An Act To Implement the Insurance Payment Reform Recommendations of the Advisory Council on Health Systems Development
Maine Legislature, Session 125, LD 0540
Committee: Insurance and Financial Services
Sponsors: GRAHAM, BRANNIGAN, BELIVEAU, EVES, FOSSEL, GOODE, MORRISON, RICHARDSON, ALFOND, CRAVEN
Amends: 2 MRSA §104, 24-A MRSA §4303, 24-A MRSA §4319

Legislative Document 
No. 540 
H.P. 423 
House of Representatives, February 15, 2011 
An Act To Implement the Insurance Payment Reform 
Recommendations of the Advisory Council on Health Systems 
Development 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
HEATHER J.R. PRIEST 
Clerk 
Presented by Representative GRAHAM of North Yarmouth. 
Cosponsored by Senator BRANNIGAN of Cumberland and 
Representatives: BELIVEAU of Kittery, EVES of North Berwick, FOSSEL of Alna, GOODE 
of Bangor, MORRISON of South Portland, RICHARDSON of Warren, Senators: ALFOND of 
Cumberland, CRAVEN of Androscoggin. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  2 MRSA §104, sub-§7, ¶G, as amended by PL 2009, c. 609, §2, is further 
amended to read: 
G.  Beginning March 1, 2008 and annually thereafter, making specific 
recommendations relating to paragraphs A to F and to paragraph H to the joint 
standing committee of the Legislature having jurisdiction over insurance and 
financial services matters and the joint standing committee of the Legislature having 
jurisdiction over health and human services matters and to any appropriate state 
agency; and 
Sec. 2.  2 MRSA §104, sub-§7, ¶H, as enacted by PL 2009, c. 609, §3, is 
amended to read: 
H.  Reviewing and evaluating strategies for payment reform in the State’s health care 
system to assess whether proposed payment reform efforts follow the guiding 
principles developed by the council and identifing identifying any statutory or 
regulatory barriers to implementation of payment reform.; and 
Sec. 3.  2 MRSA §104, sub-§7, ¶I is enacted to read: 
I.  Reviewing pilot projects for payment reform submitted to the Department of 
Professional and Financial Regulation, Bureau of Insurance pursuant to Title 24-A, 
section 4319 and assessing whether the pilot projects follow the principles adopted by 
the council in subsection 11. 
Sec. 4.  2 MRSA §104, sub-§11 is enacted to read: 
11.  Payment reform principles.  The council shall adopt principles for the review 
of pilot projects to require that payment reform strategies: 
A.  Support integrated, efficient and effective systems of care delivery and payment; 
B.  Promote a patient-centered approach to service payment and delivery; 
C.  Encourage and reward the prevention and management of disease; 
D.  Promote the value of care over volume to measurably lower costs; and 
E.  Support payments and processes that are transparent, easy to understand and 
simple to administer for patients, providers, purchasers and other stakeholders. 
Sec. 5.  24-A MRSA §4303, sub-§3-B, as amended by PL 2007, c. 199, Pt. B, §8, 
is further amended to read: 
3-B.  Prohibition on financial incentives.  A carrier offering or renewing a managed 
care plan may not offer or pay any type of material inducement, bonus or other financial 
incentive to a participating provider to deny, reduce, withhold, limit or delay specific 
medically necessary health care services covered under the plan to an enrollee.  This 
subsection may not be construed to prohibit pilot projects authorized pursuant to section 
4319 or to prohibit contracts that contain incentive plans that involve general payments 
such as capitation payments or risk-sharing agreements that are made with respect to 
providers or groups of providers or that are made with respect to groups of enrollees. 
Sec. 6.  24-A MRSA §4319 is enacted to read: 
§4319.  Payment reform pilot projects 
1.  Pilot projects.  Beginning January 1, 2012, the superintendent may authorize pilot 
projects in accordance with this subsection that allow a health insurance carrier that offers 
health plans in this State to implement payment reform strategies with providers to reduce 
costs and improve the quality of patient care. 
A.  The superintendent may approve a pilot project that utilizes payment 
methodologies and purchasing strategies, including, but not limited to: alternatives to 
fee-for-service models, such as blended capitation rates, episodes-of-care payments, 
medical home models and global budgets; pay-for-performance programs; tiering of 
providers; and evidence-based purchasing strategies. 
B.  Prior to approving a pilot project, the superintendent shall consult with the 
Advisory Council on Health Systems Development and consider the recommendation 
of the council on whether the proposed pilot project is consistent with the principles 
for payment reform under Title 2, section 104, subsection 11. 
2.  Rulemaking.  The superintendent shall establish by rule procedures and policies 
that facilitate the implementation of a pilot project pursuant to this section, including, but 
not limited to, a process for a health insurance carrier's submitting a pilot project proposal 
and minimum requirements for approval of a pilot project.  Rules adopted pursuant to this 
subsection are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A 
and must be adopted no later than 90 days after the effective date of this subsection. 
3.  Report.  Beginning in 2013, the superintendent shall report by March 1st annually 
to the joint standing committee of the Legislature having jurisdiction over insurance 
matters on the status of any pilot project approved by the superintendent pursuant to this 
section.  The report must include an analysis of the effectiveness of the pilot project in 
reducing health care costs including any impact on premiums. 
4.  Evaluation.  During the First Regular Session of the 129th Legislature, the joint 
standing committee of the Legislature having jurisdiction over insurance and financial 
services matters shall conduct an evaluation of the effectiveness of any pilot project 
approved by the superintendent and make a determination whether to continue, amend or 
repeal the authorization for a pilot project pursuant to this section.  The joint standing 
committee of the Legislature having jurisdiction over insurance and financial services 
matters may report out a bill based on the evaluation to the First Regular Session of the 
129th Legislature. 
Sec. 7.  Department of Health and Human Services payment reform 
demonstration project authorized.  Beginning July 1, 2012 and until June 30, 2016, 
the Department of Health and Human Services may establish a demonstration project to 
implement payment reform strategies to achieve cost savings within the MaineCare 
program. The demonstration project must be consistent with the principles for payment 
reform adopted by the Advisory Council on Health Systems Development in the Maine 
Revised Statutes, Title 2, section 104, subsection 11.  The demonstration project must 
also include measurable goals consistent with those principles and include methods for 
monitoring and reporting. The department may adopt rules to implement this section. 
Rules adopted pursuant to this section are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
SUMMARY 
This bill implements the recommendations of the Advisory Council on Health 
Systems Development relating to insurance payment reform. The bill adopts principles 
for payment reform strategies developed by the Advisory Council on Health Systems 
Development and requires that these principles be used to evaluate pilot project 
proposals. The bill authorizes the Superintendent of Insurance to permit health insurance 
carriers to implement payment reform pilot projects beginning January 1, 2012.  The bill 
requires the Superintendent of Insurance to consider the recommendation of the Advisory 
Council on Health Systems Development before approving a pilot project. 
The bill also authorizes the Department of Health and Human Services to conduct a 
4-year demonstration project for payment reform to achieve cost savings within the 
MaineCare program beginning July 1, 2012.