May 30, 2005

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Medical Mutual Insurance Co. of Maine Files for Rate Increase
Medical Mutual Insurance Co. of Maine this past week filed for rate increases with the Bureau of Insurance, effective Oct. 1, 2005. Rates would be increased with the insured's renewal on or after that date. The Bureau staff is expected to examine the filing and determine whether the increased rates can be applied. While similar to rates filed in New Hampshire and Vermont recently, nonetheless, the increases are very significant, particularly in some specialties. More information will be available next week after MMA staff reviews the filing.
The rate increases come at a particularly sensitive time, given the legislature's recent tepid support for reform of the medical liability laws.  While the average increase is about 25%, some specialties with unfavorable recent loss history are looking at increases two to three times the average.

"While we appreciate that the company needs to collect enough premium to pay claims and expenses, increases of this magnitude will make it more difficult to retain and recruit physicians to Maine, given our low level of reimbursement," noted Gordon Smith, MMA Executive Vice President. "This is one case where we will take no pride in telling the legislators who failed to support broad-based reform that, 'we told you so.'"

As highlighted in last week's Maine Medicine Weekly Update, the Legislature appears willing to enact only the "I'm Sorry", provision in the liability bill, L.D. 1378. (See more detailed information on this provision later in this newsletter).

More details on the rate filing will be included in next week's newsletter. 

Federal Action on Medicare Payment Formula
Two bills to fix the fatally flawed Medicare physician payment formula (based on the sustainable growth rate) have been introduced in Congress.  Senate Bill 1081, the Preserving Patient Access to Physicians Act of 2005, was introduced in the Senate May 19.  Earlier, House Bill 2356 was introduced to stop the scheduled SGR cuts and replace the old formula with a permanent solution.  S. 1081 is sponsored by Sen. Jon Kyl (R. Ariz.) and Sen. Debbie Strabenow (D-Mich).  H.R. 2356 is sponsored by Reps. Clay Shaw (R.-Fla.) ad Ben Cardin (D-Md.).

MMA will be communicating with members of Maine's Congressional delegation and encouraging them to become co-sponsors of this legislation.  Without passage of a fix to the formula, physician reimbursement under Medicare will begin a six-year decline with the first cut of 4.3% coming January 1, 2006.  Because Maine has a higher than average Medicare population and because we are poorly reimbursed geographically, any decreases in the current fee schedule could have a devastating impact on the access to physicians Medicare patients have traditionally enjoyed in Maine. [return to top]

WSJ Reports that Average Family Medical Costs Will Exceed $12,000 in 05
According to an article in the Wall Street Journal on May 26, 2005, the consulting firm Milliman has estimated that the average family of four with employer-sponsored PPO coverage will spend more than $12,200 on medical expenses in 2005.  This is an increase of $8400 per year since 2001.  The families cover 17% of the expenses, with the employer paying the rest.  Hospital care constitutes 45% of the total, physician costs 37% and pharmaceuticals 15%.  The numbers do not include health insurance premium costs. [return to top]

Work on "Part II" Biennial Budget Moves at Brisk Pace
The Appropriations Committee conducted public hearings on the Governor's proposed "Part II" budget (L.D. 1677) for the SFY 2006-2007 biennium last week.  The Appropriations and HHS Committees heard the DHHS portions of the budget on Tuesday and the HHS Committee held work sessions on Wednesday and Thursday.  The HHS Committee will make its recommendations to the Appropriations Committee during the week of May 30th.

Most of the public hearing testimony on Tuesday focused on the "modified drug formulary" proposed for MaineCare and the changes in contracting for services in the MHMR system.  Consumer advocates and provider groups, including the MMA, were concerned about the lack of information about how DHHS expected to achieve the substantial new savings in the MaineCare drug budget.  Maine Equal Justice estimates that the "modified drug formulary" would reduce the MaineCare drug budget by approximately 12%, eliminating approximately $56 million in state and federal dollars in the biennium.

At the first HHS Committee work session, Governor's Office of Health Policy & Finance drug program manager Jude Walsh described the "modified drug formulary" as an expansion of the Preferred Drug List (PDL) to be determined by the DUR Committee.  She expects the DUR Committee to significantly reduce the number of drugs available without prior authorization in each drug category.  For example, she explained, the PDL now includes hundreds of topical steroids and the Department could reduce that number to three - one mild, one medium, and one strong.  Of particular concern to physicians, she pointed out that the number of PA requests probably will double under the new program.  She acknowledged that the Department would have to continue to improve the PA process and to minimize the administrative burden on providers.  The Department already has committed to improving the PA process in L.D. 1404, An Act to Increase the Quality of Care and Reduce Administrative Burdens in the Pharmacy Prior Approval Process, a unanimous "ought to pass as amended" report from the HHS Committee based upon the work of the MaineCare Advisory Committee.  Ms. Walsh also stated that the Department expects to achieve higher supplemental rebates from drug manufacturers.

