Health care providers push for cost-of-living adjustments, against new taxes in two-year budget plan

Yahoo

17-02-2025

The Appropriations and Financial Affairs Committee crafts the budget proposal to be sent to the full Legislature for consideration. (Emma Davis/ Maine Morning Star)
With much of Gov. Janet Mills' two-year budget proposal to close a projected $450 deficit focused on cuts and taxes related to health programs, public hearings last week on those sections saw sizable pushback from health care providers and parents of children with disabilities.
In particular, objections centered on the governor's proposed taxes on ambulance services and pharmacies and cuts to mental health supports, as well as an item left out of her plan: expected cost-of-living adjustments for health care providers, a decision those testifying and lawmakers argue is illegal.
A snow storm last week postponed the final hearing for health-related initiatives to Feb. 24, when the Appropriations and Financial Affairs Committee, which sets the budget, and the Health and Human Services Committee are slated to hear from the public about social services, including General Assistance, which helps municipalities pay for basic necessities for those who can't afford them.
Cost-of-living adjustments and General Assistance have already proven to be contentious issues in negotiations for the more pressing change package to address a Medicaid funding shortfall in the current fiscal year.
Lawmakers also heard from the public last week about proposals for the two-year budget related to the judiciary, particularly the need to sufficiently fund indigent defense and the Victims of Crimes Act.
Click on the section to jump ahead to coverage of individual budget hearings:
Cost-of-living adjustments
Taxes
Mental health
Judiciary
Darryl Wood, the executive director of Life Enrichment Advancing People, or LEAP, a nonprofit that provides residential services and case management for adults with intellectual and developmental disabilities, said his organization had to close group homes after struggling to find and retain staff.
Wood was among the health care providers and parents of children with disabilities who turned out en masse last week to object to Gov. Janet Mills' decision to withhold anticipated cost-of-living adjustments. The raises were set to take effect Jan. 1 but providers were notified by the Mills administration in December they would not be coming.
An inability to pay providers competitive wages would also hurt the people who rely on the care they provide, which Kim Humphrey told lawmakers would be the case for her son, Daniel, an adult with severe autism who lives in a group home and helps deliver meals on wheels to seniors.
'Without adequate funding, Daniel loses the hard-earned skills that allow him to participate in his community,' Humphrey said. 'The proposed budget will devastate my son's life.'
Humphrey urged lawmakers to use some of the state's currently maxed out rainy day fund, a move Mills and lawmakers on both sides of the aisle have previously objected to.
The suspension of cost-of-living adjustments will also impact the ability to hire and retain workers for NeuroRestorative Maine, which provides rehabilitation for brain injuries, said program director Jennifer Jello. Jello also pointed to language in the budget plan that would make future adjustments subject to available appropriations.
'Without that predictability of implementation, there could be detrimental impact to existing care and provider capacity,' Jello said.
Others pointed to the Mills administration's recent settlement agreement with the U.S. Department of Justice to improve the children's behavioral health system, which explicitly requires annual cost-of-living adjustments for community-based services in line with the state law.
The possibility of reinstating cost-of-living adjustments in the current fiscal year also remains in limbo. After Democrats seemed poised to vote through a change package without Republican support on Feb. 11, an amendment to offer modest cost-of-living adjustments this year for essential support workers showed some promise — though ultimately fell through.
The Legislature's presiding officers opted to delay final enactment votes on the supplemental, however, leaving open the possibility cost-of-living adjustments could make their way into a bipartisan deal.
Mills proposed several tax changes that have faced pushback so far, but two of those proposals specifically involve health care and are meant to bolster MaineCare, Maine's Medicaid program.
These are a 70 cent tax on prescriptions for pharmacies and a tax on non-municipal ambulance service providers equal to 6% of their net operating revenue, the revenue from which the Mills administration says will be used to leverage additional federal dollars and eventually increase MaineCare reimbursements.
The Legislature's Blue Ribbon Commission on emergency services recommended a similar ambulance assessment in its final report released in January 2024. However, Rep. Sue Salisbury (D-Westbrook), who sat on the commission and had voted in favor of the recommendation, told lawmakers during the hearing that the group later heard that the program would be hard to manage and not have the desired effect.
Salisbury also questioned whether Mills' version of this plan would use the revenue generated to address other shortfalls in the MaineCare budget and not just help ambulance services with the gaps they'd face.
In addition to opposing the ambulance tax, Jeffrey Austin, vice president of government affairs for the Maine Hospital Association, urged the committee to reject MaineCare rate cuts Mills has proposed starting in 2027, arguing they are also in conflict with Maine law.
'This is not just a rate cut that they're proposing,' Austin said. 'It's a wholesale change to the methodology used to reimburse hospital-based doctors that is supposed to under the law go through a rate reform process.'
Taxes take center stage in budget debates
The pharmacy tax also saw strong pushback.
While the Maine Pharmacy Association is supportive of efforts to improve MaineCare reimbursements, executive director Amy Downing said, 'Funding this initiative through a tax on pharmacies is an unsustainable and dangerous path.'
