A proposal to limit hospital prices at 200 percent of Medicare rates is drawing support from affordability advocates and pushback from hospital leaders.<\/p>\n
AUGUSTA, Maine \u2014 One in three Mainers skipped or delayed medical care because of costs, according to a 2023 study<\/a> from Consumers for Affordable Health Care. Another report released last week<\/a> found six in 10 Maine households are just one major medical event away from financial disaster.<\/p>\n A bill in the legislature is designed to tackle those rising costs by capping what hospitals can charge patients, but the proposal is putting hospitals on high alert, saying the bill could detrimentally hurt revenue.<\/p>\n An Act to Lower Health Insurance Costs, Reduce Barriers to Health Care and Ensure Fair Prices for Health Care, LD 2196<\/a>, proposes putting a limit to how much hospitals can charge their patients as well as how much they can raise rates each year.<\/p>\n Bill sponsor Rep. Drew Gattine (D-Westbrook) said the move aligns with efforts at the State House to make life in Maine more affordable and curb the rise of health care costs.<\/p>\n \u201cWe need to try to find a way to stop those increases, or maybe even bring it down a little bit,\u201d Gattine said.<\/p>\n The idea stems from recommendations made in 2024<\/a> by the Maine Office of Affordable Health Care. Executive Director Meg Garratt-Reed said her office found hospital pricing to be a key driver of rising insurance premiums.<\/p>\n \u00a0\u201cWe really felt like we have to get at those underlying costs if we want to meaningfully make a change,\u201d she said.<\/p>\n LD 2196 puts the maximum price for a hospital procedure, both in and outpatient, at 200 percent of the corresponding Medicare rate determined by the U.S. government. According to Garratt-Reed, hospitals in Maine are currently charging an average of 275 percent of Medicare rates.<\/p>\n But hospital leaders warn the proposal could have serious consequences.<\/p>\n RELATED: Maine cancer advocates urge support for legislation to reduce burden of health care costs<\/a><\/p>\n The state\u2019s largest hospital system would face a $627 million loss in just one year if the bill becomes law, according to Katie Fullam Harris, chief government affairs officer for MaineHealth.<\/p>\n \u201cIt would move us to a negative 11 percent operating margin,\u201d she said. \u201cHospitals can\u2019t live with a negative operating margin.\u201d<\/p>\n With that steep of a revenue drop off, Fullam Harris said MaineHealth might need to conduct layoffs or reduce services to balance the books.<\/p>\n Garratt-Reed is skeptical that the situation would be so dire for Maine\u2019s care providers.<\/p>\n \u201cWe’ve looked at other states that have implemented policies like this that do make changes, there are reductions in revenue to hospitals, but we also see reductions in costs that correspond with those reductions in revenue,\u201d she said.<\/p>\n There are seven other states that have approved laws similar to Gattine\u2019s proposal. While each law varies, Maine\u2019s is one of the most substantial by mandating a maximum price at 200 percent; limiting annual service cost increases; applying the rates to all private insurance holders; and applying it to all in and out patient services.<\/p>\n Due to the variations between each state and state policy, researchers at Brown University have found various impacts in each state. In Rhode Island<\/a>, commercial premiums saw modest reductions. That reduction came with a $160 million drop in hospital revenue annually, which was greater than the consumer savings.<\/p>\n Another study<\/a> looked at Oregon, where the 200 percent cap is only on the health plan held by state employees. Annually, the cap saved the state $50 million and researchers \u201cfound little evidence that Oregon\u2019s payment cap disrupted hospital operations or care delivery.\u201d<\/p>\n Lisa Harvey-McPherson, vice president of government affairs for Northern Light Health, said Oregonian hospital experts told her a different story. After rates were capped for state employees, other insurance plans followed suit and now numerous hospitals in Oregon are struggling.<\/p>\n \u201cWhat is happening in Oregon today is the future of health care in Maine if this bill moves forward,\u201d Harvey-McPherson said. If the cap goes into effect, she reports NLH would lose about $220 million annually.<\/p>\n The price caps are just one part of three in LD 2196. Part B focuses on insurance policy, dictating that approval for chronic treatments are valid for one year; renewals for longer treatments can only take place every two years; insurers cannot void coverage for approved treatments within 90 days of coverage beginning; and insurers must provide 90-days\u2019 notice coverage will end for a service.<\/p>\n Part C requires insurance companies send the state of Maine detailed lists including the services and associated costs paid to hospitals. This section also requires insurers to pay at least 110 percent of Medicare rates for in-network primary care and behavioral health services.<\/p>\n If passed, the bill would include two key exceptions. The cap would not apply to critical access hospitals or those deemed in financial distress\u2014meaning roughly half of Maine hospitals would be exempt.<\/p>\n Despite strong opposition, Gattine is not reconsidering his proposal. \u201cI don\u2019t think it\u2019s too ambitious at all,\u201d Gattine said. \u201cI think it\u2019s what we need to do.\u201d<\/p>\n Both supporters and opponents are holding meetings ahead of the public hearing for LD 2196 before the Health and Human Services Committee scheduled for Thursday afternoon.<\/p>\n For more local stories continue with us on our NEWS CENTER Maine+ streaming app.<\/a>\u00a0<\/p>\n