DHHS outlines MaineCare changes, warns HR 1 adds uncertainty; hospitals warn tax rebasing could deepen financial stress
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Summary
Acting DHHS deputy commissioner Todd Haber detailed MaineCare and behavioral‑health initiatives tied to federal law HR 1 and FMAP changes, while hospital leaders warned that proposed hospital tax rebasing and physician payment changes could worsen hospital finances and access in rural Maine.
Todd Haber, acting deputy commissioner of finance for the Maine Department of Health and Human Services, spent the morning and afternoon sessions outlining the administration’s supplemental priorities in LD 2212, saying many items respond to compliance needs and volatility introduced by the July 2025 federal budget reconciliation law (referred to in testimony as HR 1 / Public Law 119‑21).
Haber walked the committees through dozens of initiatives and FA codes: staff reclassifications and new positions to support eligibility and provider integrity work, funding for actuarial forecasting tied to HR 1 ($1,000,000 GF cited), one‑time technology and staffing augmentation requests to prepare for new federal requirements, and program adjustments across MaineCare lines that partly reflect an expected FMAP shift (Haber cited FMAP moving from 61.29% in FY25 to 60.62% in FY27, with a blended rate of 60.7875% for FY26‑27).
On behavioral health, Haber flagged funding to establish a psychiatric residential treatment facility (PRTF) for youth (FA1934) and additional support for adult recovery and treatment courts. He also described moving funding for some Riverview Psychiatric Center security to the Bureau of Capitol Police under an MOU, telling the committee the level of security need has changed with Riverview’s recertification but that services would continue under a new funding model.
Hospital leaders and health systems used the hearing to push back on other provisions. Jeff Austin of the Maine Hospital Association opposed immediate rebasing of the hospital tax to FY 2024 and an effective near‑term payment, saying hospitals pay roughly $177 million now and the proposed change would add about $24 million a year without the matching adjustments historically used to mitigate rebasing effects. "This is a 24,000,001 [sic] stroke tax increase that would wipe that out," Austin said, adding that the typical practice has been to pair tax changes with adjustments to reimbursement or the supplemental payment pool.
Sarah Calder of MaineHealth said the rebasing and a separate hospital‑employed physician reduction proposed in the biennial budget would together threaten access and estimated a roughly $48 million annual impact to MaineHealth under current projections. Lisa Harvey McPherson of Northern Light Health detailed multi‑year operating losses and said the system is "cash starved," citing $53 million in unresolved cost‑report settlements for FY24 services and warning that the sector is making service and facility changes to survive.
Committee members repeatedly sought clarifications on several points: the department agreed to provide (a) a work‑session memo reconciling the 'trend' increases in health‑care costs that produced large aggregate figures in the MaineCare section, (b) details on the Riverview security MOU and whether the funding transfer is cost neutral across agencies, (c) additional background on payment error rate measurement (PERM) exposure and what technology or staffing is required to avoid penalties under HR 1, and (d) a timetable and approach for resolving OIG findings and potential federal recoupments.
Several witnesses and lawmakers emphasized the immediate uncertainty produced by HR 1: provider advocates urged state backfill for federal cuts to avoid access losses (for example, family planning and abortion‑related primary care providers asked that the state replace lost federal reimbursements). Haber and DHHS said some unknowns remain in HR 1 guidance and that several supplemental requests are designed to mitigate risk and avoid federal penalties.
Next steps: DHHS will provide requested work‑session detail on FMAP calculations, the hospital tax rebasing mechanics and timelines, PERM mitigation plans (technology and staffing), and cost‑report settlement backlog numbers. Hospital associations asked the committees to consider delaying an immediate rebasing payment and to restore practice of pairing rebasing with offsetting reimbursement adjustments.
