NCPA - National Center for Policy Analysis

Delays in Medicaid Pay Vex Hospitals

January 30, 2013

Hospitals in Maine, fearful of additional federal cuts in Medicaid funding as the deficit-reduction negotiations continue, are demanding hundreds of millions of dollars owed to them by the state for treatment of Medicaid patients. Hospitals everywhere are fearful that budget deficits in many states will causes the length of time for reimbursement to grow, says the Wall Street Journal.

  • Other states have months-long delays, according to Bruce Siegel who heads the National Association of Public Hospitals and Health Systems.
  • Maine's delay is three years and totals $484 million.
  • The coalition of hospitals says that late Medicaid payments restrict their ability to cover bills, which forces their credit rating down, keeps them from making pay raises and delays major building projects.

To publicize the situation, the Maine hospitals have launched a radio and newspaper campaign to press the state to cover the bills. Since Congress already agreed to a $25 billion cut in Medicaid and Medicare spending at the beginning of the year, the hospitals are unsure whether they risk not being paid in the current environment. Maine is undergoing a budget deficit that continues to rattle the hospitals' nerves.

  • A spokesman for the Illinois Hospital Association has fears that a similar problem will occur in Illinois, which currently has an eight month delay.
  • Maine Governor Paul LePage (R) has submitted legislation that raises the money owed to hospitals through a bond that will be paid off by future liquor sales.
  • Maine's Medicaid debt is large because the state expanded its Medicaid eligibility before the economic downturn. Consequently, Maine now has one of the higher percentages of residents receiving Medicaid benefits.

Of the $484 million bill, Maine says that the federal government will reimburse $300 million, a statement confirmed by the U.S. Department of Health and Human Services.  With more than a $100 million deficit in the current fiscal year, hospitals will continue to worry until Maine figures out where the money will come from.

Source: Jennifer Levitz and Louise Radnofsky, "Delays in Medicaid Pay Vex Hospitals," Wall Street Journal, January 15, 2013.


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