An Act To Implement the Recommendations of the Commission to Study Maine's Community Hospitals
Maine Legislature, Session 122, LD 1673
Committee: Health and Human Services
Sponsors: MAYO, PINGREE
Amends: 22 MRSA §1881, 22 MRSA §1881-A, 22 MRSA §1882, 22 MRSA §1883-A, 22 MRSA §1886, 22 MRSA §1888, 22 MRSA §1889, 22 MRSA §8709

Legislative Document 
No. 1673 
S.P.620 
In Senate, May 16, 2005 
An Act To Implement the Recommendations of the Commission to 
Study Maine's Community Hospitals 
Reference to the Committee on Health and Human Services suggested and ordered printed. 
Presented by Senator MAYO of Sag ada hoc. (GOVERNOR'S BILL) 
Cosponsored by Representative PINGREE of North Haven. 
Printed on recycled paper 
JOY J. O'BRIEN 
Secretary of the Senate 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 22 MRSA c. 405-D, as amended, is further amended by 
repealing the chapter headnote and enacting the following in its 
place: 
CBAP".rER 405-D 
HOSPITAL AIm BEALTII CAKE PROVIDER COQPERATI(JI ACT 
Sec. 2. 22 MRSA §1881, as enacted by PL 1991, c. 814, §1, is 
amended to read: 
SIBBI. Short title 
This chapter may be known and cited as the "Hospital .aru:l 
Health Care Provider Cooperation Act 9~-*99a." 
Sec.3. 22 MRSA §1881-A is enacted to read: 
SIBBI A. 
Legislatiye findings: intent: purpose 
1. 
Findings. 
The Legislature makes the following findings. 
A. 
Health care costs in Maine have been increasing much 
more rapidly than the ability of its citizens to support 
these increases. 
B. 
The escalating costs of Maine I s health care system are 
unsustainable and threaten the well being of the citizens of 
the State. 
C. 
It is necessary and appropriate to encourage hospitals 
and other health care providers to cooperate and enter into 
agreements 
that. will 
help 
facilitate 
cost 
containment, 
improve quality of care and increase access to health care 
services. 
2. 
Intent: purpose. 
It is the intent of the Legislature to 
protect the public health and promote the public interest by 
encouraging 
hospitals 
and 
other 
health 
care 
providers 
to 
cooperate and enter into agreements that will help facilitate 
cost containment, improve quality of care and increase access to 
health care services. 
It is the intent of the Legislature that a 
cooperative agreement for which a certificate of public advantage 
has been issued will not violate any law governing impermissible 
restraint of trade and that issuance of such a certificate will 
provide state action immunity under the federal antitrust law. 
Sec. 4. 22 MRSA §1882, as amended by PL 1995, c. 583, §§1 and 
2, is further amended to read: 
Page l-LR2373(1) 
SI882. Definitions 
As 
used 
in this 
chapter, 
unless 
the 
context otherwise 
indicates, the following terms have the following meanings. 
1. 
Cooperative aqreement. 
"Cooperative agreement" means an 
agreement among 2 or more hospitals or 
llellpl'-&~i-1;--RleR4;.a~ health 
care 
providers 
for 
the 
sharing, 
allocation 
or 
referral 
of 
patients, 
personnel, 
instructional 
programs, 
mental 
health 
services, support services and facilities or medical, diagnostic 
or 
laboratory 
facilities 
or 
procedures 
or 
other 
services 
traditionally offered by hospitals or 
llellp~e'i4;.--Rlell4;.a1 ~ 
heal th care providers, or for the coordinated negotiation and 
contracting with payors, vendors or employers or for the merger 
of 2 or more hospitals or health care providers. 
I-A. 
Health care provider. 
"Health care provider" means a 
physician and any other person that is certified, registered or 
licensed in the healing arts, including, but not limited to, a 
nurse, podiatrist, optometrist, chiropractor, physical therapist, 
dentist, psychologist, physician assistant and any corporation 
organized 
under 
the 
Maine 
Nonprofit 
Corporation 
Act 
or 
an 
organization recognized as exempt from federal income tax under 
United 
States 
Code, 
Section 
50l(c)(3) 
that 
is 
engaged 
primarily in the provision of mental health services. 
2. 