More than 10% of the state's retail pharmacies have closed in the past decade, and Downing argued the tax would place additional financial strain on those that remain, potentially forcing them to reduce hours, cut services or close altogether.
'The state's argument that increased MaineCare reimbursements will offset this tax in aggregate is flawed,' Downing said. 'Pharmacies with a high percentage of MaineCare patients might break even, but those serving a more diverse mix of patients, including those on Medicare, private insurance or paying out of pocket, will be unfairly penalized.'
This is a concern for Steven Royer, vice president of the Kennebec Pharmacy and Home Care, a MaineCare and commercial health insurance provider. After several closures in recent years, they have two pharmacy operations: a long-term care pharmacy and an infusion therapy pharmacy that provides medications and nursing services in home settings.
Most of the patients served by the two pharmacies do not have MainCare, as many are seniors who are on Medicare, Royer said.
'While I understand that some pharmacies receive an increased reimbursement for MaineCare prescriptions, this increase would not offset the tax being assessed in our pharmacies due to our patient population,' Royer said.
Emily Hill, chief resident in the Family Medicine Residency at Central Maine Medical Center in Lewiston, said the system she works in day-to-day is already fragile.
'I acknowledge the difficult choices you all have to make, especially given the tenuous federal funding environment,' Hill said. 'However, I want to highlight today that these savings are ultimately costs, costs that will be shouldered by the hard working Mainers who work in healthcare and, most importantly, these will all be felt by patients.'
Mental health providers urged lawmakers to reject Mills' plan to not move forward with two crisis receiving centers in Kennebec and Aroostook counties authorized last year, in response to the mass shooting in Lewiston. Two other centers will still be built in Lewiston and Penobscot County.
They argued the state should divest in law enforcement strategies to address substance use and mental health issues and instead use those funds to support community programs, such as the centers.
'Access to care remains a challenge, as is evidenced by long wait lists for community-based services and individuals languishing in emergency departments instead of receiving the behavioral health support they need,' said Jennifer Christian, associate director of Alliance for Addiction and Mental Health Services.
Halting funding for more crisis centers will exacerbate this, Christian said, as will withholding cost-of-living adjustments for providers and Mills' plan to reduce workforce incentives.
The governor has proposed a decrease from $2.5 million annually to $1 million annually for recruitment and retention incentives for staff who provide medication management services.
Mainers object to proposed program cuts ahead of governor's budget address
Betsy Sweet, speaking on behalf of the Behavioral Health Community Collaborative, said the frustration being felt in hospitals and jails will not be fixed with more beds or capital infrastructure.
'Here is my plea to you: we need to do this differently,' Sweet said. 'We ask that your committees look beyond the line by line entries and blippies and look at the overall picture.'
The appropriations committee is the only committee already poised to connect the dots between spending across issue areas.
'They are so connected,' Sweet said, 'and you are the ones that can make those connections not just intellectually, but financially.'
This tension between requests for investments in measures that supporters say would prevent reliance on state government long term and requests to expand existing state structures was also seen in the budget hearings for other issue areas.
Maine only hired its first five public defenders in 2022. Mills added two offices and 10 more public defender positions the following year. Last month, the Kennebec County Superior Court ruled that Maine violated people's Sixth Amendment rights by failing to provide indigent legal representation.
The governor's proposed budget doesn't create any new positions for public defense services, which leaves the state with a half baked system, said Jim Billings, executive director of the Maine Commission on Public Defense Services.
The state has five offices in the northern and western regions of the state, but no public defender structure in the most populous counties. The list of cases without counsel in the state has been hovering around 1,000 cases for months, according to Billings.
Billings also said Mills' proposed allocations to pay outside counsel fall drastically short from what's needed. Maine has long relied on private attorneys to represent low-income defendants in the absence of indigent defense infrastructure.
Currently, Public Defense Services is paying between $3 and $4 million per month for outside counsel fees, which Billings said means the system will run out of funding for this in April 2026.
'This is also disastrous for trying to recruit new members of the bar to do [Public Defense Services] work or to even maintain the meager roster we have,' Billings said.
Another budget item of concern when it comes to the judiciary is funding for the Victims of Crime Act.
The budget includes a $3 million ongoing allocation, however that only covers half of the funding gap created by a reduction in VOCA funding from the federal government, said Francine Garland Stark, executive director of the Maine Coalition to End Domestic Violence. Garland Stark asked lawmakers to increase the allocation to $6 million.
Shira Burns, executive director Maine Prosecutors Association, also urged lawmakers to close the gap. Six of Maine's eight prosecutorial districts and the Office of the Attorney General rely on VOCA grant funding for their Victim Witness Advocate programs, and those six districts get get $55,000 each year to support salaries of VWAs, an amount that has not increased in well over a decade, Burns said.
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