April 9, 2007

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Governor Baldacci Announces "Dirigo Health 2.0"

At a press conference in the Cabinet Room on Wednesday, April 4, 2007, the Governor, along with representatives of his Office of Health Policy & Finance and the Dirigo Health Agency, outlined his plan to build upon his 2003 Dirigo Health Program.

  • "I am proud of what Dirigo has accomplished.  We have helped small businesses provide insurance to their employees, we've given individuals a place to turn when the insurance market failed them, and we've saved lives, " Governor Baldacci said.  "We've helped to contain costs and we've focused on preventative care, which saves money and improves quality of life.  But now is the time to take the next step." 

The MMA and other participants in the health policy debate in Augusta have been anticipating the Governor's proposal to "take the next step" in the Dirigo Health Program all session.  Last week, the Governor released several documents outlining Dirigo Health 2.0:  More People, More Choices, More Affordable.

The Governor is proposing the following changes in the MaineCare program associated with the Dirigo changes:

  • Maintain current eligibility while restraining costs;
  • Assure MaineCare members get the right care at the right time at the right price;
    • Clinical care management to save $19.7 M in FY 2008 and $26.7 M in FY 2009;
    • Rate standardization;
    • Manage behavioral health care services to save $5 M in FY 2008 and $8.5 M in FY 2009;
    • Prior authorization of radiology services "like private insurers" to save $2 M a year;
  • Recover money from insurers, workers compensation, and Department of Veterans Affairs for services they, not MaineCare, should pay to save $5.1 M a year;
  • Increase prescription co-pays by $0.50 to save $300,000 a year.

The Governor outlined Dirigo Health 2.0 as follows:


  •  The Insurance Marketplace
    • Regulate how much health insurers can charge to small businesses.  Require the Bureau of Insurance to expand its oversight and approval of insurance rate increases and requires insurers to spend more on health care and less on administration.  It allows Maine's self-employed to buy insurance as small business.
    • Make health insurance more affordable for individuals.  Create the Maine Reinsurance Plan designed to reduce costs for Mainers who seek coverage in the individual market, while assuring comprehensive coverage and no lifetime benefit limits for people with very high health care needs, who could not otherwise get insurance.  This program stimulate competition in the marketplace.  Guaranteed issue continues and community rating is modified, allowing some additional rate variation based on age, location, employment, and health status.  There are additional consumer protections and a sunset provision if savings and additional competition are not achieved.
    • Require premium discounts to both small and large businesses that provide approved worksite wellness programs and to all individuals who don't smoke.
    • Require insurers to provide more information about rates to consumers and allows for pilot programs that allow insurers to negotiate better prices while protecting consumer choice.
  • DirigoChoice
    • Assures moderate growth for the DirigoChoice product.
    • Targets under-insured and uninsured Mainers.
    • Allows reduced employer costs to join DirigoChoice.
    • Allows the program to self-administer through support of L.D. 431.


  • Continue the Maine Quality Forum to guarantee that we all get the right care at the right time and that patient safety is assured.
  • Create a revolving loan fund for quality initiatives like electronic medical records.
  • Require a focus on primary care in the state health plan to improve health and reduce costs.
  • Moderate growth in hospital costs by continuing voluntary hospital cost targets.


  • Enact employer and individual (for those over 400% of the FPL) pay-or-play by July 2008 and January 2009 respectively.  Direct the Dirigo Health Agency, in consultation with representatives from the business, labor, economic development, taxation, consumer and health care communities, along with other stakeholders, to address the concerns for affordability, fairness, and the impact on the business climate and develop rules needed to implement the plan and to report to the legislature's Insurance & Financial Services Committee no later than January 1, 2008.
  • Individuals and businesses covered through the Shared Responsibility law will be required to make a financial contribution, possibly on a sliding scale based on ability to pay and size of business, if they do not provide or purchase health insurance.
  • Once "Shared Responsibility" is law, the Dirigo Health Agency may provide subsidies to designated health plans offered by any licensed insurer in Maine.


  • July 1, 2007 - June 30, 2008:  Continue the current Savings Offset Payment for one transitional year only.  Extends the 2% premium tax on some health plans to cover HMOs; uses revenues in FY 2008 for DirigoChoice and in FY 2009 and beyond to support the Reinsurance Plan.
  • July 1, 2008 - June 30, 2009:  Converts current Offset Payment to a surcharge on hospital payments paid by all payers equal to the amount of health care provided to previously under-insured and uninsured enrollees in DirigoChoice.  Use revenues generated by the 2% assessment on HMOs to support the Reinsurance Plan.  Use Shared Responsibility contributions from employers and individuals who do not provide or purchase health coverage pursuant to Shared Responsibility provisions.