Hospital. 
"Hospital" means: 
A. 
Any acute care institution required to be licensed as a 
hospital under section 1811; or 
B. 
Any nonprofit parent of a hospital, hospital subsidiary 
or hospital affiliate that provides medical or medically 
related diagnostic and laboratory services or engages in 
ancillary activities supporting those services. 
2-A. 
Merqer. 
"Merger" 
means 
a 
transaction 
by 
which 
ownership or control over substantially all of the stock, assets 
or activities of one or more licensed and operating 
aespi~als 
~ital or health care provider is placed under the control of 
another licensed hospital or hospitals or health care provider or 
providers 
or 
the 
parent 
organization 
of 
that 
hospital 
or 
hospitals or health care provider or providers. 
aT---.eap£e€~~--~-~~--eaFe--p~evi4e~T---~NeRpFe~it 
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SeetieB-~~~4~~-~-is-~~~~~-iB-~~~r~~~-ef 
~eBta~-Aea~tA-seFvieesT 
4. 
Reviewing agencies. 
"Reviewing 
agencies" 
means 
the 
Attorney GeneraL the department and the Governor's Office of 
Health Policy and Finance, or its successor, which have joint 
authority with respect to applications filed under this chapter. 
Sec. 5. 22 MRSA §l883, as amended by PL 1995, c. 583, §§3 to 
7, is further amended to read: 
SIBB3. Certification for cooperative aqreements 
1. 
Authority. 
A hospital or 
BeBpFe~j,.t--~eBt.a~ health care 
provider may negotiate and enter into cooperative agreements with 
other hospitals or BeBpFeij,.t--~eBta~ health care providers in the 
State if the 
likely benefits 
resulting 
from 
the 
agreements 
outweigh 
any 
disadvantages 
attributable 
to 
a 
reduction 
in 
competition that may result from the agreements. 
2. 
Application for certificate. 
Parties to a cooperative 
agreement may apply te-t.Ae-QepaFt.~eBt. for a certificate of public 
advantage governing that cooperative agreement. 
The application 
must 
include 
an 
executed 
written 
copy 
of 
the 
cooperative 
agreement and describe the nature and scope of the cooperation in 
the agreement and any consideration passing to any party under 
the agreement. 
A-~-&py-~-tAe l:M application and copies of all 
additional related materials must be submitted simultaneously to 
the 
AtteFBey-~~-~-te-~~-~~~--at-~~-~-t.i~e 
reviewing agencies. 
2-A. 
Letter of intent. 
Parties 
to 
a 
hospital 
merger 
agreement who intend to file an application for a certificate of 
public advantage for the merger transaction shall file a letter 
of intent describing the proposed merger with tAe-QepaFt.~eB~-aRQ 
tAe--At.-t-()ol"~-"eReFa~ . the reviewing agencies at least 45 days 
prior to the filing of the application for 
a certificate of 
public advantage. 
3. 
Procedure for review. 
The following procedures apply to 
the review of the application ay-tAe-QepaFt~eBt. 
A. 
The 
QepaFt~eBt reviewing 
agenci~ shall 
Feview--aRQ 
evaluate the application in accordance with the standards 
set forth in subsection 4. 
B. 
The department shall furnish copies of any letter of 
intent, application or decision to a person who requests 
copies and to 
a 
person who 
registers annually with the 
department for 
that purpose. 
A 
person may 
provide 
the 
department with written comments concerning the application 
within 
days 
after 
the 
application 
is 
filed. 
The 
department 
shall 
provide 
the 
Attorney 
General 
~m1 
th~ 
GQy:~rnQ['S 
QHi~e Qf 
He~lth 
PQli~:l 
~ng, 
Fin~n~~. Q[ 
it& 
SU~C~S&Qr. with copies of all comments. 
C. 
The 
eepa~~meR~--may reviewing agencies shall hold 
a 
public hearing in accordance with rules 
adopted by the 
department. 
The reviewing agencie&. at an:l time after an 
applicatiQn i& fHeg, ung,er &ectiQn 1883. &ub&ectiQn 2 Qr a 
letter Qf intent is fileg, ung,er !,iectiQn 1883. 
