January 9, 2015

Speech delivered by Commissioner Mary Mayhew

SFY 2016-2017 Biennial Budget
Governors Cabinet Room

INTRODUCTION
Good afternoon. My name is Mary Mayhew and I have the honor of serving as the
Commissioner of the Department of Health and Human Services for Governor Paul
LePage.
Several times over the past four years, I have stood in this room and delivered bad
news, just as my predecessors did before me. With every budget came the stark
reality that Maines Medicaid program faced yet another shortfalla shortfall that
would ultimately be closed by cutting funding for other important state agencies
and priorities and adding to Maines tax burden.
The shortfall was driven by a program that had grown beyond the states ability to
fund. For more than a decade, this growth in the program was paid for by failing
to pay bills on time, allowing the massive accumulation of the hospital debt,
cutting provider reimbursement rates, failing to keep pace with the costs of care,
and worse neglecting the core priorities of our elderly, disabled and individuals
with mental illness.
You simply cannot appropriately manage or prioritize if you are annually dealing
with massive shortfalls and financial crisis. Such has been the case for decades at
DHHS.
This year, however, I come to you with very good news. We are pleased to report
that Medicaid spending has been brought under control and we face no significant
shortfall in our Medicaid program for the upcoming two-year budget cycle.

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We have worked hard over the last 4 years, with Governor LePages vision and
leadership, to stabilize the financial foundation in this agency and to make
decisions to move us away from bailing out the boat to effectively charting a
course for the people of Maine that best reflects the core priorities of serving our
most vulnerable citizens.
This year, we will not be asking other state agencies to sacrifice resources for our
schools, roads, environment, and economic development priorities just so we can
plug a massive hole in the budget of DHHS.
Indeed, part of the motivation for getting DHHS spending under control was to
facilitate a lower state income tax to grow Maine's economy and provide
opportunities for the very people DHHS serves. There is no more transformative
hand up than a good-paying job.
In sum, Governor LePages budget for DHHS identifies approximately $106
million in savings to pay for $112 million in new initiatives to support the elderly,
people with intellectual and developmental disabilities, physical disabilities, brain
injuries, and those with mental illness, for a net ask of $6 million over the
biennium.
These are priorities that have been ignored for far too long.

STABILIZING MEDICAID SPENDING

The Governors budget reflects the benefits of stabilizing Medicaid spending,
concentrating the programs resources on Maines neediest and most vulnerable,
and investing in innovative new ways to control costs and improve care by
rewarding quality instead of volume.
Lets take a step back and look at where weve been. Throughout the decade
before Governor LePage took office, Maines Medicaid program doubled in
enrollment, doubled in cost, and doubled as a share of the state budget.
We were spending over a billion dollars more per year on Medicaid when Gov.
LePage took office than we were when his predecessor took office. From a 2011
high of over 350,000 Mainers on the program, there are now about 290,000
enrolled.
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With the boat bailed out, we can now chart our course. With Medicaid spending
stabilized, we are finally able to focus on initiatives that improve health outcomes,
lower costs, and truly care for our states neediest and most vulnerable.
When Governor LePage took office, the percentage of the population nationally on
Medicaid was 18 percent. In Maine, it was half again more: 26 percent. Today,
we are pleased to report that at 22 percent of our population, Maines Medicaid
enrollment is now equal to the national average.
Nationally, Medicaid spending growth over the next 10 years is expected to reach
8.1 percent annually. Overall health care spending nationally is expected to
average 5.8 percent annually. In Maines Medicaid program, however, we are
projecting growth of less than one percent for the upcoming biennium.
The massive hospital debt of more than $750 million that accrued as a result of
past failures to get the Medicaid program under control has been paid in full by this
Administration, and we are now paying our hospitals on time by accurately
budgeting for those costs instead of using them as interest-free lenders to carry our
welfare debt.
Maine learned its lesson from past Medicaid expansions to populations outside its
core mission, and in 2013 and 2014, rejected what would have been the biggest
eligibility expansion yet. This would have added up to 100,000 able-bodied adults
to the system at a cost to the General Fund of more than $800 million over 10
years. Worse yet, it was subject to the whims of an increasingly unstable federal
entitlement system.

