AUGUSTA – In an attempt to control spiraling health care costs, the Department of Corrections is proposing to limit reimbursement rates for hospitals and health professionals that treat prison inmates.

It’s an effort to try to save tax dollars, however, that isn’t sitting well with officials at Penobscot Bay Medical Center in Rockport, which provides a large portion of medical services to state prison inmates.

The Maine State Prison is in nearby Warren.

Elmer Doucette, vice president for fiscal services for Northeast Health, PenBay’s parent company, said PenBay, “like many other hospitals in Maine, will be severely hurt if reimbursements for medical care provided to individuals and state and county correctional facilities are limited to Medicaid rates. This is on top of a $1 million reduction that the hospital has had to absorb based in the governor’s biennial budget.”

Knox County legislators descended on the Criminal Justice and Public Safety Committee on Wednesday to protest the proposal, saying that PenBay would bear too much of the burden. They said it would mean losses of at least $200,000 a year for the community-based nonprofit hospital.

The primary provider of health care services for Maine prison inmates is Correctional Medical Services, a managed care company based in St. Louis. Denise Lord, associate corrections commissioner, said the company did not receive the corporate rates granted to other insurance companies, such as Anthem or Aetna.

Lord noted that Correctional Medical Services paid about 90 percent of costs billed, while private insurance companies and MaineCare pay much less.

DOC’s proposal asks lawmakers to approve a bill that would have hospitals and other health care providers bill DOC’s medical provider at the MaineCare rate, which is substantially lower than the regular rate, when treating any prison inmates.

Sen. Ethan Strimling, D-Portland, the Senate chairman of the Criminal Justice and Public Safety Joint Committee said he had heard from administrators at Maine Medical Center in Portland, which also treats some prison inmates.

“They told me they were looking at losses of around $500,000,” Strimling said.

Some inmates are already MaineCare members, and Lord said the department encourages inmates to apply for MaineCare while in prison. If they are MaineCare participants, then their hospitalization costs are covered. MaineCare does not cover outpatient costs, however.

The costs for those patients who are not enrolled in MaineCare are picked up by the department’s medical provider.

Lord said the increasing number of prisoners in the state system, combined with a growing number of prisoners entering the system with serious illnesses, has put a huge burden on the system. She said if the department could get the MaineCare reimbursement bill passed, DOC would have better leverage with which to negotiate next year’s contract with its medical provider, thereby limiting cost increases.

“One example is over the holidays we had two inmates come into the system with hepatitis C,” Lord said. “It takes a lot of resources to treat them. It’s not so much that our prison population is getting older, it’s that the number of inmates coming into our system with serious illnesses is really increasing and we have to address these costs somehow.”

The legislation was in among several other DOC bills and was on the committee’s agenda for Wednesday, but just before she addressed the committee, Lord said the matter of the reimbursement had actually been included in Gov. John Baldacci’s emergency supplemental budget.

Therefore, that legislation will be debated in front of the Appropriations Committee next week. Despite the last-minute change, Knox County legislators and the Maine Hospital Alliance insisted on addressing their concerns to the members of the Criminal Justice and Public Safety panel.

One legislator, Rep. Lois Snowe-Mello, R-Poland, accused the department of trying to sneak the legislation in when it was clearly rejected last session. Last year legislators approved the MaineCare reimbursement protocol for county jail inmates, but rejected an amendment to that legislation that would have included state prison inmates.

Mary Mayhew of the Maine Hospital Association said her association didn’t like the reimbursement package when it was applied to county jails, but said at least the cost burden was spread out among hospitals across the state.

“We let that go, but we said then that if the state tried to do the same thing with state inmates we could not let that pass,” she told committee members. “MaineCare in a horrific crisis anyway.”

She told committee members that PenBay would be facing a crisis should the Legislature approve the DOC reimbursement bill.

Also expressing concern Wednesday was Carol Carothers, executive director of the National Alliance for the Mentally Ill of Maine.

“I am not opposed to cost savings, but I do oppose cost savings that compromise the health care available to inmates,” Carothers wrote in a statement. “Health care for inmates in Maine is poor, jails struggle to provide adequate care and 20 inmates have died in our jails and prison in the last five years because of these shortcomings.”

Carothers said that the bill may create a system where costs were limited in such a way that inmates could not receive needed care outside of the jail because the rates would be too low for local providers to accept them.