&ubuctiQn 
2-A. 
m~:l reguire b:l &ubpQena the atteng,ance and te&timQn:l Qf 
witne&&e& ang, the prQductiQn Qf g,Qcwment& in Kennebec CoUnt:l 
Qr the CQunt:l in which the applicants are lQcateg, fQr the 
pU[PQ&e Qf investigating whether the cQQperative agreement 
&atisfies 
the 
&tang,arg,& 
set 
fQrth 
in 
&ectiQn 
1883. 
subsectiQn 4. 
All g,Qcwment& prQg,uceg, and te&timQn:l given in 
response 
tQ the subpoena are cQnfig,ential. 
The AttQrne:l 
General ma:l seek an Qrg,er from the SuperiQr CQurt compelling 
cQmpliance with a 
subpQena issueg, ung,er this subsectiQn. 
Intervention is governed by 
the provisions of Title 5, 
section 9054. 
D. 
The parties to a 
cooperative agreement may withdraw 
their 
application 
and 
thereby 
terminate all proceedings 
under this chapter as-.fe·UewS-l-
withQut the apprQval Qf the 
rey:iewing agencies an:l time priQr tQ the is&uance Qf a final 
g,ecisiQn ung,er paragraph E. 
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At~e~Bey-geRe£al-e~-~~~-ioc-~-a&Y&~-~Fi9F-te 
t5e-~-~~~-e.f-~-~£~we£-~~-~~~-~*eaQi~-~~-a 
eey~t-a€~Je£-~--~&~&-l885T-~~~e€~Je£-~~~-~~ie~ 
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sy.eseetieB-7t-e~ 
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pa~a~~ap5-E-~~-~~~~&-aetieB-ha~-~~-~~~-YBQe~ 
seetieB-l885T-sy.eseetieB-~T 
E. 
The 
Qe~a~tmeBt rey:iewing agencies shall grant or deny 
finally the application no less than 40 days nor more than 
days after the filing of the application. 
App[QVal 
reguires the cQncurrence Qf all 3 reviewing agencies. 
The 
Qe~a~tmeBt reviewing 
agencies 
shall 
issue 
a 
recommended 
decision at least 5 days prior to issuing a final decision 
~~aBtiB~--Qr--eeByiB~--t-he--a~~lieatieB. 
The recommended and 
final decisions must be in writing and set forth the basis 
for the decision. 
4. 
Standards for certification. 
The department shall issue 
a certificate of public advantage for a cooperative agreement if 
i~---d&t.&FR'Ii:aes 
the 
reviewing 
agencies 
determine 
that 
the 
applicants have demonstrated 
9y-~~~-~-€e~¥4~€4£~--eviaeRee 
that the likely benefits resulting from the agreement outweigh 
any disadvantages attributable to a reduction in competition that 
may result from the agreement. 
A. 
In evaluating the potential benefits of a cooperative 
agreement, the 
aepaf't:meR~ reviewing agencies shall consider 
whether one or more of the following benefits may result 
from the cooperative agreement: 
(1) 
Enhancement 
of 
the 
quality 
of 
a9spit:-a-],.--9F 
R9RPE9fi~--me:at:al health care, mental health care or 
related care provided to Maine citizens; 
(2) 
Preservation 
of 
hospital 
or 
nonprofit 
mental 
health 
care 
provider 
and 
related 
facilities 
in 
geographical proximity to the communities traditionally 
served by those facilities; 
(3) 
GaiRs Lower costs and gains in the cost 
of services provided by the hospitals or 
meRt:al health care providers involved; 
efficiency 
R9RPf'9fit: 
(4) 
Improvements 
R9RPE9fit:--meRt:al 
equipment; 
in the utilization of hospital 
health care provider 
resources 
or 
and 
(5) 
Avoidance of duplication of hospital or R9Rpf'afit: 
meRt:al health care resources; and 
(6) 
Continuation 
educational programs 
providers. 
or 
establishment 
of 
needed 
for health care professionals and 
In any certificate for a merger issued under this chapter, 
the 
aepaf't:meRt: 
reviewing 
agencies 
shall 
make 
specific 
findings as to the nature and extent of any likely benefit 
found under this paragraph. 
B. 
