An Act To Codify MaineCare Rate System Reform
Maine Legislature, Session 130, LD 1867
Committee Amendment CA_A_H968 (House)
Amends: 5 MRSA §12004-I, 22 MRSA §3173-J

CO1\1MITTEE AMENDMENT "fl" to H.P. 1377, L.D. 1867, "An Act To Codify 
MaineCare Rate System Reform" 
Amend the bill by striking out everything after the enacting clause and inserting the 
following: 
'Sec.1. 5 MRSA §12004-I, sub-§36-F is enacted to read: 
36-F. 
Human 
Services 
MaineCare Rate Reform Expert 
Technical Advisory Panel 
Sec. 2. 22 MRSA §3173-J is enacted to read: 
Not Authorized 
22MRSA 
§3173-J, 
sub-§5 
§3173-J. Rate-setting system for development and maintenance of sustainable, 
efficient and value-oriented MaineCare payment models and rates 
This section establishes a rate-setting system for the development and maintenance of 
MaineCare payment models and rates that comply with the requirement in 42 United States 
Code, Section 13 96a that rates be consistent with efficiency, economy and quality of care; 
that are adequate to support MaineCare member access to services; and that are equitable 
and data-driven. 
1. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. 
"Alternative payment model" means a health care payment model that uses 
financial incentives to promote or leverage greater value for patients, purchasers, 
payers or providers and that connects at least a portion of reimbursement to 
performance on defmed quality measures. 
B. "MaineCare section of policy" means a set of MaineCare-covered services, as 
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categorized by the department through the adoption of rules that specify the parameters 
for coverage. 
COMMITTEE AMENDMENT 
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CO.lv1MITTEE AMENDMENT "ff,' to H.P. 1377, L.D. 1867 
C. "Rate determination" means a process conducted by the department to establish the 
reimbursement rate methodology, base rate amount or payment model for a MaineCare 
section of policy or for a specific covered service, whether through adoption or 
adaptation of a benchmark rate from another payer or development through a rate 
study. 
D. "Rate study" means an analysis conducted by the department or its contracted 
vendor to develop a recommended rate methodology and resulting base rate amount 
and payment model based on the service model and cost components for the service. 
2. Rate-setting system principles and processes. The department shall establish 
MaineCare provider reimbursement rates, including those paid through fee-for-service and 
alternative payment models. 
The rates must be established in accordance with the 
following principles and processes and adopted through rulemaking as described in 
subsection 3. The department shall: 
A. Develop annually a schedule of rate determination by MaineCare section of policy 
in consultation with the MaineCare Rate Reform Expert Technical Advisory Panel 
established under subsection 5 as follows: 
(1) Post the rate determination schedule on its publicly accessible website; 
(2) Provide an opportunity for the public to review and comment on the rate 
determination schedule and make available a summary of these comments on its 
publicly accessible website; and 
(3) Conduct off-schedule rate determinations as the department finds appropriate; 
B. Conduct or contract for, every 4 years, a comprehensive benchmarking report to 
compare MaineCare rates for all services to those paid by Medicare, at least 5 
comparison Medicaid states and any appropriate Maine commercial payers. The 
department shall provide public notice of the initiation of the comprehensive 
benchmarking process, provide an opportunity for the public to review and comment 
on the draft report and make available a summary of these comments alongside the 
final report; 
C. Conduct a rate determination process for any contemplated change in 
reimbursement amount or model for a MaineCare section of policy or for a specific 
covered service, in accordance with the following procedures: 
(1) Provide public notice of initiation of the rate determination for a MaineCare 
section of policy or for a specific covered service; 
(2) Consider and, when appropriate, adopt alternative payment models that use 
financial incentives to promote or leverage greater value for the MaineCare 
program. This consideration must include a review of research on any available 
national models or best practices regarding payment models for the service; 
(3) Determine whether a Medicare rate is available for the service and whether the 
Medicare rate represents the most appropriate benchmark and payment model; 
(4) In the absence of a Medicare rate, determine whether a rate from a non-
Medicare payer source, including, but not limited to, commercial health care rates 
in the State or other states' Medicaid rates, is available for the service and whether 