NEW INITIATIVES MADE POSSIBLE

This budget funds over $100 million in long-overdue initiatives for the elderly,
disabled, and mentally ill, coupling those critical investments with savings of over
$100 million in sensible payment reforms.
I.

Waitlists

This critical shift in priorities simply would not have been possible if we had not
brought some measure of stability to our Medicaid program.
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These initiatives are designed to finally put the elderly and disabled at the front of
the line for Medicaid services. They represent our Departments core mission,
which for too long had taken a backseat to the distraction of an ever-expanding
welfare state for the able-bodied.
There are currently 2,200 Mainers with serious needs on waitlists for home- and
community-based services, down from 3,100 recently. Some have developmental
disabilities. Others have suffered from traumatic brain injuries. And some are
our elderly loved ones. All of them deserve our support.
We propose the most aggressive effort yet to provide services to those currently on
waitlists who need services. At $46 million over the biennium, this does not come
cheap, but it is a moral imperative that we must confront and a challenge that we
must overcome.
Let me give you an example of what funding the waitlists means for real people.
Imagine a 75 year old couple with a 50 year old son with Downs Syndrome. They
have cared for him his entire life. However, their health is failing and their son is
in need of greater support and they dont know if they can do it any longer without
help. Meanwhile, their son has been on a waitlist for services.
Additionally, the number of children who have been diagnosed with autism when
they graduate from school and are being placed on waitlists for community
services warrant our commitment to this funding.
Moreover, families across Maine are confronting the issue of how to care for
elderly loved ones who want to remain in their homes and age in place but need
support to remain independent; somebody to stop by once in a while and help them
make sure theyre eating right and taking their medications.
These are the families that most desperately need our support, and these are the
families whose voices will finally be heard in this budget.
II.

Nursing Home Funding

Another focus of this budget is our struggling nursing homes. We see it in the
news time and againrural nursing homes closing in part because the Medicaid
reimbursement rate they rely on is too low.
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This year it was Pittsfield Rehab and Nursing. Last year it was the facility at
Houlton Regional Hospital. The year before that it was Atlantic Rehabilitation and
Nursing Center in Calais. All were victims of the same kind of misplaced
Medicaid priorities that ran up our hospital debt.
A recent study by the Maine Health Care Association found that the difference
between the cost of services provided by Maine nursing homes to Medicaid
patients, and the funding they actually receive from Medicaid, is about $30 million
per year.
We can no longer short-change the nursing homes that care for our elderly loved
ones and provide good jobs in struggling communities.
Last summer, between Gov. LePage allocating surplus DHHS funds and the
Legislature appropriating money, our nursing homes received a roughly $25
million, one-time boost for fiscal year 2015.
This budget provides an ongoing funding source, allocating an additional $24
million in state funds and $44 million in federal funds for a total of $68 million
over the biennium to keep our nursing homes solvent. This figure includes $2.2
million to initiate a remote access facility grant program in fiscal year 2017 to
bring special relief to our rural nursing facilities.
With this budgets nursing home funding initiatives, Governor LePage is keeping
his promise to Maine seniors and all those who work hard every day to provide
them the quality care they deserve.
III.

Health Homes and PCP Reimbursement

Part of bringing long-term sustainability to Maines Medicaid program is going to

be a fundamental transformation in the way we deliver care and structure
incentives. Thats why this budget includes funding to replace federal funds
expiring for important measures like Health Homes and enhanced primary care
reimbursement rates.
Giving somebody a plastic card will not ensure that they decide to seek primary
care instead of emergency care, nor will it guarantee that there is even a primary
care provider who is able to see them.
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Part of fixing the broken Medicaid system is going to have to be a combination of