The aepaf't:meRt:.!.s reviewing agencies I 
evaluation of any 
disadvantages attributable to any reduction in competition 
likely to result from the agreement may include, but need 
not be limited to, the following factors: 
(1) 
The extent of any likely adverse impact on the 
ability of health maintenance organizations, preferred 
provider organizations,' managed 
health care 
service 
agents or other health care payors to negotiate optimal 
payment 
and 
service 
arrangements 
with 
hospitals, 
physicians, allied health care professionals or other 
health care providers: 
(2) 
The extent of any reduction in competition among 
hospitals, 
physicians, 
allied 
health 
professionals, 
other health care providers or other persons furnishing 
goods or services to, or in competition with, hospitals 
or 
nonprofit mental 
health care 
providers 
that is 
likely 
to 
result 
directly 
or 
indirectly 
from 
the 
hospital cooperative agreement and its likely impact: 
(3) 
The 
extent 
of 
any 
likely 
adverse 
impact 
on 
patients or clients in the quality, availability and 
price of health care services: 
(4) 
The availability of arrangements that are less 
restrictive 
to 
competition 
and 
achieve 
the 
same 
benefits or a more favorable balance of benefits over 
disadvantages 
attributable 
to 
any 
reduction 
in 
competition likely to result from the agreement; and 
( 5) 
The extent of any likely adverse impact on the 
access of persons in in-state educational programs for 
health 
professions 
to 
existing 
or 
future 
clinical 
training programs. 
c. 
In 
evaluating 
the 
cooperative 
agreement 
under 
the 
standards in paragraphs A and B, the Elepal'tmeBt reviewing 
agencies 
shall consider 
the extent to which 
any likely 
disadvantages may be 
ame~iel'ateEl mitigated by any reasonably 
enforceable conditions and the extent to which the likely 
benefits or favorable balance of benefits over disadvantages 
may be enhanced by any reasonably enforceable conditions 
under subparagraph (2). 
(1) 
In any certificate issued under this subsection, 
the 
Elepal'tmeBt 
reviewing 
agencies 
may 
include 
conditions reasonably necessary to 
ame~ie!'ate mitigate 
any 
likely disadvantages 
of 
the 
type 
specified in 
paragraph B, subparagraphs (1) to (3). 
(2) 
In any certificate issued under this subsection, 
the 
Elepal'tmeBt 
reviewing 
agencies 
may 
include 
addi tional condi tions, if proposed by the appl icants, 
designed to achieve public 
benefitsT-~AieA ~ 
may 
include but are not limited to the benefits listed in 
paragraph A. 
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D. 
The department shall maintain on file all cooperative 
agreements for which certificates of public advantage remain 
in effect. 
Any 
party 
to 
a 
cooperative 
agreement 
who 
terminates the agreement shall file a notice of termination 
with the department within 30 days after termination. 
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Sec.6. 22 MRSA §1883-A is enacted to read: 
SI883-A. 
Continuing supervision 
1. 
Periodic 
reJX>rts. 
In 
any 
certificate 
of 
public 
advantage issued under section 1883, the reviewing agencies shall 
reguire the applicant to report periodically on the extent of the 
benefits realized and, in the case of any certificate containing 
conditions, its compliance with any conditions issued under this 
~ter. The reviewing agencies shall evaluate the applicant's 
submission and compliance and within 30 days of receipt of the 
submission 
issue 
a 
report 
of 
their 
findings. 
Reviews 
are 
reguired as follows: 
A. 
For transactions not involving mergers, at least once in 
the first 12 months after issuance of the certificate; and 
B. 
For transactions involving mergers, between 12 and 24 
months after issuance of the certificate. 
2. 
SuperyisoI:Y proceedings. 
At any time, one or more of 
the reviewing agencies may initiate supervisory proceedings for 
the purpose of evaluating compliance with any conditions imposed 
in the certificate of public advantage or for the purpose of 
determining whether, 
in their estimation, 
the likely benefits 
resulting from a certified agreement continue to outweigh the 
likely disadvantages attributable to any potential reduction in 
~Jil.Etti tion 
resulting 
from 
the 
agreement. 
Supervisou 
proceedings are governed by the procedures set forth in section 
1883, subsection 3. 
Sec. 7. 22 MRSA U885, as amended by PL 1995, c. 583, §§8 to 
12, is repealed. 