this alternate payer rate represents the most appropriate benchmark and payment 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT"/} "to H.P. 1377, L.D. 1867 
model. The department shall determine an appropriate percentage of the 
benchmark rate for the service, taking into consideration the findings of the 
benchmarking report conducted in accordance with paragraph B; 
(5) Conduct a rate study for every service for which a benchmark rate or payment 
model in accordance with subparagraph (3) or ( 4) either is unavailable or is 
inconsistent with the goals of efficiency, economy and quality of care to support 
member access. Each rate study must include the following: 
(a) A review of data, which must include: 
(i) An assessment as to whether the delivery of service and associated 
requirements have changed since the previous rate study, if available, to 
determine if the rate methodology needs to be revised; 
(ii) The collection of data on provider costs and cost-related aspects of the 
delivery of service and associated requirements through existing cost 
reports, provider surveys and other available data sources; and 
(iii) Research on any available national models or best practices regarding 
cost-related aspects of the delivery of service and associated requirements; 
and 
(b) Developing or updating rates by considering the following: 
(i) The appropriateness of adoption of a change in payment model 
consistent with the purposes of this section; 
(ii) The current rate assumptions and their appropriateness given current 
provider costs, best practices or changes in the delivery of service and 
associated requirements; 
(iii) The findings for related services of any comprehensive benchmarking 
report under paragraph B; and 
(iv) The degree to which services are dependent on MaineCare 
reimbursement, including, but not limited to, cost factors, such as average 
wage, that may be reflective of restraints of MaineCare reimbursement 
versus costs of the broader marketplace; and 
(6) Upon completion of the rate determination process, present the department's 
rationale and recommendations for rate methodology, resulting base rate amount 
and payment model for public comment prior to the rule-making process; convene 
a meeting of interested providers and other interested members of the public to 
discuss the recommendations and hear comments; and respond in writing to 
comments with an explanation of whether and how feedback was incorporated into 
the final rate·determination; and 
D. Ensure that base rate amounts developed under paragraph C are updated to keep 
pace with changes in the costs of delivering the service by: 
(1) For rates benchmarked to Medicare rates according to paragraph C, 
subparagraph (3), referencing Medicare rates for the most current year available, 
updated at least annually, and reviewing the current established percentage 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT "ff" to H.P. 1377, L.D. 1867 
benchmark, as appropriate, taking into consideration the findings of the most recent 
benchmarking report conducted in accordance with paragraph B; 
(2) For rates benchmarked to an alternate payer source in accordance with 
paragraph C, subparagraph ( 4 ), updating rates to the most current year of data for 
that payer source at least once every 2 years and reviewing the current established 
percentage benchmark, as appropriate, taking into consideration the findings of the 
benchmarking report conducted in accordance with paragraph B; and 
(3) For base rates determined through a rate study in accordance with paragraph C, 
subparagraph (5), providing an annual cost-of-living adjustment effective on a 
consistent date to be established by the department for each service that has not 
received a rate adjustment within the 12 months prior to the effective date of the 
cost-of-living adjustment and for which the department determines benchmarking 
in accordance with paragraph C, subparagraph (3) or ( 4) is not appropriate or 
advisable. In establishing cost-of-living adjustments, the department shall: 
(a) Use inflation indices determined through rulemaking to reflect a reasonable 
cost of providing services for different categories of services; and 
(b) Maximize use of a single, consistent and general cost-of-living adjustment 
index, consistent with the cost-of-living adjustment applied to minimum wage 
laws, in order to ensure that the cost-of-living adjustment reflects increases to 
provider costs for delivering the service rather than other factors, such as 
private sector price increases or cost-shifting from different payers. 
3. Rulemaking for establishment of rate methodology. 
In addition to the 
requirements of Title 5, chapter 375, rulemaking for MaineCare provider reimbursement 
rate methodologies must comply with the following. 