hands-on care management, meaningful payment reform, and reasonable
reimbursement rates for health care professionals whom we ask to care for
Medicaid recipients.
Health Homes are medical providers who integrate and coordinate all primary,
acute, behavioral health, and long-term services to treat the whole person. This
coordinated care model targets high cost users with at least two chronic conditions
or serious mental illness. The budget provides $13 million in state funds necessary
to fund Health Homes and help drive down costs in Maines Medicaid program by
working directly with super utilizers.
We are already seeing dramatic results with this initiative. Some Medicaid highusers often visit emergency rooms 50 or even 100 times per year, so we picked up
the phone and gave them a call, helping them and their primary care providers
identify ways to reduce their emergency room visits.
Identifying over 900 of the highest users of emergency department treatment,
through this intervention we have so far been able to reduce their monthly cost per
member from $1,400 to $1,000.
While many states are expanding Medicaid eligibility to more able-bodied adults
without supporting provider reimbursement rates to pay for it, Maine is taking a
different approach with this budget. We dedicate $15 million to maintain 100
percent reimbursement at Medicare rates for primary care providers who treat
Medicaid patients.
Coverage is meaningless without access to care, and paying the health care
providers who provide critical preventative care a fair rate is paramount to our
mission of crafting a Medicaid program thats built to last.
IV.

Consent Decree and Riverview

I know that Governor LePage is particularly proud of the initiative in this budget to
fully meet conditions of the Consent Decree for Mainers who suffer from severe
mental illness, providing $11.6 million in funding to fulfill unmet needs in addition
to $1.5 million in increased funding for the Bridging Rental Assistance Program to
help the mentally ill live independently.
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Taking care of Mainers suffering from severe mental illness also means ensuring
that Riverview Psychiatric Recovery Center is truly a center of excellence for the
treatment and care of Maines most psychiatrically challenged citizens.
Progress is well underway, and the Governors budget proposal reflects many of
the reforms Riverview needs to become safer and more effective in the delivery of
evidence based treatment options. The hospital will be adding 12 new acuity
specialists, expanding its psychology program through the addition of postdoctoral fellows in psychology, improving staff training protocols, and maintaining
its strong historical ties with Dartmouth Universitys Medical School.

COMMONSENSE PAYMENT REFORMS

As part of our commitment to fund all of these important initiatives without
imposing an additional burden on taxpayers or eating into the budgets of other state
agencies, we have identified several commonsense ways to reduce spending.
One is a simple and much-needed reform to the way we provide General
Assistance reimbursement to municipalities. For years under the current system,
state taxpayers provided 50 percent of GA costs to municipalities up to a certain
threshold. Beyond that, the state then paid 90 percent of GA costs.
This created a perverse incentive for large municipalities to accelerate GA
spending once they reached the threshold. As a result, the state share of GA
funding almost tripled, from $5 million in 2003 to $13 million in 2014.
Our proposal flips the GA funding formula, providing a larger, 90 percent match
up front and a smaller, 10 percent match once the municipality reaches 40 percent
of its average annual spend.
With this proposal, municipalities have an incentive to control costs in their GA
program, rather than increase them, and we calculate it would save state taxpayers
nearly $11 million over the biennium, which would then be redirected to address
longstanding waitlists for disabled Mainers needing home and community based
services.
Additionally, Governor LePages initiative to prevent 100 percent state-funded
welfare benefits from going to non-citizens will save over $4 million in this
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budget, essentially paying for the cost to fund Section 18and 19 waitlists, which
cover individuals with brain injuries and disabilities, respectively.
Benefits for non-citizens versus benefits for disabled Mainers is not a difficult
choice to make.
This budget brings parity to physician reimbursement rates by paying providers for
non-emergency emergency room visits at primary care rates, providing an
incentive for hospitals to work to cut down on non-emergency ER visits while
saving $2.7 million.
We bring further parity by paying hospital-based physicians the same as other
physicians, saving another $8.7 million.
Finally, Maine is one of only two states to exceed federal guidelines for Medicare
Savings Program eligibility. Changing Maines outlier status would save a
staggering $50 million over the bienniumenough to provide sufficient funding to
our nursing homes while funding several waitlists for home care services for
disabled Mainers.

CONCLUSION
This budget is unlike any other DHHS has helped craft, not only for the initiatives
it puts forward, but for the simple fact that these initiatives are finally possible.
Maines Medicaid program and DHHS as a whole are no longer in the perpetual
state of financial crisis which has plagued this Department for decades. No longer
are we swimming in a sea of red ink while seniors lose their nursing home beds
and disabled Mainers languish on waitlists with no end in sight.
Funding our nursing homes, waitlists, and primary care initiatives are the
culmination of our efforts to contain program costs over the past four years, and
DHHS stands ready to work with the Legislature and advocate for these priorities
which I know are of central importance to Governor LePages vision for Maine.

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