Sec. 8. 22 MRSA §1886, as amended by PL 1995, c. 583, §§13 
and 14, is further amended to read: 
§1886. Effect of certification; applicability 
1. 
Validity 
of 
certified 
cooperative 
aqreements. 
Notwithstanding Title 5, chapter 10, Title 10, chapter 201 or any 
other provision of 
law, 
a 
cooperative agreement for which a 
certificate of public advantage has been issued is a 
lawful 
agreement. 
Notwithstanding Title 
5, 
chapter 
10, 
Title 
10, 
chapter 201 or any other provision of law, if the parties to a 
cooperative agreement file an application for a certificate of 
public advantage governing the agreement with the 
eepaF~~eR~ 
reviewing agencies, the conduct of the parties in negotiating and 
entering into a cooperative agreement is lawful conduct. 
Nothing 
in 
this 
subsection 
immunizes 
any 
person 
for 
conduct 
in 
negotiating and entering into a cooperative agreement for which 
an application for a certificate of public advantage is not filed. 
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3. 
Other laws specifically requlatinq hospitals. 
Nothing 
in this chapter exempts hospitals or other health care providers 
from 
compliance with 
laws governing certificates of need or 
hospital cost reimbursement. 
5. 
Contract disputes. 
Any dispute among the parties to a 
cooperative agreement concerning its meaning or terms is governed 
by normal principles of contract law. 
Sec. 9. 22 MRSA §1888, as amended by PL 1995, c. 232, §7, is 
repealed. 
Sec. 10. 22 MRSA §1889, as enacted by PL 1995, c. 583, §15, 
is amended to read: 
S1889. Application fee 
Any 
application 
for 
a 
certificate 
involving a merger must be accompanied by 
$10,000, unless the hospitals seeking to 
than 50 licensed beds, in which case the 
of 
public 
advantage 
an application fee of 
merge each have less 
fee is $:,hIiQQ $5,000. 
Any application submitted that includes as a party an entity not 
subject to the assessment described in section 1887 must be 
accompanied by an application fee of $5,000. 
The 
Qepa~tMeBt 
Attorney 
General 
shall place 
these 
funds 
into 
a 
nonlapsing 
dedicated revenue account and funds may be used only by the 
Attorney General for the payment of the cost of experts and 
consultants 
in connection with 
reviews 
conducted 
under 
this 
chapter. 
Sec. 11. 22 MRSA §8709, sub-§l, as enacted by PL 1995, c. 653, 
Pt. A, §2 and affected by §7, is amended to read: 
1. 
Financial data. 
Each health care facility shall file 
with the 
organizationT--:i~--a-~e£m--spe-o-j,..f-ied--&y-~-a-:l~"""P"\H'~-t9 
see~~ea-8~g4T financial information including costs of operation, 
revenues, 
assets, 
liabilities, 
fund 
balances, 
other 
income, 
rates, charges and units of services, except to the extent that 
the board specifies by rule that portions of this information are 
unnecessary. 
Except as provided in subsection I-A, information 
required by this subsection must be submitted in a form specified 
by rule pursuant to section 8704. 
Sec. 12. 22 MRSA §8709, sub-§I-A is enacted to read: 
I-A. 
Hospitals; 
standardized accounting template. 
When 
filing the annual financial information required by subsection 1, 
a hospital licensed in accordance with chapter 405 shall submit 
its 
information 
electronically 
using 
standardized 
accounting 
template software designed by the Governor's Office of Health 
Policy 
and 
Finance 
and 
provided 
to 
the 
hospital 
by 
the 
organization. 
Sec. 13. Standardized reporting and voluntary limits to control 
growth of hospital costs. 
1. 
Voluntary restraint. 
To control the rate of growth of 
the costs of hospital services, the Legislature requests that 
each hospital licensed under the Maine Revised Statutes, Title 
22, chapter 405 voluntarily restrain cost increases and operating 
margins in accordance with this section. 
The targets apply to 
each hospital's fiscal year beginning on or after July 1, 2005 
and remain in effect through the end of each hospital's fiscal 
year beginning on or after July 1, 2007. 
A. 
