HOULTON, Maine — Like other facilities around the state, hospitals in Aroostook County have been waiting for years for the state to pony up the millions of dollars it owes them for care they have extended to patients covered by the MaineCare program.
With a number of County hospitals under increased financial strain, hospital officials have set their sights on the new administration in the Blaine House to see what relief Gov. Paul LePage will offer them in terms of paying down the state’s debt to the hospitals. Administrators said this week they are cautiously optimistic about a supplemental budget proposed by LePage earlier this month, which includes approximately $70 million to reduce the state’s share of debt to hospitals resulting from underpayments in the MaineCare program over the past five years.
“It is good to see that the governor is following through on one of his campaign promises,” Tom Moakler, the CEO of Houlton Regional Hospital, said Wednesday. “Now we are just waiting to see what the Legislature will do.”
In the supplemental budget, LePage included about $70 million for the program, which in turn would leverage federal matching funds for a total of $248 million to pay back to Maine hospitals statewide. That would represent more than half of the $400 million the state owes in back MaineCare payments to hospitals.
The budget proposal now must make it through committee and be approved by the Legislature.
The lack of regular reimbursements through the state’s MaineCare program for services provided by the hospitals to Medicaid patients has disrupted the normal cash flow of hospitals both in The County and statewide.
Moakler said the state owes the critical access hospital $2.5 million in back payments since 2005.
Last fall, Moakler drafted a 2011 budget for the hospital of 450 employees. For the first time in 14 years, the $44 million fiscal forecast contained no wage increases.
If the hospital receives payment, he said, it would immediately use $1.4 million of it to pay off the short-term loans it has had to obtain to pay bills in the interim. The hospital also would be able to pay its vendors faster, he explained.
At this point, the average hospital bill is paid in 100 days, and some vendors have been waiting as much as six months for payments. If the funding comes through from the state, Moakler said, the hospital could pay bills within 60 or 70 days.
At The Aroostook Medical Center in Presque Isle, the state owes that hospital close to $8 million for the care it has extended to MaineCare patients. Sylvia Getman, TAMC’s president and CEO, said recently that if the proposal in the supplemental budget passes, TAMC would receive about $5.1 million in back payments.
“We’re pleased that Gov. LePage has made a commitment to paying these overdue bills,” said Getman. “It will have a tremendous impact on health care in our community.”
She said the delay in payments from the state has affected TAMC in a number of ways. The hospital also has delayed payments to local vendors due to cash flow problems. It also has had a capital budget freeze for several months, which means that purchases of new medical equipment and technology have been put on hold.
Both the Houlton and Presque Isle hospitals saw a reduction in patient volume last year, mainly due to the downturn in the economy. Financial issues led to TAMC offering close to 30 employees early retirement packages and related incentives. The hospital employs more than 1,000 people.
Moakler said he is “fairly optimistic” the Legislature will pass the supplemental budget as proposed. He said he has been in contact with local lawmakers to stress the importance of the back payments being made.
“This is good news, but we should have been paid this money years ago,” he said. “Getting those back payments will make our cash situation a little more manageable and allow us to pay our bills quicker.”
Getman also said she was “cautiously optimistic.”
“We hope the Legislature will agree that paying the state’s debt to hospitals is a priority,” she said. “It really does impact our ability to provide the people of our community with the high level of services they deserve.”
“This is a big step, and we’re very happy with the decision to include this money in the supplemental budget,” she continued. “Local hospitals are there for the community 24 hours a day, every day of the year. Hospitals touch the lives of just about everyone, purchase goods and services locally, and employ many people. Getting paid for the services we have provided is so important if we are to continue to be here for our patients whenever they need us.”
Kris Doody, the CEO of Cary Medical Center in Caribou, also was pleased to hear news of the directives in the supplemental budget. She said the hospital is owed $4.6 million in back payments since 2007. Because that debt has lingered over the years, Doody said the hospital has held off on some capital purchases, instituted a freeze on raises and took other steps toward cost reductions.
“We don’t anticipate that we will get all of the money that we are owed, but we feel we will get enough so that it will help replenish some of the money that we have taken from our reserve accounts to keep operating,” she said Wednesday.
Doody said she was “very optimistic” that the Legislature will approve the measure to pay down the debt.
“We believe that the Legislature recognizes the importance of paying us the money we are owed,” she said.