March 8, 2004

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Gov. Baldacci Outlines 2005 Supplemental Budget & Medicaid Cuts
The Governor on Friday unveiled general elements of the supplemental budget needed to make up the projected deficit from July 1, 2004 through June 30, 2005. The budget gap is approximately $138 million and is primarily the result of shortfalls in the MaineCare program and a change in the deferral match rate.
During a press conference at mid-day on Friday, the Governor outlined his plan to address the budget gap with savings from DHS and DBDS programs.  Although the proposed cuts in MaineCare will impact on physicians indirectly, physicians have been spared direct reductions in reimbursement.

While not many details will not be known until the printed budget document is available, probably some time this coming week, here are the highlights from the the comments made at the press conference.

  • $22 million in savings from "redesigning  benefits" for adults in MaineCare
  • $7.3 million net (state and federal) loss to hospitals, partially offset by new federal money  through the Critical Access Hospital program, and generating through more "tax and match" funds,  another $6.7 million in additional General Fund revenue.
  • $11 million in savings from reductions in mental health services
  • $4.4 million in savings from reductions in services to individuals with mental retardation
  • $12 million in savings from reductions in long term & chronic care
  • $14.4 million in savings from further reductions in pharmaceutical costs

Upon MMA's initial review, two particular items will be of  significance to physicians:

  • In the description regarding reimbursement to hospitals, the document states that it will, "standardize physician reimbursement regardless of setting."  This may represent an attempt to pay physician fees in hospital-owned provider practices at no more than is paid to privately practicing physicians.  Currently, such hospital-based practices are reimbursed for the full costs of Medicaid and Medicare.
  • References to more prior authorization of certain services and elimination of brand-name drugs will undoubtedly impose more administrative burden on physicians and their practices.

     The proposal includes approximately $61.7 million in MaineCare cuts to recipients and providers, representing nearly 10% of Medicaid funding for one year.  The proposal continues the Governor's commitment to not reduce eligibility, but does impose restraints on services.  By not restricting eligibility, the proposal will continue to fuel, particularly among the Republicans, a call for delay in implementation of the largely state-funded Dirigo Health program.  Given the continuing deficits in the existing MaineCare account, Republican lawmakers have called upon the Governor to delay the start of any new health program.  Hospital interests have made the same point.

Medicaid Watch Debuts with Four Facts About Maine Medicaid
The Maine Heritage Policy Center published its first MEDICAID WATCH last week.  The Center, which is a nonprofit and non-partisan research and educational organization, expects to publish the report periodically.

This first edition pointed out the following four facts, and provided sources for each item:

  1. Maine has the 4th fastest growing Medicaid program in the country.  The Center noted that Maine Medicaid has grown by another 25,000 persons (11.4%) since Dec. 2002.  Maine Medicaid grew 124% faster than the average growth around the country.
  2. Forty-six states spend less than Maine on their Medicaid program.  Maine spends an average of $1,190 per capita, which is 44% higher than the national average of $825 per capita.  Only four states devote a larger portion of their state budget to Medicaid and thirty-five states spend less than Maine per Medicaid recipient.  Maine spends $7,009 for each Medicaid recipient, which is 16% higher than the national average of $6,010.
  3. As a percentage of population, Maine has the 5th largest Medicaid program in the nation.  If the July 1, 2004 expansion of eligibility contained in the Dirigo Health legislation comes to fruition, Maine could add another 6% of its population to the Medicaid rolls (78,000 persons) adding to the 18.8% of the population currently covered.
  4. Maine Medicaid pays for healthcare services at some of the lowest rates in the nation.  For instance, only 8 states pay for physician services at a rate lower than Maine.  Only 7 states pay for prescription drugs at a lower rate.

     The Center can be reached at  The website is [return to top]

Legislative Committee Hears Board of Licensure in Medicine Requests
Through the Government Evaluation Act process, a state agency, including licensing boards, is permitted to suggest legislation for adoption by the legislature.  At a work session this past Tuesday, the Business, Research & Economic Development Committee considered a series of legislative requests from the Board of Licensure in Medicine.  Board Chair Edward David, M.D., J.D. and Executive Director Randal Manning were both present to make the request.

Committee members plan to go forward with a number of technical provisions addressing the relationship between the board and staff, issues with "dual residency" programs and English and Canadian training, and a new type of temporary license designed to respond to disasters/emergencies.  Also, the bill will include a prohibition on license renewal if a physician owes a debt to the Board and will clarify the mandatory reporting of a colleague for sexual misconduct.

However, the Committee was less comfortable with two requests from the Board.  Members wanted to take a closer look at a provision to clarify the subpoena authority of the Board during complaint investigations.  The Committee wishes to resolve this issue this session.  Finally, the Committee asked the Board to defer until the 122nd Legislature (next year) a provison regarding the scope of reports required to be provided to the Board by hospitals or insurers that have taken disciplinary action against a physician. [return to top]

Hospital Medical Staff Officers to Meet at Sunday River
All hospital medical staff officers in the state will be receiving a mailing within a few days inviting them to attend the next meeting of the MMA Hospital Medical Staff section.  The meeting will be held in conjunction with the annual educational program of the medical staff coordinators.  The conference of the medical staff  coordinators will be held May 13 and 14, 2004 at Sunday River Ski Area.