Each hospital is asked to voluntarily hold its operating 
margin to no more than 3%, as measured using data submitted 
to the Maine Health Data Organization using the electronic 
standardized accounting template software required by Title 
22, 
section 8709, 
SUbsection I-A. 
For purposes of this 
section, 
a 
hospital's operating margin is calculated by 
dividing its operating income, as computed in the template, 
by its total operating revenue, as computed in the template. 
B. 
Each hospital is asked to voluntarily restrain its 
increase in its expense per casemix-adjusted inpatient and 
VOlume-adjusted outpatient discharge to no more than the 
forecasted increase in the hospital market basket index for 
the coming federal fiscal year, as published in The Federal 
Register, when the federal Centers for Medicare and Medicaid 
Services publishes the Medicare program's hospital inpatient 
prospective payment 
system rates for 
the 
coming federal 
fiscal year. 
For purposes of this paragraph, the measure of 
a 
hospital's 
expense 
per 
casemix-adjusted inpatient 
and 
volume-adjusted outpatient discharge is calculated by: 
(1) 
Calculating the hospital's total hospital-only 
expenses; 
(2) 
Substracting 
from 
the 
hospital's 
total 
hospital-only expenses the amount of the hospital's bad 
debt; 
(3) 
Subtracting 
from 
the 
amount 
subparagraph (2) the hospital taxes paid 
during the hospital's fiscal year; and 
reached 
in 
to the State 
(4) 
Dividing the amount reached in subparagraph (3) by 
the product of: 
(a) 
The number of inpatient discharges, adjusted 
by the all payer case mix index for the hospital; 
and 
(b) 
The 
ratio of total gross patient service 
revenue to gross inpatient service revenue. 
For 
the 
purposes 
of this paragraph, 
a 
hospital's total 
hospital-only expenses include any item that is listed on 
the hospital's Medicare cost report as a subprovider, such 
as a psychiatric unit or rehabilitation unit, and does not 
include nonhospital cost centers 
shown on the hospital's 
Medicare cost report, such as home health agencies, nursing 
facilities, 
swing 
bends, 
skilled nursing facilities 
and 
hospital-owned physician practices. 
For purposes of this 
paragraph, a hospital's bad debt is as defined and reported 
in the hospital's Medicare cost report. 
C. 
By October 1, 2005, the Maine Hospital Association and 
the Governor's Office of Health Policy and Finance shall 
agree on a target for increases in hospitals' expense per 
casemix-adjusted 
inpatient 
discharge. 
Each 
hospital's 
expense 
per 
casemix-adjusted 
inpatient 
discharge 
is 
calculated using the following process: 
(1) 
Each patient's expense per discharge is calculated 
by 
applying 
the 
Medicare 
cost 
report 
ratio 
of 
cost-to-charges for the matching cost centers to the 
charge detail on each patient's discharge abstract as 
reported 
in 
the 
Maine 
Health 
Data 
Organization's 
discharge abstracts; 
(2) 
The hospital's average expense per discharge is 
calculated by adding the costs of all discharges and 
dividing the sum by the total number of discharges; and 
(3) 
The 
inpatient 
hospital's 
discharge 
is 
expense 
per 
casemix-adjusted 
calculated by 
adjusting 
the 
average 
expense 
per 
discharge 
by 
the 
average 
case 
weight for the hospital, using case weights issued by 
the federal Centers for Medicare and Medicaid Services. 
Sec. 14. Outpatient cost-efficiency. 
By January 1, 
2006, 
the 
Maine Hospital Association and the Governor's Office of Health 
Policy 
and 
Finance 
shall 
agree 
on 
a 
timetable, 
format 
and 
methodology for the hospital association to measure and report on 
outpatient 
cost-efficiency. 
The 
methodology 
must 
use 
the 
ambulatory payment classification system as the unit of cost. 
Sec. 15. Standardization of administrative cost tracking. 
The 
Legislature requests that the Maine Hospital Association develop, 
by 
January 
1, 
2006, 
standardized 
definitions 
of 
various 
administrative 
cost 
categories 
that hospitals 
may 
use 
when 
establishing budgets and reporting on spending on administrative 
costs. 
Sec. 16. Health care administrative streamlining work group. 
1. 
Work group established. 
