Specifically, the set of initiatives in the supplemental budget:
Support MaineCare rate reform for hospital inpatient and outpatient services by investing $90.3 million in federal and state dollars in State Fiscal Year (SFY) 2025, starting July 1, 2024;
Finance most of this rate investment by increasing the hospital tax rate from 2.23 to 3.25 percent, raising $29.5 million in SFY 2025, starting January 1, 2025, to complement the Federal share of these MaineCare (Medicaid) payments; and
Add $2.5 million of General Funds to the $6.3 million already in the FY24-25 biennial budget to help with rate reform, including for a transitional payment to assist York Hospital, which has a unique grandfathered funding structure, in moving to the new system consistent with all other acute care hospitals in the state. This payment to York Hospital is targeted, based on data shared with hospitals, to total $5.6 million annually for the next five years.
As part of rate reform, the plan would repeal both the tax on and supplemental payment to critical access hospitals effective December 31, 2024 while adjusting cost reimbursement from 109 to 104.5 percent starting on July 1, 2024.
Additionally, the budget proposal would direct that net hospital tax revenue be directed to the “Medical Care – Payments to Providers” program in the Department of Health and Human Services to be used for MaineCare hospital payments.
The agreement builds on MaineCare payment improvements to behavioral health providers, Federally-qualified health centers, and for inpatient psychiatric and substance use care, which was implemented in July 2023 with a similar transition payment to Northern Maine Medical Center.
The Department’s sweeping and unprecedented plan to transform MaineCare (Maine’s Medicaid program) rate setting from a fragmented, often outdated and arbitrary approach into a coherent, streamlined and data-driven system is well under way. The plan is a culmination of Governor Mills’ directive to DHHS on her first day in office to expand MaineCare and develop a plan to make the health coverage program for low-income people more accessible, affordable, and sustainable.
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