Medicare & Medicaid Reform

The Blue Ribbon commission noted in several sections that not only are hospitals and other health care providers being underpaid by as much as 70%, but that Maine receives nearly half the level of reimbursement of states like Florida .

As any one who has been in business knows, that unlike government when you don’t get fully paid for services rendered, you don’t necessarily reduce the cost components of those services because of the difficulty of doing so; but you shift them over to someone who will pay them. This is called “COST SHIFTING” and is a major problem!

It is so much of a problem that when Governor King announced his interim budget, there was a loud scream of anguish from the Maine Hospital association over the decision to reduce reimbursement of Medicare and Medicaid costs

Here is some commentary:

Maine does very well overall,” said Matt Kane, author of the study done by the Northeast-Midwest Institute, a Washington-based think tank. ”On a per capita basis, Maine took in $1,375 or 36 percent more that the 50-state per capita amount.”

The study looked only at federal grants to state and local governments for various purposes, not federal funds spent in the state on payrolls or to purchase goods and services. The report estimated Maine received $1.753 billion in grants.

While Maine did well, it was second to Vermont among the New England states in garnering federal grant funds. Vermont was fifth-highest in the nation. New Hampshire fared the worse in the region and 43rd in the national ranking.

“Like other states, the biggest single federal program in Maine is Medicaid,” Kane said last week. The study indicates Maine received more than $962 million in federal Medicaid funds, 167 percent above the national average.

“Maine takes advantage of more of the options under the Medicaid program than many other states,” said State Economist Laurie LaChance, ”so I think that is part of why we do so well compared to other states.”

Medicaid provides health care to the poor and also pays for nursing home care for many older Mainers. The program is a joint federal-state program with the feds paying 67 percent of the cost. Nationally, the federal share can be as low as 50 percent and as high as 83 percent.

LaChance said the Department of Human Services has done a good job of maximizing the use of Medicaid to stretch state funds. She said some states might not have the staff resources to take full advantage of available federal funds.

BUT...."Formula description

Funding is distributed to states to reimburse their medical assistance costs based on the Medicaid reimbursement formula. The federal share for reimbursement is determined based on an initial reimbursement rate of 55 percent, but this 55 percent level is adjusted up or down using the ratio of a state’s per-capita income to the U.S. per-capita income, squared. States with high per-capita incomes relative to the U.S. level receive reimbursement at a rate below 55 percent, to a minimum federal share of 50 percent, and states with low per-capita incomes relative to the U.S. level receive reimbursement at a rate above 55 percent to a maximum of 83 percent. (Source: U.S. General Services Administration, Formula Report, http://www.cfda.gov.)