Northern Light Inland Hospital in Waterville closed in June. Hospital officials across Maine say the state’s consistent lag in reimbursing them for services provided to residents on MaineCare, and policy changes on the horizon, could force more closures. (Rich Abrahamson/Staff Photographer)
Earlier this year, hospitals were caught in a political feud over MaineCare spending that triggered a temporary curtailment in funding that amplified concerns about more closures and a further loss of services.
While state officials say they caught up on those payments in late June, the funding debate belies a truth health care providers serving residents in Maine’s Medicaid program know all too well: that it takes years for the state to reimburse them for appointments, screenings and treatments.
And hospitals say it’s not a glitch or an intentional effort to withhold funding, which was the case more than a decade ago — it’s how the system is set up.
Hospital officials said the lag in payments — totaling roughly $100 million a year — creates additional financial risk at a time when hospitals are closing and eliminating services.
Jeffrey Austin, vice president of government affairs for the Maine Hospital Association, said hospitals are currently struggling to keep their doors open, and faster reimbursements would provide them with some breathing room — at least in the short term.
“We’re carrying this stuff for the state while the state has a surplus every year, plus a rainy day fund of a billion dollars,” Austin said. “Our guys are so hurting – we just can’t afford to float this for 18 months or two years anymore. We can’t afford it.”
And those financial challenges are only expected to increase in the coming years as federal and state policy changes take effect.
At the federal level, President Trump’s “One Big Beautiful Bill” contains about $911 million in Medicaid cuts over the next decade, expected to cause about 10 million Americans, including more than 40,000 Mainers, to lose health coverage. It’s expected to hit rural hospitals especially hard, since Medicaid is a primary source of funding.
State lawmakers last session enacted legislation increasing the amount of free care hospitals must provide. And that’s on top of the increase in charity care that is expected when the Medicaid cuts take effect after the 2026 midterm elections and people who lose insurance get sick and show up at a local emergency room.
A study by a national think tank, the Center for Healthcare Quality and Payment Reform, recently concluded that half of Maine’s 24 rural hospitals are at risk of closing even without factoring in further cuts to Medicaid.
Northern Light Health’s Inland Hospital in Waterville closed this year. Others have closed birthing centers and emergency rooms to cut costs.
While state officials note that hospitals received weekly interim payments, Austin said getting fully reimbursed for services provided two years ago amounts to a cut in funding, since the cost of services, including salaries, continues to increase, and the money coming in from the state is not keeping pace.
“They’re already a low payer, and they’re delaying that low payment,” Austin said. “With an inflationary environment, a two-year delay can be a 6, 7, 8% cut.”
Last session, lawmakers had an opportunity to speed up that reimbursement process but postponed final action.
The bill, sponsored by Rep. Gary Drinkwater, R-Milford, would have required the state to provide 75% of hospital reimbursements within 90 days of receiving a hospital’s cost settlement report, which is submitted annually within five months of the close of the fiscal year.
LD 331 was modeled after a similar bill approved in 2023 to speed up payments to nursing homes.
The bill would have required a one-time investment of about $75 million, providing a necessary lifeline to hospitals, especially smaller ones in rural areas.
The effort appears to have fallen to the politics of the moment.
Democrats, who control both chambers and the Blaine House, hammered Senate Republicans for blocking an emergency budget bill that would have provided an additional $118 million in payments to providers. Republicans withheld their support because they wanted reforms to safety net programs, including adding work requirements and freezing enrollment in MaineCare.
Drinkwater’s proposal originally failed in the House, when the majority Democrats, who were still pressing Republicans to support their emergency budget request, voted against it. But the lower chamber reversed course after the proposal was approved by the Senate.
The bill was not enacted and currently sits on the appropriations table, where it awaits funding before it can be sent to Gov. Janet Mills.
House Speaker Ryan Fecteau, D-Biddeford, declined an interview request through a spokesperson to discuss the votes.
In the spring, MaineCare Director Michelle Probert told lawmakers that the Department of Health and Human Services would support the bill, as long as lawmakers provided additional funding so the state could “get ahead of the payments and eliminate the need to borrow funding from future fiscal years.”
Probert told the Portland Press Herald/Maine Sunday Telegram that the cost settlement payments account for less than 10% of the state’s Medicaid reimbursements, while acknowledging that total can add up for larger hospitals.
The bill was supported by the state’s two largest health care providers — Northern Light Health and MaineHealth.
Sarah Calder, vice president of government affairs, told lawmakers in March that MaineHealth was still awaiting more than $100 million in reimbursements, including $40 million in payments for the 2023 fiscal year, running from Oct. 1, 2022, through Sept. 30, 2023.
“It is important to note that this is care that has already been provided and the expenses have already been incurred — in some cases more than 2 years ago — and we’re still waiting on reimbursement,” Calder said in written testimony. “These are exceptionally challenging times in health care with many hospitals throughout the state having less than 30 days cash on hand.”
Republicans, meanwhile, were accusing the state of not paying its bills — equating the systemic delay in payments to the events of more than a decade ago, when former Republican Gov. Paul LePage paid off $484 million in hospital debt in 2013.
But that debt was caused by the state failing to recognize increased costs for hospitals associated with a series of expansions that added more people to MaineCare.
Lisa Harvey-McPherson, vice president of government affairs at Northern Light Health, told lawmakers that the state’s timeline is predictable, but the delay in payments is partly responsible for the network’s $300 million budget gap in its MaineCare program.
“As we work to improve our financial performance, timely payment for the services we provide is a priority,” Harvey-McPherson said. “We incur the cost to provide care in real time — our doctors, nurses, medical procedures, clinical imaging — all of it. And we are challenged when we wait years to receive the MaineCare settlement payments that we are due. This bill resolves the problem of delayed settlement payments.”
Austin, of the Maine Hospital Association, said that cost reports submitted by hospitals are “very accurate.” He said the state requires hospitals to submit a check if their own cost reports show they owe money, which occasionally happens, but he’s not aware of any statutory deadline for the state to pay hospitals.
A DHHS spokesperson said that, last year, the state owed hospitals additional money 80% of the time after the cost settlement process.
Austin believes the time is right for the state to change its system, especially with policy changes at the federal and state level.
Last week, state officials reported a $152 million surplus for the fiscal year ending June 30 and Budget Stabilization Fund, or “Rainy Day Fund,” of more than $1 billion, the maximum allowed under state statute.
While speeding up payments would not change the overall fiscal health of a hospital, Austin said the one-time infusion of cash would give hospitals some breathing room and prepare for the added financial pain they expect when Trump’s bill fully takes effect.
“It would be helpful in the year you’re facing pain,” Austin said. “And we also felt this pain was coming from D.C. as well. We’ve got to survive.”
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