Most of the MaineCare initiatives are ones included in the Governor's FY 2008-2009 biennial budget proposal, L.D. 499.  Part II of the outline largely is a restatement of provisions in the original Dirigo law.  The insurance reforms including the Reinsurance Plan, the Shared Responsibility provisions, and the revised financing mechanism all are difficult to assess without seeing specific language in a proposed bill.  The Governor's staff has not yet suggested when a bill or bills might be introduced.

Cosmetic Surgery & Supplies Mixed Up in Tax Reform Debate

The MMA recently has learned that officials from Maine Revenue Services have audited one plastic surgery practice and plan to audit another because they believe that the practices should have been collecting sales tax on such drugs as botox, restylane, and radiesse as well as implants and surgical supplies.  The audited practice has requested reconsideration of the State's decision. 

Two provisions of the sales and use tax exemptions likely will be at issue in this dispute.  The exemptions specified at 36 M.R.S.A. sec. 1760 include:

  • 1760(5)  Medicines.  Sales of medicines for human beings sold on doctor's prescription; and
  • 1760(5-A)  Prosthetic devices.  Sale of prosthetic aids, hearing aids or eyeglasses and artificial devices designed for the use of a particular individual to correct or alleviate physical incapacity; and sale of crutches and wheelchairs for the use of invalids and crippled persons and not for rental.

Also, during the Taxation Committee's discussion of "tax reform" last week, taxation of "elective cosmetic surgery" appeared on a working document in the committee.  Apparently, New Jersey now is the only state that taxes cosmetic surgery.   This week the MMA will try to assess the strength of this proposal and will work to steer the committee away from this proposal. [return to top]

Appropriations Committee Budget Frustrations Expressed During MECMS Update

The new biennial state spending plan, L.D. 499, remains in work sessions in the Appropriations Committee with no apparent consensus on two parts of the Governor's plan, the education restructuring plan and the $1 per pack increase in the cigarette excise tax.  The Appropriations Committee has been working on budget issues - first a supplemental budget (L.D. 215), then a biennial budget (L.D. 499), and a bond package - since work started in January.  On Thursday afternoon, they took their frustration out on the Department of Health & Human Services and Maine's provider community during a regular MECMS update.  Because of the Appropriations Committee's jurisdictional focus, it perhaps is not surprising that their regular "MECMS updates" focus more on the State's recovery of interim payments than on the problems the system conversion has presented for the provider community.  As we approach the end of the current fiscal year on June 30, 2007 with no new spending plan in place and poor recent revenue projections, it is also not surprising that members are distressed at hearing that the interim payment recovery effort is likely to be $21.5 million short by the end of the fiscal year.  This background may, in part, explain the aggressive tone of the members discussion last Thursday afternoon. 

One member suggested that DHHS staff pay personal visits to providers' offices to collect.  Another suggested that names be published in the newspaper if providers did not repay the interim payments.  DHHS Commissioner Brenda Harvey tried her best to moderate Committee members' comments, pointing out that her staff are not professional collection agents and that the Department needs to maintain a respectful relationship with the provider community in order to maintain an adequate network of providers to serve the MaineCare beneficiaries. 

Most of the outstanding interim payments to be recovered are in nursing home and residential care facilities, and MH/MR facilities.  While physicians, PAs, and nurses have a sizeable outstanding balance to be recovered of approximately $11.2 M, this is the only significant category in which the State in aggregate owes more to the provider community ($13.9 M) than the provider community owes the State. [return to top]

Little Change in Number of Sentinel Events Reported

There were 25 sentinel events, including 14 unanticipated deaths, reported by Maine hospitals in 2006, according to the 2006 Sentinel Event Report to the Legislature.

Twenty-four of the reported events took place in an acute hospital setting and one in an ambulatory surgical center.  Seven of the events involved permanent loss of function, three were wrong site surgery and one was a suicide.

This is the third such report under the state's Sentinel Event Reporting Law.  In 2004 there were 24 reportable events, with 15 deaths.  In 2005, there were 28 events with 20 deaths.

The full report is available at http://www.maine.gov/dhhs/dlrs/medical_facilities/pdf/SE_Annual_Report_2007.pdf. [return to top]

Marple Agrees to Become MaineCare Director

Tony Marple has accepted the position of director of the Office of MaineCare Services within the Department of Health and Human Services.


