An Act To Codify MaineCare Rate System Reform
Maine Legislature, Session 130, LD 1867
Committee: Health and Human Services
Sponsors: MEYER, CLAXTON, GRIFFIN, MOORE
Amends: 22 MRSA §3173-J

Legislative Document
No. 1867
H.P. 1377
House of Representatives, January 5, 2022
An Act To Codify MaineCare Rate System Reform
Submitted by the Department of Health and Human Services pursuant to Joint Rule 203.
Reference to the Committee on Health and Human Services suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative MEYER of Eliot.
Cosponsored by Senator CLAXTON of Androscoggin and
Representative: GRIFFIN of Levant, Senator: MOORE of Washington.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  22 MRSA §3173-J is enacted to read:
§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 are consistent with efficiency, economy and 
quality of care in order to support MaineCare member access to services in compliance 
with the United States Social Security Act, Section 1902(a)(30)(A).
1. Rate development principles and processes. The department shall establish 
MaineCare provider reimbursement rates, including those paid through fee-for-service and 
value-based alternative payment models. The rates must be established in accordance with 
the following principles and processes. The department shall:
A. Consider and, when appropriate, adopt payment models that use financial incentives 
to promote or leverage greater value for the MaineCare program; 
B. Benchmark to Medicare services for which a Medicare rate is available and 
represents the most appropriate benchmark and method of payment by:  
(1) Referencing Medicare rates for the most current year available, updated at least 
annually;
(2) Establishing a consistent percentage of Medicare for benchmarked services; 
and
(3) Documenting the rationale for the deviation from the standard Medicare 
benchmark when there is an exceptional basis for a service to be benchmarked to 
a rate other than the Medicare rate or a percentage of Medicare other than the 
standard percentage benchmark;
C. Benchmark to a non-Medicare payer source, including, but not limited to, 
commercial health care rates in the State or other states' Medicaid rates, if one is 
available and represents the most appropriate benchmark and method of payment. 
Rates benchmarked in accordance with this paragraph must be updated to the most 
current year of data for that payer source at least once every 2 years. The department 
shall review the percentage benchmark for updating, as appropriate, and shall take into 
consideration the findings of the benchmarking report conducted in accordance with 
paragraph E;
D. Maintain on its publicly accessible website a list of services benchmarked in 
accordance with paragraphs B and C;
E. 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 Maine commercial payers; 
F. Conduct a rate study in accordance with this paragraph and paragraph G for every 
service for which a benchmark rate in accordance with paragraph B or C is either 
unavailable or is inconsistent with the goals of efficiency, economy and quality of care 
to support member access. The department shall:
(1) Develop annually a schedule of rate studies in consultation with the technical 
advisory panel established under subsection 4, as long as a review of the rate 
methodology and assumptions resulting from the rate study for the service occurs 
no less frequently than once every 5 years; 
(2) Post the rate study schedule on its publicly accessible website; and
(3) Conduct off-schedule rate studies and reviews if the department determines 
those studies and reviews to be appropriate;
G. Conduct rate studies for specific services for which it determines benchmarking in 
accordance with paragraph B or C is not appropriate or advisable.  Each rate study must 
include the following:
(1) Public notice of initiation of the rate study;
(2) Review of data that must include:
(a) An assessment as to whether the service model has changed since the 
previous rate study, if available, to determine if model assumptions need to be 
revised;
(b) The collection of data on provider costs and cost-related aspects of the 
service model through existing cost reports, provider surveys and other 
available data sources; and
(c) Research on any available national models or best practices regarding 
payment models and cost-related aspects of the service model;
(3) Developing or updating proposed rates by considering the following:
(a) The appropriateness of adoption of an alternative payment model or other 
change in payment model, consistent with the purposes of this section;
(b) The current rate assumptions and their appropriateness, given current 
provider costs, best practices or changes in the service model;
(c) The findings for related services of any comprehensive benchmarking 
report under paragraph E;
(d) The potential use of established benchmarks or comparable rate data from 
other payer sources; and
(e) 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; 
(4) Public presentation of draft results for public comment; and
(5) Response to comments and an explanation of whether and how feedback was 
incorporated; and
H. Provide 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 it determines benchmarking in accordance with paragraph B or C is not 
appropriate or advisable. In establishing cost-of-living adjustments, the department 
shall: 
(1) Use inflation indices determined through rulemaking to reflect a reasonable 
cost of providing services for different categories of services; and
(2) 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.
2. Rulemaking for rate adjustments.  Rulemaking for MaineCare provider 
reimbursement rates must adhere to the following.
A. Changes to rate methodology based on a rate study or resulting from the 
incorporation of a value-based payment model are subject to adoption through 
rulemaking in accordance with the Maine Administrative Procedure Act. To the extent 
possible for the specific service, the rule may specify overall methodology, not billing 
code-level specificity, to minimize the need for multiple instances of rulemaking. 
B. For services benchmarked to Medicare or other available payer rates, the department 
shall adopt a rule specifying the year and other aspects of the benchmark methodology. 
Additional rulemaking is not required for rate changes tied to the adopted benchmark 
methodology unless the department changes the benchmarking percentage or 
methodology. 
C. No later than one year after the effective date of this section, the department shall 
adopt a rule specifying the appropriate cost-of-living adjustment methodology for 
different types of services in accordance with subsection 1, paragraph H. 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.
3. Funding. The department may use funds from the MaineCare Stabilization Fund 
established in section 3174-KK in order to fund the rate adjustments made in accordance 
with this section when additional funding may be needed in addition to appropriations 
associated with separate initiatives.
4. 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 must include 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 of licensing and certification;
(5) A representative from the Office of Affordable Health Care;
(6) A representative from the Department of Labor;
(7) A representative from the Department of Administrative and Financial 
Services; and
(8) A representative from the Office of Fiscal and Program Review.
B. The panel shall:
(1) Review annual schedules of MaineCare policy sections slated for rate studies 
under subsection 1, paragraph F or G;
(2) Review assumptions and recommendations from rate studies under subsection 
1, paragraph F or G;
(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. Meetings of the panel are governed by this paragraph. 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 the meeting and an opportunity 
for public comment.
SUMMARY
This bill formalizes the Department of Health and Human Services’ MaineCare 
provider reimbursement rate system reform effort by establishing rate development 
principles and processes, specifying rule-making requirements for rate adjustments, 
ensuring access to a funding source, as needed, for associated rate adjustments and 
establishing an expert technical advisory panel to assist the Commissioner of Health and 
Human Services on MaineCare rates and payment models.