offers no insurance subsidies to working poor people, who make a tad too much to qualify for MaineCare. The assumption was that these consumers would be covered under any expansion of Medicaid.

Meantime, hospitals, doctors' offices, non-profits and others across the state are working overtime to encourage people to go online and enroll.

"So we know that over 25,000 Mainers have enrolled in plans through the marketplace," says Emily Brostek, with Consumers for Affordable Health Care.

Brostek says Maine has already outperformed the goals that the federal goverment has for the open enrollment period. "But many of those people haven't necessarily started to use their coverage."

When they do, Bostek says she expects to see at least some easing in the large number of charity care cases filling hospital waiting rooms throughout Maine.


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