The Governor's Office of Health 
Policy and Finance shall convene a health care administrative 
streamlining 
work 
group 
to 
facilitate 
the 
creation 
and 
implementation of a single portal through which hospitals can 
access 
and 
transmit 
member 
eligibility, 
benefit 
and 
claims 
information 
from 
mUltiple 
insurers. 
The 
work 
group 
shall 
investigate: 
A. 
Funding mechanisms, 
including seeking outside funding 
for 
start-up 
and 
ongoing 
operational 
costs, 
with 
the 
intention that the portal become independent and sustainable 
over time; and 
B. 
Ways 
to 
ensure 
that 
savings 
resulting 
from 
implementation of such a portal are passed on to purchasers 
in the 
form of rate reductions 
by hospitals 
and other 
providers 
and 
by 
reductions 
in administrative costs 
by 
insurers and 3rd-party administrators. 
The work group may also consider the incorporation of medical and 
quality data to the extent possible in the future. 
2. 
Membership. 
The 
work 
group consists of 
members 
appointed by the Governor. 
The membership of the work group must 
reflect the geographic diversity of the State. 
Members serve as 
volunteers 
and 
without 
compensation 
or 
reimbursement 
for 
expenses. 
The membership consists of the following persons: 
A. 
Four members 
representing community hospitals chosen 
from 
a 
list 
submitted 
representing hospitals; 
by 
a 
statewide 
association 
B. 
Four members representing insurers or other 3rd-party 
payors; 
C. 
Two members representing physician practices; 
D. 
One member representing an organization that specializes 
in the collection of health care data; 
E. 
One member representing statewide business; 
F. 
One member representing the Maine Quality Forum; 
G. 
Two 
members 
representing 
the 
Department 
of 
Administrative and Financial Services, Bureau of Insurance; 
H. 
One member representing the Department of Health and 
Human Services; and 
I. 
The chair of the Public Purchasers' Steering Group. 
work 
group 
shall 
consider 
outlined in subsection 1. 
The work group may: 
3. 
Duties. 
The 
the 
issues 
A. 
Hold 
public 
hearings 
to 
collect 
information 
from 
individuals, 
hospitals, 
health care 
providers, 
insurers, 
3rd-party payors, government-sponsored health care programs 
and interested organizations; 
B. 
Consult with experts in the fields of health care and 
hospitals and public policy; and 
c. 
Examine any other issues to further the purposes of the 
study. 
4. 
Staff assistance. 
The 
Governor's 
Office 
of 
Health 
Policy and Finance shall staff the work group. 
The work group 
shall work in cooperation with the Maine Hospital Association and 
the Maine Association of Health Plans. 
The Department of Health 
and Human Services and the Maine Health Data Organization shall 
provide additional staff support or assistance as needed. 
5. 
Report. 
The work group shall submit a report and any 
suggested legislation to the Governor 
and the joint standing 
committee of the Legislature having jurisdiction over health and 
human services matters and the joint standing committee of the 
Legislature having 
jurisdiction over 
insurance 
and 
financial 
services matters no later than November 1, 2006. 
Sec. 17. Hearing process review. 
The Department of Health and 
Human Services shall review the existing hearing process provided 
in the laws governing certificates of need, the Maine Revised 
Statutes, Title 22, 
chapter 103-A, 
to determine whether that 
process 
ensures 
that 
the 
Commissioner 
of 
Health 
and 
Human 
Services has all the information needed to make 
a 
fair and 
accurate 
determination of 
whether 
each project proposed 
for 
certification meets the needs of Maine citizens. 
The Department 
of Health and Human Services shall conduct the review described 
and then report its findings and any proposed changes to the laws 
governing certificates of need to the Joint Standing Committee on 
Health and Human Services no later than January 1, 2006. 
Sec. 18. Review of staffing; fees. 
By 
January 1, 
2006, 
the 
Department of Health and Human Services shall: 
1. 
Review 
and 
make 
recommendations 
regarding 
the 
certificate of need program's staffing needs; 
2. 
Review and analyze the State's current certificate of 
need fees compared to certificate of need fees in other states; 
and 
3. 
Make recommendations regarding possible changes in the 
State's certificate of need fees necessary to adequately support 
program staffing needs. 
The 
findings 
Services 
Department of Health and Human Services shall 
to the Joint Standing Committee on Health 
no later than January 1, 2006. 
