A state agency and a group representing Maine hospitals said Tuesday that they have reached an agreement to reform Medicaid reimbursement rates to most hospitals in Maine.

The Maine Department of Health and Human Services and the Maine Hospital Association announced in a joint release that the agreement will improve Medicaid reimbursement rates for all state hospitals except four psychiatric hospitals, which are categorized differently under Medicaid.

The $90 million investment, included in the upcoming Maine supplemental budget, means that medical centers will receive higher reimbursement rates for Medicaid patients, a step the state and hospitals say should result in better health care for Maine people.

The rate reforms will impact more than 400,000 Mainers by boosting reimbursements to hospitals as well as health and social service providers.

The agreement will require that the MaineCare payments to hospitals are data-driven, fair, consistent and sufficient to provide access to quality care.

Medicaid, called Maine Care in Maine, is a joint federal and state health insurance program that helps cover medical costs for people with limited income and resources.

“This agreement helps MaineCare to move away from outdated and arbitrary rates and toward a uniform and fair system at a time when existing sources of ongoing revenue alone are not enough,” DHHS Commissioner Jeanne Lambrew said in a statement.

“This proposal provides our members with needed Medicaid rate increases at a critical time,” said Steve Michaud, president of the Maine Hospital Association. “Drawing down additional federal Medicaid dollars helps hospitals and their caregivers, eases the burden of escalating costs on Mainers and businesses who are paying for care, and helps the Maine economy at the same time.”

According to DHHS and the hospital association, rate reform will be funded by investing $90.3 million in federal and state dollars at the beginning of the state’s fiscal year on July 1. The agreement maximizes available funding under federal payment limits and is subject to approval by the U.S. Centers for Medicare and Medicaid Services.

The state and hospitals said the plan will transform MaineCare from a “fragmented, often outdated and arbitrary approach into a coherent, streamlined and data-driven system.”

They said the plan is a result of Gov. Janet Mills’ directive to DHHS to expand MaineCare and make the health coverage program accessible, affordable and sustainable for low-income people.

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