A. Establishment of a rate methodology for a new MaineCare section of policy or 
specific new service or changes to an existing rate methodology must be adopted 
through rulemaking in accordance with the Maine Administrative Procedure Act. 
Rulemaking is not required for the addition of new billing codes or to specify rates for 
specific billing codes if there is no change in the overall methodology and rates are 
posted in accordance with this section. 
B. For services the department benchmarks to Medicare or other available payer rates 
for reimbursement, the department shall adopt a rule specifying the percentage, 
frequency of benchmark updates for alternate payer sources and other aspects of the 
benchmark methodology. Additional rulemaking is not required for rate changes tied 
to the adopted benchmark methodology, or for the addition of new billing codes, unless 
the department changes the benchmarking percentage or methodology. 
C. No later than July 1, 2023, the department shall adopt a rule specifying the 
appropriate cost-of-living adjustment methodology for different types of services in 
accordance with subsection 2, paragraph D, subparagraph (3). Additional rulemaking 
is not required for rate increases tied to annual cost-of-living adjustment increases 
unless the department changes the cost-of-living adjustment methodology. 
Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A unless rules to adopt MaineCare reimbursement rates are 
designated as major substantive rules in another section oflaw. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDlvIENT "/?" to H.P. 1377, L.D. 1867 
4. Funding. The department may use funds from the MaineCare Stabilization Fund 
established in section 317 4-KK. in order to fund the rate adjustments made in accordance 
with this section when funding may be needed in addition to appropriations associated with 
separate initiatives. 
5. MaineCare Rate Reform Expert Technical Advisory Panel. The MaineCare Rate 
Reform Expert Technical Advisory Panel, referred to in this subsection as "the panel," is 
established for the purpose of advising the commissioner by providing technical, 
nonpartisan, 3rd-party expertise to inform the department's planned schedule and actions 
on rate assumptions, payment models and other related technical matters. The panel may 
not propose rates or methodologies. The commissioner or the commissioner's designee 
shall serve as chair. 
A. The panel includes the following members: 
(1) A representative from the Maine Health Data Organization; 
(2) A representative from the Department of Professional and Financial 
Regulation, Bureau of Insurance; 
(3) A representative from the Department of Professional and Financial 
Regulation; 
(4) A representative from the department's division oflicensing and certification; 
(5) A representative from the Office of Affordable Health Care; 
(6) A representative from the Department of Labor; and 
(7) A representative from the Department of Administrative and Financial 
Services. 
B. The panel shall: 
(1) Review annual schedules of MaineCare sections of policy scheduled for rate 
determinations under subsection 2, paragraph A; 
(2) Review assumptions and recommendations from rate determinations under 
subsection 2, paragraph C; 
(3) Review findings from benchmarking reports to inform the appropriateness of 
MaineCare rate levels across services; and 
( 4) Advise on other related technical matters, as appropriate. 
C. The panel shall meet at least twice per year and as otherwise convened by the 
commissioner. Meetings of the panel are public, and the panel shall provide public 
notice of each meeting and an opportunity for public comment. 
6. MaineCare Advisory Committee. The MaineCare Advisory Committee, required 
by 42 Code of Federal Regulations, Section 431.12 and further described in department 
rules, and referred to in this subsection as "the committee," shall participate in the 
department's rate-setting system in accordance with this subsection. 
A. The committee must include a permanent rate system subcommittee that allows 
broad participation by the full spectrum of types of MaineCare providers. Participation 
in the rate system subcommittee may not be limited by number or type of stakeholder 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT "f} "to H.P. 1377, L.D. 1867 
in order to allow for participation by any stakeholder affected by MaineCare 
reimbursement policy and interested in participating in the work of the subcommittee. 
B. At each meeting of the committee or rate system subcommittee, if requested by the 
chair of the committee or rate system subcommittee, the department shall provide 
updates on the department's planned and completed activities under this section for 
discussion and advisement, including, but not limited to, the following: 
(1) Schedule and status of rate determination, planned and in progress, by 
MaineCare section of policy; 
(2) Status of and plans for comprehensive benchmarking studies; and 
(3) Contemplated rulemaking to establish rate methodology resulting from rate 
determination processes. 