Marple had been acting director since February when he took over for Mike Hall, who served as the Medicaid director for the past three years and recently resigned to take a similar position in Pennsylvania



Marple was the senior vice-president and chief financial officer at MaineGeneral Health in Augusta for many years before he left that position in October.


[return to top]

New Acting Director for Maine Quality Forum

D. Joshua Cutler, MD has been appointed as the acting director of Dirigo Health Agency's Maine Quality Forum (MQF).

Initially, Dr. Cutler will be working with the MQF part time while he transitions out of his practice. Dr. Dennis Shubert, former head of the MQF, will provide consulting services during the transition. Dr. Cutler will attend the April meeting of the Quality Forum Advisory Council.

A long-time member of the Maine Medical Association, Dr. Cutler served one term on the Maine Board of Licensure in Medicine, and also served on the Hospital Study Commission and the Advisory Council on Health Systems Development, both of which were used to formulate the State Health Plan.

A native of Bangor, Dr. Cutler is a cardiologist who has most recently practiced in South Portland with Maine Cardiology Associates and on the staff of Maine Medical Center and Mercy Hospital. He received his undergraduate degree from the Harvard University and his M.D. from Duke University. [return to top]

Report on April 9 Dirigo Health Agency Bd. of Directors Meeting

The Dirigo Health Agency Board of Directors held its regular monthly meeting today (Monday) and heard reports from staff and the Governor's Office of Health Policy and Finance (GOHPF).  

Trish Riley from the GOHPF briefed Board members on the Governor's proposal released last week to continue the Dirigo programs but with substantial changes in funding and operations.  The actual legislation containing the proposal is still in the Revisor's office at the Legislature and is not expected to be printed for a few days.  Ms. Riley explained the Governor's rationale for not relying on the funding sources recommended by the Blue Ribbon Commission (mostly sin taxes), noting the the serious hole in the projected state budget created by the changes in the revenue forecast and the continuing work of the Legislature's taxation committee warranted utilizing a different approach for funding Dirigo than utilizing tax increases.  The Governor's proposal to move from the current Savings Offset Payment to a surcharge on hospital bills was described and discussed.

Of particular interest to MMA is the proposal for shared responsibility involving a limited employer "play or pay" proposal, effective July 1, 2008 and an individual mandate effective Jan. 1, 2009.  These proposals will be controversial at the State House but are consistent with the MMA "White Paper" on Health System Reform prepared and released in 2003.

Much of the staff report focused on the likely prospect of legislation allowing the DirigoChoice product to be self-insured and administered by a Third Party Administrator.  An RFP will be created to prepare for this possible option if approved by the Legislature where it has already received favorable committee action.

Board members welcomed new member Edward David, M.D., J.D., a former MMA President and current Chairman of the Maine Board of Licensure in Medicine.  Dr. David is a retired neurologist from Bangor.

The Board will meet next on Wednesday, May 9 at 1:00 pm at the Agency offices on Water St. in Augusta. [return to top]

Fomer MMA Staffer Pat Packard Dies at Age 73

The Association has regrettably learned of the recent passing of Patricia Ann Packard, age 73, of Brunswick, who worked as an employee of MMA from l958 until her retirement in 1995.  She was a native of Brunswick and served in the United States Air Force prior to working at MMA.
Pat began her career at MMA working with Dr. Hanley and Patricia Bergeron when MMA offices were located in the infirmary at Bowdoin College.  One of her primary responsibilities in the 60's and 70's was editing the Journal of the Maine Medical Association, a task she enjoyed and performed diligently.  When the Journal itself was retired in l979, Pat was assigned administrative assistant duties for the incoming in-house attorney Gordon Smith.

"Pat was certainly one of a kind,", Mr. Smith stated in acknowledging her death which occurred  last Friday.  "It was my honor to work with her closely for 16 years and her commitment and loyalty to MMA for her 37 years was impressive.  I know I speak for a lot of our senior members when I say that she was an important part of MMA and with her passing we lose both a friend and a part of our institutional memory.  We will all miss her and we extend our  sincere condolences to her family."

MMA will be represented at the Wednesday service by Patricia Bergeron who worked with Pat for all 37 of those years.  MMA will make a donation to the Coastal Humane Society in Brunswick in honor of Pat.  Pat was especially fond of dogs and was frequently seen walking her dog "Lucky" up and down Federal Street in Brunswick. [return to top]

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