AUGUSTA — A key Republican senator released a proposal Tuesday to expand Maine’s Medicaid program to more than 60,000 low-income residents and establish a managed care system for all 320,000 beneficiaries of the $2.5 billion program in an effort to control costs.

The proposal, sponsored by Assistant Senate Minority Leader Roger Katz, R-Augusta, could reshape a partisan debate that has raged for more than a year. Katz’s idea is the result of a six-month effort to build support for expanding the publicly funded health insurance program, which has provoked fierce ideological and philosophical opposition among Republicans over its results and costs.

Katz said the state has proven incapable of managing its Medicaid program, called MaineCare, the way it’s now structured, “regardless of which party is running it.” He said his plan would enable the state to overhaul the program while taking advantage of federal funding for expansion through the Affordable Care Act.

Katz’s plan was submitted in the form of an amendment to a managed care bill he submitted in the last legislative session and that lawmakers held over to the current session. The Legislature’s Health and Human Services Committee will take up the proposal Wednesday.

MaineCare expansion would extend health insurance to an estimated 60,000 to 70,000 adults who have no children and earn as much as 133 percent of the federal poverty level – just over $15,558 a year for an individual – while providing an economic boost to hospitals and health care providers. Katz said the sustainability of the program is on the line.

“It’s a broken system,” he said. “At the same time, expansion could offer a major economic boost. We are forgoing almost a million dollars a day (in federal funding) by not participating in the Medicaid expansion.”

Under the managed care approach, the state would drop its fee-for-service structure, which now pays hospitals and health care providers for every visit and procedure. In its place would be a system that creates a limited network of doctors and hospitals for MaineCare patients. The cost of the treatments provided in the network would be set by a third-party managing company that would be paid a set fee by the state.

The Medicaid expansion would expire after three years if the Legislature didn’t reauthorize it – after an independent review of its health impacts and costs. Coverage for those people also would end if the federal government reneged on its promise to fully fund expansion for three years, then gradually reduce its compensation to 90 percent of costs by 2020.

Katz’s proposal includes provisions to boost efforts to:

Root out Medicaid fraud among providers and consumers.

Make reforms that would help eliminate a waiting list for about 3,000 developmentally disabled people.

Study ways to move people off Medicaid through better employment opportunities.

MOVING TOWARD BIPARTISAN PLAN

The amendment is Katz’s second attempt to build bipartisan consensus for Medicaid expansion, a top priority for Democrats in Maine and in other states. It has been a leading issue for Eves, the House speaker, who took the symbolic step of allowing Katz’s proposal to move ahead of his expansion bill.

“We view the proposal as a step forward in months of debate over how to ensure more families can have access to a family doctor,” said Eves. “Our priority has always been focused on lifesaving health care for 70,000 Maine people. While we have been skeptical of managed care programs in the past, we look forward to hearing the details of the Republican proposal. We will want to make sure that the emphasis is on quality treatment, not simply denying care.”

Democrats have the majority in the Legislature, but they don’t have enough votes to override a veto by Gov. Paul LePage, a staunch opponent of expansion. A compromise proposed by Katz last year fell three votes short of overriding LePage’s veto in the House.

Since then, Katz and several other Republicans, including Sen. Thomas Saviello of Wilton, have been working with Republican lawmakers to forge a new proposal. Katz and Saviello said the amendment proposed Tuesday is the product of those discussions.

“This didn’t have to be so partisan,” Katz said. “The proposal we have shows that.”

But the bipartisan approach did little to dissuade critics of expansion. Adrienne Bennett, spokeswoman for LePage, said the bill is another example of how “liberals are playing politics with the state’s financial future.”

Bennett questioned the authenticity of Democrats’ support for the amendment, noting that interest groups aligned with the Democratic Party have often opposed managed care.

House Minority Leader Kenneth Fredette, R-Newport, said, “Obamacare’s welfare expansion would be so devastating for Maine’s economic future that we simply cannot support it or anything that’s attached to it.”

MANAGED CARE MORE WIDESPREAD

Proponents of managed care say it improves the efficiency of Medicaid and saves money while installing benchmarks for health outcomes. Opponents worry that managed care can lead providers to deny care if they’re close to the payment caps set by the state.

Democratic Gov. John Baldacci began laying the groundwork for managed care, but LePage abandoned the pursuit after succeeding Baldacci in 2011. Last year, Health and Human Services Commissioner Mary Mayhew testified against Katz’s managed care proposal. Mayhew said it would undercut Medicaid payment reforms that her department was pursuing.

At a legislative committee meeting last month, Stefanie Nadeau, director of MaineCare services for the DHHS, questioned whether the state would save the $40 million that Katz projected when he proposed managed care last year. Because of its rural nature and sparse population, Maine may not be as conducive for savings through managed care as other states, Nadeau said.

National data shows that managed care in Medicaid is becoming more common as states try to control spending on a program that accounted for 23.6 percent of total state expenditures in fiscal year 2011, according to the National Association of State Budget Officers.

The Kaiser Family Foundation reported that the percentage of Medicaid recipients enrolled in some form of managed care increased from 57 in 2002 to 66 in 2012. Managed care is used in at least 45 states, according to the U.S. Department of Health and Human Services.

The Kaiser Foundation also found that savings through managed care produced mixed results, and that significant savings were largely dependent on how states crafted their plans. The key savings drivers, the report said, were reduced emergency room use and improved use of primary care physicians.

Maine would have to apply for a waiver from the federal government to switch to managed care. Dr. David Howes, president of Martin’s Point Health Care, said states’ increased migration to managed care has made such requests more routine. Martin’s Point participates in managed care programs through contracts with Medicare, the federal health program for the elderly, and the Department of Veterans Affairs.

Katz said the Medicaid expansion debate has been polarized, with Democrats favoring expansion as proposed through the Affordable Care Act and a core group of Republicans, including LePage, opposing it outright.

“Some of us think there’s a third way,” Katz said. “It will expand Medicaid but at the same time institute major management reforms.”

Steve Mistler can be contacted at 791-6345 or at:

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