C. The rate system subcommittee may formulate and present recommendations to the 
committee pertaining to the department's activities under this section. 
7. Index of MaineCare rates by service code; publicly accessible website. The 
department shall maintain and annually update a centralized master index of rates by 
service code and post this index on its publicly accessible website. The index must contain 
the following: 
A. The service code, including any modifiers that affect reimbursement; 
B. The current year rate; 
C. The source for the rate, including, but not limited to, Medicare or alternate payer 
benchmark, rate study or other source, and the year and the author of the review, study 
or report that justified the rate; 
D. The year the base rate was last updated prior to the application of any subsequent 
cost-of-living adjustments; 
E. Whether the rate is subject to cost-of-living adjustments and, if so, the identity of 
the benchmark index; 
F. The section of MaineCare policy pursuant to which the rate was adopted; and 
G. The target date for the next rate review. 
In addition to the index, the department shall post on its publicly accessible website all rate 
· studies, benchmark reports and other materials used by the department to develop the rates 
and payment models. 
8. Notice prior to implementation. For planned rate changes that do not require 
rulemaking as described in subsection 3, the department shall provide notice prior to 
implementation, of no less than 30 calendar days' for cost-of-living adjustments and no less 
than 7 calendar days for Medicare fee schedule changes or the addition of new service 
codes, to stakeholders who request to receive such notice.' 
Amend the bill by relettering or renumbering any nonconsecutive Part letter or section 
number to read consecutively. 
SUMMARY 
This amendment makes the following changes to the bill. 
COMMITTEE AMENDMENT 
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COMMITTEE AMEND:MENT "ff" to H.P. 1377, L.D. 1867 
1. It adds definitions of "alternative payment model," "MaineCare section of policy," 
"rate determination" and "rate study." 
2. It clarifies the rule-making process and establishes that rules are routine technical 
rules unless otherwise identified as major substantive rules for MaineCare reimbursement 
rate setting. 
3. It clarifies that all rate reviews must be posted on a publicly accessible website and 
adds public notice and comment periods on rate review schedules. 
4. It adds a requirement for public notice of initiation of the comprehensive 
benchmarking process, opportunity for public review and comment and posting of a 
summary of comments. 
5. It revises the rate determination process to clarify that the process includes 
consideration of alternative payment methodologies; determination of the appropriateness 
of the benchmarking rate for each service to Medicare or other payer rate; conducting rate 
studies for services that are not appropriate for benchmarking; and public notice and 
comment for every rate review. 
6. It requires research into best practices when considering an alternative payment 
model. 
7. It requires that rates, once developed, be updated regularly to keep pace with the cost 
of providing services. 
8. It removes a representative of the Office of Fiscal and Program Review from the 
expert technical advisory panel and establishes the panel in the Maine Revised Statutes, 
Title 5. 
9. It adds the MaineCare Advisory Committee as an additional advisory body on the 
rate-setting system and requires the Department of Health and Human Services to consult 
with the committee on the department's planned and completed rate-setting activities, 
including schedule and status of rate reviews, status and plans for comprehensive 
benchmarking studies and contemplated rulemaking related to reimbursement rate 
methodologies. It adds a requirement for a rate system subcommittee within the committee. 
10. It adds a requirement that the department maintain and annually update a 
centralized master index of rates by service code and post it on the department's publicly 
accessible website. 
11. It adds a requirement that the department give advance notice of rate updates that 
do not require rulemaking to stakeholders who request notice. 
COMMITTEE AMENDMENT 
Approved: 03/24/22 .feac:.. 
LD 1867 
LR2350(02) 
An Act To Codify MaineCare Rate System Reform 
Fiscal Note for Bill as Amended by Committee Amendment /f {{J-i l S') 
Committee: Health and Human Services 
Fiscal Note Required: No 
Fiscal Note 
No fiscal impact 
LR2350(02) - Fiscal Note - Page 1 of 1