AUGUSTA — Hospital executives and their representatives lined up Wednesday to say a proposed two-year budget offered by Republican Gov. Paul LePage would damage the state’s health care system and put hospitals deeper in debt if passed by the Legislature.

Members of the Legislature’s budget-writing Appropriations Committee and the Health and Human Services Committee are meeting jointly this week to review the budget proposals as they relate to the Department of Health and Human Services.

DHHS is the state’s largest agency, spending about $3.9 billion in state and federal funds in 2014. The agency is funded with about $1.8 billion from the state’s General Fund.

Especially at risk are smaller rural hospitals that serve as critical access hospitals, including Stephens Memorial Hospital in Norway and Rumford Hospital.

Critical access hospitals are those that have fewer than 25 acute care beds available.

LePage’s proposal, presented by DHHS Commissioner Mary Mayhew, offers complex changes that include increasing Medicaid reimbursement rates for primary care physicians while reducing those rates for hospitals.

Jeff Austin, who represents the Maine Hospital Association, said combined with the loss of federal matching funds, hospitals would lose at least $55 million a year.

That loss does not include the costs hospitals would face if LePage’s proposal to allow cities and towns to apply property taxes to nonprofits were enacted, Austin said.

“This is a staggering amount of cuts to force hospitals to afford,” he said.

He said the cuts were not being made to balance the state’s Health and Human Services budget but to redirect the money to other programs and initiatives.

“If the state wants to increase spending on other programs, it needs to identify new revenues to fund that spending and not cannibalize the rest of Medicaid,” Austin said.

Frank McGinty, executive vice president and treasurer for MaineHealth, a network of hospitals that includes Maine Medical Center in Portland and Stephens Memorial, said LePage’s budget would result in fewer health care services for the communities they serve. The cuts would also lead to fewer health care jobs, especially in rural parts of the state, McGinty said.

He said the impact of those lost services and the availability of health care would fall heaviest on the state’s uninsured and its poorest residents.

He said recent changes in eligibility standards for MaineCare that saw about 60,000 individuals lose health coverage have sent the amount of charity care the hospitals in his network provide from $33 million a year to $44 million a year over the past four years.

The additional changes would only add to that tally, McGinty said.

“My colleagues and I urge you to think very carefully before allowing these changes in the MaineCare program’s policy to tear a gaping hole in the safety net for the more than 100,000 Maine residents who are uninsured,” McGinty said.

He and Austin said LePage’s efforts to provide higher reimbursement rates for primary care physicians were needed and “laudable,” but those rates shouldn’t be increased at a cost to hospitals.

McGinty said combined with the property tax proposals, the rate reimbursement changes would require Stephens Memorial Hospital to reduce its spending by as much as $1.2 million a year. He said the costs for Maine’s largest hospital, Maine Medical Center, would exceed $36 million.

Under the proposal, DHHS would reimburse hospitals for emergency department visits for non-emergency issues at the same rate as it reimburses primary care providers.

Mayhew noted collaborative efforts with hospitals to reduce the use of emergency rooms by Medicaid patients with education and outreach have saved the state’s Medicaid program $9 million.

She said this reimbursement rate change would help reduce unnecessary emergency department visits, but Austin said that’s an illogical assumption.

“This is a penalty imposed on hospitals, who, under federal law, must keep their emergency department open to all individuals 24 hours a day, 365 days a year,” Austin said. “Cutting hospital reimbursement is not a disincentive to Medicaid recipients to use the service.”

Mayhew has said repeatedly that the state’s Medicaid budget, for the first time in decades, was balanced and not facing a financial crisis.  

It was a point committee members reiterated as they spoke in opposition to changes that would create dramatic financial hardships for the state’s hospitals, which are in many cases the largest employers in their regions.

State Rep. Linda Sanborn, D-Gorham, a doctor, said she hoped hospital executives, doctors and other well-paid individuals who were opposing the cuts in LePage’s budget would likewise oppose his proposals to reduce the state’s income tax and eliminate its estate tax.

“We’ve been talking about pitting one of these poor health care choices against another and the reality is, the state is not in the red, we are not in a crisis and we do not have to be making any of these cuts,” Sanborn said.

LePage promised an audience in Bangor on Wednesday that he would “spend the rest of his days” fighting opponents of income tax cuts.

The committees will continue their hearings on the DHHS budget proposals Thursday.

sthistle@sunjournal.com