SUMMARY 
report its 
and Human 
This bill enacts the recommendations of the Commission to 
Study Maine's Community Hospitals established in Public Law 2003, 
chapter 469, 
which created Dirigo Health. 
The 
Commission to 
Study Maine's Community Hospitals was charged with the duty to 
study the 
role of community hospitals 
in the 21st century, 
including assessing cost efficiencies, 
cost effectiveness and 
overall 
affordability 
of 
available 
health 
care 
services. 
Specifically, the bill accomplishes the following. 
1. 
It amends the Hospital Cooperation Act to make it easier 
for hospitals to collaborate by reducing concerns relative to 
antitrust ramifications. 
It also extends the Act to include 
health care providers other than hospitals, and changes the short 
Page l4-LR2373(1) 
title of the 
law to "the Hospital and Health Care Provider 
Cooperation Act." 
2. 
It requires hospitals to submit to the Maine Health Data 
Organization their annual financial information using electronic 
standardized 
accounting 
template 
software 
designed 
by 
the 
Governor's Office of Health Policy and Finance and provided to 
hospitals by the Maine Health Data Organization. 
3. 
It continues voluntary targets for hospitals for: 
A. 
Hospital entity operating margins; 
B. 
Cost increases for 
a 
mixed inpatient and outpatient 
measure; and 
C. 
Cost increases for an inpatient-only measure. 
The operating margin target is not more than 3'\. 
The mixed 
inpatient and outpatient cost increase target is no more than the 
forecasted increase in the hospital market basket index for the 
coming federal fiscal year. 
The inpatient-only cost increase 
target will be negotiated between the Maine Hospital Association 
and 
the 
Governor's Office of Health Policy 
and 
Finance 
and 
determined no later than October 1, 2005. 
4. 
It instructs the Maine Hospital Association and the 
Governor's Office of Health Policy 
and 
Finance 
to 
agree 
by 
January 1, 2006 on a timetable, format and methodology for the 
hospital 
association 
to 
measure 
and 
report 
on 
outpatient 
cost-efficiency. 
The methodology must use the ambulatory payment 
classification system as the unit of cost. 
5. 
It requests that the Maine Hospital Association develop, 
by 
January 
1, 
2006, 
standardized 
definitions 
of 
various 
administrative 
cost 
categories 
that 
hospitals 
may 
use 
when 
establishing budgets 
and 
reporting spending on administrative 
costs. 
6. 
It instructs the Governor's Office of Health Policy and 
Finance to convene a health care administrative streamlining work 
group to facilitate the creation and implementation of a single 
portal through which hospitals can access and transmit member 
eligibility, 
benefit 
and 
claims 
information 
from 
multiple 
insurers. 
The work group is directed to investigate funding 
mechanisms, 
including seeking outside funding for start-up and 
ongoing operational costs, with the intention that the portal 
become independent and sustainable over time, and ways to ensure 
that savings resulting from implementation of such a portal are 
passed 
on 
to 
purchasers 
in 
the 
form 
of 
rate 
reduction 
by 
hospitals and other providers and by reduction in administrative 
costs by insurers and 3rd-party administrators. 
The work group 
may also consider the incorporation of medical and quality data 
to the extent possible in the future. 
.The work group is directed 
to submit a report and any necessary suggested legislation to the 
Governor and the joint standing committee of the Legislature 
having jurisdiction over health and human services matters and 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over insurance and financial services matters no 
later than November 1, 2006. 
7. 
It instructs the Department of Health and Human Services 
to review the existing hearing process provided in the laws 
governing certificates of need to determine whether that process 
ensures that the Commissioner of Health and Human Services has 
all 
the 
information 
needed 
to 
make 
a 
fair 
and 
accurate 
determination of whether each project proposed for certification 
meets the needs of Maine citizens. 
It directs the Department of 
Heal th and Human Services to conduct the review descr ibed and 
then report its findings and any proposed changes to the law to 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over health and human services matters no later than 
January 1, 
2006. 
It also 
requires that the department, 
by 
January 1, 2006, review and make recommendations regarding the 
certificate of need program's staffing needs and fee structure, 
including comparisons to other states, and report its findings to 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over health and human services matters.