Dirigo Health: can’t lead if you can’t pay

“A small debt makes a man your debtor, a large one makes him your enemy.” – Seneca, from “Ad Lucilium”

“If the Maine Medicaid budget continues to run amok in the red the resulting budget deficits may strip the state budget of its ability to support the Dirigo Plan, and perhaps strip Gov. Baldacci of political support for his Dirigo baby.” – Dr. Erik Steele, from BDN column last year

Maine Medicaid (Maine-Care) has become the state’s most unreliable health care insurance payer. In the past that would just have been a pain in the financial assets of those doctors, hospitals and other providers who take care of MaineCare patients (one in five of all Mainers are insured by MaineCare). Now, however, Maine-Care’s status as a progressively unreliable payer jeopardizes the state government’s ability to lead the implementation of its Dirigo Health Plan, and to lead health care policy discussions in Maine.

Why? Because the state government that manages MaineCare and is responsible for paying MaineCare bills is also trying to lead the drive to rein in health care costs in Maine.

Consider:

. MaineCare’s new computers bit the byte earlier this year, shutting off payments for several weeks to thousands of doctors, dentists, psychologists and others taking care of MaineCare patients;

. Then, shortly after the computer system got going again, the state announced that MaineCare had erroneously overpaid those health care providers by some $50 million, and, of course, wanted that money back;

. Many Maine physicians have not had a fee increase from MaineCare in almost 20 years. There is a fee increase proposed in the new MaineCare budget, but growing state fiscal red ink threatens the increase and few physicians will believe the increase is coming until they see it. The result of this chronic underpayment is that many Maine physicians restrict the number of MaineCare patients they see, or refuse to see them altogether, because those patients may cost physicians more to take care of than they are paid for providing that care;

. 12 of Maine’s hospitals recently had to sue the state to recover $166 million MaineCare dollars owed them for care those hospitals provided to MaineCare patients as far back as 1996. The state has settled the suit for about 66 cents on the dollar owed;

. Maine hospitals are owed another $170 million in back payments because the state has failed to pay since 2002 for the increased numbers of MaineCare patients being treated at those hospitals (enrollment in MaineCare has increased from about 200,000 Mainers in 2001 to about 260,000 in 2004). To address this debt the state committed to an increase in MaineCare payments to hospitals in the proposed 2006-2007 budget, but has recently withdrawn much of its commitment to do so in the face of growing budget deficit pressures in that budget;

. The Maine Hospital Association estimates that MaineCare will owe Maine hospitals almost $350 million dollars in two years if the MaineCare budget passes as now proposed by state government. While the state has promised to pay this growing debt over the next several years, the projected $700 million deficit in the state’s 2008-2009 biennial budget makes hospitals skeptical they will ever see the money owed them.

Part of what makes many MaineCare providers so frustrated with state government over the payment issue is that MaineCare payments may be the difference between financial survival and disaster. At best, without reliable payments they cannot budget. At worst, without reliable payments they may not survive. According to its chief executive officer, Blue Hill Memorial Hospital is owed more than $800,000 by MaineCare for, among other things, MaineCare babies delivered in 1999 who are now in first grade. That money amounts to several times the hospital’s bottom line in the last few years. Furthermore, MaineCare’s failure to pay its hospital debts mean those debts will be passed on to other patients, their health insurance companies and their employers.

At its core the problem is not evil state officials who simply want to avoid the state’s debts. It is Maine’s state budget deficit, and particularly the unaffordable growth in the state’s share of MaineCare’s costs. At $700 million a year, MaineCare is now the second largest item in the state budget, and costs about $200 million annually more than it did in 2001. We all got into this problem in part because Maine has so many residents without health insurance, and MaineCare rolls were expanded to reduce the number of uninsured.

There is no easy way out of the mess. Maine’s government leaders can cut MaineCare costs to the bone but that flesh removed is the health care of real people. It’s a dilemma for the health care providers, too; less MaineCare coverage for Mainers means more Mainers with no insurance at all. That means more unpaid medical bills; in 2001 Maine hospitals alone had an estimated $190 million in bad debt from uninsured patients.

But Maine’s governor, his health care policy team, and our legislative leaders must find a way for MaineCare to reliably pay the debts the state incurs for MaineCare patients on the schedule the state government made to pay those debts. Otherwise, Maine’s Dirigo Health Plan and any collaborative attempts to solve other health policy issues will be jeopardized by the growing distrust between the state’s government and its health care providers. Otherwise, Maine will lose the only initiative it has ever had to rein in health care cost growth.

The price for state government leadership of health care policy discussions in this state is that the state must be a reliable payer for MaineCare patients. The Dirigo Health Plan was named that for a reason; Dirigo means “I lead.” But if you can’t pay, you can’t play well and you certainly cannot lead.

Erik Steele, D.O., a physician in Bangor, is chief medical officer of Eastern Maine Healthcare Systems and is on the staff of several hospital emergency rooms in the region.