At the work session, Ms. Walsh presented the following notable statistics about the MaineCare drug management program:

  • Maine's program recently has had the lowest pharmaceutical cost growth in the country at 2.9%;
  • 40% of the MaineCare drug budget is consumed by about 42,000 beneficiaries;
  • Maine has the highest drug rebate to spending ratio in the country at 31.6%.

Maine's hospital community expressed grave concern about the proposed budget's underpayments for hospital programs and services.  According to the Maine Hospital Association, the Governor's "Part II" budget includes reduced funding for increases in PIPs to $25 million in state money paying only between 75% and 80% of the amount needed to cover the increasing volume of MaineCare patients.  The Governor's budget also includes only $5 million in state funds to pay past year settlements, covering only 7% of more than $180 million owed to hospitals.  It shifts more than $29 million of previously earmarked hospital payments to help fill the $73 million budget gap created by the change in the federal Medicaid match rate.

During last week's work sessions, DHHS Commissioner Nicholas presented a plan to institute a 5% "across-the-board" cut to achieve almost $94 million in savings over the biennium.  The Appropriations Committee requested the 5% plan of all state agencies as an alternative to the Governor's proposal.  The DHHS 5% plan would cut services deeply and would eliminate some services entirely so it is unlikely to appeal to the Appropriations Committee or the Legislature as a package, but some of the suggestions could be in the final budget.

Many witnesses at the public hearing suggested an increase in the cigarette excise tax as an alternative to the Governor's proposed budget.

By the end of the HHS Committee work session on Thursday afternoon, it appeared that the Committee would split into 3 recommendations to the Appropriations Committee.  The House Democrats reject the Governor's budget and recommend a $1.25 increase in the cigarette excise tax as an alternative.  They also propose to spend $15 million towards MaineCare "wrap around" drug benefits when the Medicare Part D benefit becomes effective and $750,000 for increased spending on ambulance services.  The Senate Democrats (Senate Chair Art Mayo and Senator John Martin) accepted the Governor's proposal, but leave a $5 million gap because they propose to spend $500,000 on ambulance services and $5 million on the MaineCare Medicare Part D "wrap."  The Committee Republicans were scheduled to caucus on their recommendations on Friday.   [return to top]

Judiciary Committee Finalizes "I'm Sorry" Legislation
At a work session on Friday, May 27, 2005, the Judiciary Committee unanimously endorsed final language for the "I'm sorry" provision of L.D. 1378, the liability reform bill offered by the Coalition for Health Care Access & Liability Reform.  The bill now will be entitled, An Act to Amend the Medical Liability Laws Concerning Communications of Sympathy or Benevolence.

The substance of the "I'm sorry" provision will state as follows:

          2.  Evidence of admissions.  In any civil action for professional negligence or in any arbitration proceeding related to such civil action, any statement, affirmation, gesture or conduct expressing apology, sympathy, commiseration, condolence, compassion or a general sense of benevolence that is made by a health care practitioner or health care provider or an employee of a health care practitioner or health care provider to the alleged victim, a relative of the alleged victim or a representative of the alleged victim and that relates to the discomfort, pain, suffering, injury or death of the alleged victim as the result of an unanticipated outcome is inadmissible as evidence of an admission of liability or as evidence of an admission against interest.  Nothing in this section prohibits the admissibility of a statement of fault.

The March 2005 report of the Bureau of Insurance estimates that this could save between 3.5% and 5.9% of total claim costs. 

After the Legislature adjourns, the Coalition representatives will meet with representatives of the Maine Trial Lawyers Association to try to develop some consensus proposals to improve the medical liability climate in Maine to bring back to the Judiciary Committee in January 2006.  [return to top]

Insurance Committee Reaches Compromise on Dirigo SOP Bill
Last Thursday afternoon, following several work sessions and contentious negotiations, the Insurance & Financial Services Committee finalized a compromise on L.D. 1577, An Act to Modify the Calculation and Implementation Date of Savings Offset Payments under the Dirigo Health Act.

The "savings offset payment" (SOP), a 4% health insurance premium tax in the Governor's original Dirigo bill, is supposed to represent savings in Maine's health care system resulting from the reduction in bad debt and charity care because the number of uninsured Mainers is reduced through the DirigoChoice program.  The applicability of the SOP to self-insured employers or third-party administrators, the calculation of the SOP, and the use of SOP funds all have been controversial since the passage of the Dirigo legislation.

The compromise sets up a working group under the Dirigo Health board made up of 10 members, 5 nominated by the Dirigo Health board and 5 nominated by employers, insurance carriers, and TPAs, plus the Superintendent of Insurance.  The group's work will be facilitated and its recommendations must be unanimous.  The working group is charged with making recommendations on the following issues:

  • a definition of "claim;"
  • a definition of "subsidy;"
  • the administrative costs payable by the SOP after the first year;
  • a methodology for measuring savings in the system.

Also, the SOP will be based on paid claims, rather than premiums, something supported by the business community. [return to top]

Update on MaineCare Physician Fee Increase
MMA staff and several specialty society representatives met with MaineCare officials last Wednesday to discuss the $8.5 million physician fee increase approved in Part I of the state budget, effective July 1, 2005.  The additional state appropriation, along with matching federal funds, will allow the Bureau of Medical Services to increase all rates to a minimum of 53% of the Medicare rate.  Bureau staff, led by MaineCare medical director Laureen Biczak, D.O., shared the following analysis which details the impact on each specialty.  Under the proposal, no existing payments would be reduced.

