Maine is considering a bill that would set a maximum price for hospital procedures in order to cut healthcare costs, but Portland-based MaineHealth warned the cap would drive layoffs and service closures, NBC affiliate News Center Maine reported March 4.
LD 2196, or an Act to Lower Health Insurance Costs, Reduce Barriers to Health Care and Ensure Fair Prices for Health Care, would set the maximum price for both inpatient and outpatient hospital procedures at 200% of the corresponding Medicare rate. It would also limit annual service cost increases; require insurers to pay at least 110% of Medicare rates for in-network primary care and behavioral health services; and expand coverage approvals for chronic treatments or treatments already in progress.
The law would not apply to critical access hospitals or those deemed in financial distress, which accounts for about half of Maine’s hospitals.
Currently, Maine hospitals are charging an average of 275% of Medicare rates, according to the report.
“This bill assumes hospitals are operating with excessive margins that can simply be cut without consequences,” Andy Mueller, MD, CEO of MaineHealth, said in a March 5 news release shared with Becker’s. “That is not the reality. The scale of reductions contemplated in LD 2196 would force us to dismantle essential services that Maine people depend on every day.”
MaineHealth, the state’s largest system, said it would face a $627 million loss in one year, resulting in a negative 11% operating margin if the bill passes. It warned that the system might have to layoff up to 8,000 jobs across the state and reduce services to balance the books.
Seven other states have approved similar cost cap laws with mixed results. In Rhode Island, commercial premiums saw a modest reduction, but hospital revenue dropped $160 million annually, which was greater than total consumer savings, according to the report. In Oregon, a 200% cap, which only applies to health plans held by state employees, saved $50 million annually, but hospital leaders said other insurance plans followed suit and that now many hospitals are struggling.
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