A featured speaker at the conference is Elizabeth Snelson, perhaps the best known medical staff attorney in the Country.  Ms. Snelson practices in Minneapolis and will speak on medical staff bylaw issues on Thursday morning, May 13th.  After joining the coordinators for Libby's talk, the staff officers group will have a luncheon meeting where there will be an opportunity to dialogue with colleagues about the work in their medical staff.

Questions about the meeting can be directed to Gordon Smith, Esq., at [return to top]

Dirigo Health Update: Health Systems Development Adv. Council Hears about Global Budgets
The Health Systems Development Advisory Council met on Friday, March 5, and heard a presentation on global budgeting from Kenneth E. Thorpe, PhD., Robert W. Woodruff Professor and Chair, Dept. of Health Policy and Management , Rollins School of Public Health, Emory University.

Professor Thorpe discussed two approaches to a global health budget, one being a premium-based approach, directed at the health plan level and the second being a provider-based approach. 

Much of the presentation and subsequent discussion focused on hospital spending and hospital budgets.  Professor Thorpe discussed the Maryland rate-setting, all-payor system, which regulates 46 hospitals in that state.   In the Maryland system, each facility receives enough funds to have an operating net margin of approximately 3%.  The Maryland system required a federal Medicare waiver, and there has been less success in achieving waivers since Maryland received theirs years ago.

While there was discussion of budgets on the physician side, Dr. Thorpe acknowledged that no state had implemented any such system and that doing so would require a complex system.  In response to a question from MMA, Dr. Thorpe stated that the existing formula for physician payment under Medicare was a disaster and certainly not a model to look to.

Broadly defined, global budgeting is a process that can allow a society - be it a country, a state, a community - to set a desired level of health care spending and to monitor spending over time in an effort to ensure that actual spending does not diverge from the desired level.

The Dirigo Health law states that, "The Governor or the Governor's designee shall...issue an annual statewide health expenditure budget report that must serve as the basis for establishing priorities within the state health plan."   The law also states that,  "A certificate of need or public financing that affects health care costs may not be provided unless it meets goals and budgets explicitly outlined in the plan."

Issues surrounding the establishment of a global budget and how it can be used include:

          *  What services and programs should be included in the budget?

          *  How should the budget be set?

          *  How should the budget be allocated across geographic areas, services, and programs?

          *  How fast should the budget grow each year?

          * How can the budget be enforced?  By limiting prices?  Limiting premiums? Limiting provider budgets or resources?

     Professor noted that global budgets have not been used in the United States, but noted some countries that have had various levels of success with them, including Canada, Germany and the United Kingdom.  He also noted that in some areas, notably Rochester, N.Y. and in Oregon, there have been attempts similar to global budgeting.

The Advisory Council will meet next on Friday, March 19th. [return to top]

Radiologists and Obstetricians-Gynecologists Meet at Sugarloaf
This past weekend, the Maine Radiological Society and the Maine Section of the American College of Obstetrics and Gynecology met at Sugarloaf, U.S.A.   The groups held joint clinical sessions and addressed topics ranging from preventing medical malpractice to Uterine Artery Embolization.

Ann Trask, M.D. gave a presentation on the international relief group, Doctors Without Borders,  describing her four month experience volunteering internationally with the organization, which was awarded the Nobel peace prize in 1999.  Dr. Trask practices Ob-Gyn in Yarmouth.

Joseph Wax, M.D. presented the latest data and clinical evidence regarding patient choice C-Sections.  The dilemma of a patient demanding a C-section in the absence of any clinical necessity is growing in Maine and elsewhere.  Dr. Wax practices at the Maine Medical Center in Portland.

The Program closed on Sunday morning with a presentation by Dan Spratt, M.D. on the impact of nutrition, exercise and stress on the reproductive system. Dr. Spratt practices endocrinology at the Maine Medical Center.

Both groups were well represented at the meeting and attendees concluded that it was one of the best attended meetings for both groups.  The Maine Medical Association provided meeting management services for the conference, as it does for 13 specialty societies in the state. [return to top]

Upcoming at MMA
Upcoming meetings at MMA include:

Committee on Physician Health, Monday, March 8, 6:00pm

Legislative Committee, Tuesday, March 9, 6:00pm

Executive Committee, Wednesday, March 17, 2:00pm

Budget and Investment Committee, Wednesday, March 17, 5:00pm

Committee on Peer Review and Quality Improvement, Wednesday, March 17, 6:00pm

Committee on Public Health,  Wednesday, April 7, 4:00pm

Payor Liaison Committee, Wednesday, April 21, 6:15pm [return to top]

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