Most of the comments made at the meeting were favorable.  As the Bureau can make the changes to the fee schedule without going through rule-making, most participants felt it was important to move the proposal along so that the changes could be implemented and ready for July 1.

While the Legislature has re-opened the Part I budget, it appears unlikely that the fee increase would be taken away.  Nonetheless, the sooner the increase is built into the fee schedule,  the better.

In the following chart, the percent increase for each specialty is found in the seventh column from the left.

[return to top]

May 21 Tough Choices Meeting Concludes with Mixed Results
Approximately 300 Maine citizens participated in the "Tough Choices" meetings and were asked to discuss and rank various options for improving health status, reducing costs, improving quality and increasing access to health insurance coverage.  The participants were selected from a randomly selected group of several thousand citizens which were intended to represent the general demographic make-up of the state.  The meetings were organized by the Governor's Office of Health Policy and Finance with the results to be considered in preparation of the next State Health Plan.  The Maine Health Access Foundation was the primary financial underwriter of the event.

At the start of the event, Governor Baldacci welcomed participants and stressed the importance for all Maine people to be involved in solutions to improve health care and the Maine the healthiest state in the nation.

Participants had been sent a discussion guide, prepared by the Governor's office, which presented various options, although additional discussion topics were presented by some of the groups and later discussed. Participants were asked to score each of the options and then were asked to rank the top selected options.

The top choices in the category of reducing costs were eliminating for-profit insurance companies, regulating insurance premiums and capping costs of health care providers and insurers.  In the category of improving healthcare quality, the top choices were placing controls on introduction of new medical technology, establishing best practices and treatment guidelines and creating report cards on quality of care for consumers.  In the category of increasing access to coverage, creating a single payer universal coverage system received the strongest support.

Preliminary results of the meeting are posted at:  A more detailed report is expected soon at:


  [return to top]

Slots Still Available at June 6 Charitable Golf Tournament in Augusta
Spaces are still available at MMA's Second Annual Charitable Golf Tournament being held on Monday, June 6 at the Augusta Country Club.  The event begins with lunch at 11:00am and a shotgun start at noon.  The tournament features a scramble-style format with proceeds benefiting the Physician Health Program.

Individual golfers are welcome and will be placed on an appropriate team.  Anyone interested in participating, or in sponsoring a hole, should contact Chandra Leister at 622-3374 or via e-mail to [return to top]

Deputy Commissioner of HHS Michael Hall Added to Physician Survival Seminar Faculty in Bangor, June 8.
DHHS Deputy Commissioner Michael Hall has been added to the list of presenters at the Association's 14th Annual Physician Survival Seminar being held in Bangor on Wednesday, June 6. Deputy Commissioner Hall has played a major role in the Department's attempt to fix the flawed claims management system (MECMS) and also has been deeply involved in the DHHS budget proposals.

The details of the MaineCare physician fee increase will also be presented.

Nearly 100 attendees are now expected for the Bangor program but a few spaces are still available.  Contact Chandra Leister at MMA at 622-3374 or via e-mail to if you would like to register for this day-long program.  The program offers seven and one-half hours of CME.

  [return to top]

8th Cardiovascular Health Summit
SAVE YOUR SPACE NOW:  8th Cardiovascular Health Summit

Making it Happen in Maine: Successful Models for Cardiovascular Health

Spanning the Continuum

Thursday, June 16, 2005

Colby College, Waterville

9:00 am - 3:30 pm

On line registration is now available for this conference by going to

Registration deadline is June 4, 2005. Credit card payments are now being accepted.

Agenda Update: Governor John Baldacci will be joining the group at 1:30 pm. [return to top]

MECMS Provider Outreach Sessions
The Bureau of Medical Services has designed some outreach sessions for providers who haven't been able to attend prior meetings.  We have chosen sites we haven't visited in recent outreach sessions in the hope that it will be easier for first time attendees to participate.

We will discuss UB92 and CMS/HCFA 1500 billing issues, give an update on the progress of MECMS and offer providers the chance to talk individually with provider relations specialists.  There is little new information for providers who have been to previous sessions.

Here is the schedule:

Tuesday, 5/31
Calais Regional Hospital
1:00 to 2:15; UB92
2:30 to 4:00; CMS/HCFA 1500

Wednesday, 6/1
Ellsworth DHHS Office
1:00 to 2:15; UB92

2:30 to 4:00; CMS/HCFA 1500

Thursday, 6/2
Sanford DHHS Office
1:00 to 2:15; UB92

2:30 to 4:00; CMS/HCFA 1500

Friday, 6/3
Skowhegan DHHS Office
9:00 to 10:15; UB92
10:30 to 12:00;CMS/HCFA 1500

Ft. Kent DHHS Office
1:00 to 2:15; UB92
2:30 to 4:00; CMS/HCFA 1500
[return to top]

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