State Makes Payment to Maine Hospitals

Press Release

State Makes Payment to Maine Hospitals

Governor John E. Baldacci today signed a $45 million financial order to pay a portion of the State's obligation to Maine hospitals under an October 2006 settlement agreement. The Governor was joined in the Hall of Flags announcement by the Maine Hospital Association, bipartisan Legislative leadership and representatives from Maine's Congressional Delegation.

"Today is a good day for Maine hospitals and for our State," said the Governor. "We are fulfilling the promise of the Recovery Act by protecting jobs and protecting access to health care for our most vulnerable neighbors."

The financial order signed today enables the State to use $45 million of General Fund money made available by the federal Recovery Act. The money will draw down federal dollars for a total payment to hospitals of $163 million in State and Federal dollars. In addition, the Governor has submitted a proposal to the Legislature that includes an additional $57 million for hospital payments. The $57 million will draw down federal matching dollars for a total payment in 2010 of $210.7 million dollars.

All told, Maine's hospitals will receive payments in 2009 and 2010 toward old settlements totaling $373.7 million in Federal and State dollars.

"In October 2006, I committed to an aggressive four-year schedule to increase hospital reimbursements and repay Maine's hospitals for settlements owed to them," said Governor Baldacci. "Despite difficult budget times, working with the Legislature we have been able to meet that commitment. The agreement I signed in 2006 was to bring Maine current through fiscal year 2007. With these payments, we will go beyond what we agreed to."

As the Appropriations Committee worked to close the 2009 supplemental budget, a bipartisan agreement was reached that ensured that the first General Fund dollars freed up by increased federal support for Medicaid would be directed toward hospital settlements. At the time of the agreement, the amount that would be available was not known.

"I am proud of the balance that we have achieved by working together to meet our obligations to Maine's hospitals, especially our rural facilities," said the Governor. "At the same time, we have avoided painful cuts in human services. We know that this global recession will put increasing strains on our safety net."

The 2006 agreement also called on hospitals to work to control the cost of the health care they provide.

"In the agreement, both sides agreed to a target of 3 percent growth in hospital costs," said Governor Baldacci. "As important as these payments are, we also know that our current rate of health care spending is not sustainable. It will take a collaborative effort between the State, Maine's hospitals and other health care providers to contain costs while providing access to quality care."

"As we move forward, Maine will replace its current payment method, which involves interim payments followed later by settlements, with a system that is more accurate and more timely. But we will need everyone - my administration, the Legislature, the hospitals and other care providers - all working together to contain costs," said the Governor.

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