Opinion ID: 2320997
Heading Depth: 4
Heading Rank: 3

Heading: Reasonableness of the Board's Interpretation

Text: [¶ 47] We begin by examining evidence of legislative intent. See Cyr, 2007 ME 28, ¶ 9, 916 A.2d at 970. The pronouncements of the legislators during their initial consideration of the Act demonstrate that, although they did not attempt to define or limit the definition of aggregate measurable cost savings, they focused on what they initially believed would generate the greatest cost savings: reduction in the costs associated with bad debt and charity care. [¶ 48] Indeed, it is fairly clear that in their initial discussion of funding sources for the Dirigo Health program, the Governor's office and legislators focused almost entirely on the savings expected to be generated by the reduction of bad debt and charity care. It is also apparent that, in those initial discussions, the two savings mechanismsthe expansion of MaineCare and the reduction of bad debt and charity care costswere sometimes viewed as the exclusive sources of funding for Dirigo. [10] [¶ 49] This focus on anticipated reductions in bad debt and charity care was also evident in a narrative summary entitled Dirigo Health: Health Reform for Maine, through which the Governor supplemented his proposed health reform legislation. [11] This publication primarily focused on recouping savings realized through the reduction or elimination of bad debt or charity care, without specifically mentioning other measures of cost savings. First, in the summary, the document listed the pooling of financial resources to finance Dirigo Health as a strategy to address access to health care: Pool Resources to Finance Dirigo Health Assistance for Maine residents up to 300% of poverty will be financed by pooling individuals and small businesses, by pooling contributions from employers, individuals, state and Federal funds and by recovering and redirecting 60% of the funds currently spent on bad debt and charity care. By pooling these resources, access can be achieved without new state appropriations. Gov. John Elias Baldacci, Dirigo Health: Health Reform for Maine 4 (May 5, 2003). Second, in explaining the funding, the document stated, [Dirigo Health] will recapture some of the reduced bad debt and charity care write offs for Maine providers that result from reducing the number of uninsured Mainers. Currently we estimate that a conservative estimate of the level of bad debt and charity care costs across all providers that is available for recovery is $164 million. . . . Id. at 27. In discussing the Act's approach to reducing cost shifting, the document explicitly identified the recovery of savings resulting from the reduction or elimination of charity care and bad debt: This proposal seeks to recover bad debt and charity care funds from the back end of care and reinvest them in the front end of coverage to provide health insurance for the uninsured. However . . . we will not recover all bad debt and charity care, rather, we anticipate a recovery rate of 60%. If universal coverage is provided to all eligible persons, this rate represents $164 million in savings. Id. at 58. [¶ 50] In addition, the Director of the Governor's Office of Health Policy and Finance submitted testimony to the Joint Select Committee on Health Care Reform in which she discussed as savings exclusively those savings realized through reductions in bad debt and charity care: [U]ninsured citizens seek care only when no other option is available  at late and costly stages of disease. Hospitals and other providers care for them at no charge, then raise their rates to cover the losses associated with that care. Those increased rates are charged to insurance premiums in the form of a cost shift that all of us pay. As a result, there is today $275 million already in the system that covers bad debt and charity care to pay for the uninsured when they get sick. We propose to reinvest less than a third of that money to help pay for health insurance coverage including coverage for prevention and primary care, for all Maine's uninsured. Consistent with these initial discussions, in response to questions posed to the Governor's office by the Committee, the Governor's office indicated that the reduction in bad debt and charity care would generate savings and did not list other measures of savings: Why is the proposal funded solely from a tax on insurers and not a broader funding mechanism? The purpose of the assessment is to recover bad debt and charity care now implicit in prices. It makes sense to remove this directly from prices via insurer negotiation with providers, rather than adding to a complex system of offsets (as would be the case with a more diversified assessment or any assessment on providers). [12] [¶ 51] After considering the initially proposed legislation, L.D. 1611 (121st Legis.2003), and receiving additional testimony and information, the Joint Select Committee on Health Care Reform submitted Committee Amendment A to the Act To Provide Affordable Health Insurance, Comm. Amend. A to L.D. 1611, No. H-565 (121st Legis.2003). This amendment replaced the initial Act, and the Legislature ultimately adopted this amendment. See P.L.2003, ch. 469. [¶ 52] The summary to Committee Amendment A also focused on the recovery of savings due to reductions in bad debt and charity care: In the first year of operation, funding for Dirigo Health is provided through the General Fund. After July 1, 2005, funding for subsidies and the Maine Quality Forum must be provided through savings offset payments paid by health insurance carriers, employee benefit excess insurance carriers and third-party administrators. The board of directors is required to establish the savings offset amount, not to exceed 4% of annual premium revenue or its equivalent, on an annual basis and those savings offset payments may not exceed the aggregate cost savings attributable to reductions in bad debt and charity care costs as a result of the operation of Dirigo Health and the expansion in MaineCare. Comm. Amend. A to L.D. 1611, No. H-565, Summary (121st Legis.2003). Representative Kevin Glynn, who supported Committee Amendment A, echoed this understanding that the amount of the offset would be limited to the amount saved by reducing the amount of bad debt and charity care: The language in the bill is intended to set a maximum amount that this tax can ever be assessed at 4 percent. However, which is important, is the tax that will be assessed up to that maximum cap will never be greater than the bad debt and charity care that are actually going to be realized by both the hospitals and doctor's offices, that is then realized by the insurance carriers, which then will offset that tax. 2 Legis. Rec. H-985, H-995 (1st Reg. Sess.2003). [¶ 53] Thus, as initially enacted, the Act's legislative history indicates that aggregate measurable cost savings were understood to be generated primarily by reductions in bad debt and charity care along with any related savings resulting from expansions in MaineCare eligibility. [¶ 54] By the next legislative session, however, the Legislature had become concerned about how to address the undefined term aggregate measurable cost savings. Certain legislators began to voice questions about the scope of savings included in the term, as well as the limited extent of the savings to be found in reducing bad debt and charity care. To address these uncertainties, two proposals were presented to the Legislature. The proposal that was ultimately enacted created a working group to make recommendations to the Dirigo Health Board of Directors, which would then determine the method for calculating aggregate measurable cost savings, subject to the approval of the Superintendent of Insurance. Comm. Amend. A to L.D. 1577, No. S-359 (122nd Legis.2005); P.L.2005, ch. 400, §§ A-10, B-1. The alternative proposal would have placed the determination of aggregate measurable cost savings in the hands of the Superintendent of Insurance instead of the Dirigo Health Board of Directors. Comm. Amend. B to L.D. 1577, No. S-360, § A-10 (122nd Legis.2005). [¶ 55] Senator Peter Mills, a proponent of the amendment that would have required the Superintendent to determine the aggregate measurable cost savings, specifically identified the problem created by the ambiguity of the term aggregate measurable cost savings. He warned that the savings resulting from reductions in bad debt and charity care could be miniscule, and that the program directors might take credit for a substantial set of cost savings initiatives connected to the broader application of the Act To Provide Affordable Health Insurance: The original theory of the Dirigo product was that by taking people off the uninsured list and giving them insurance that this would save on bad debt and charity care. I have no doubt that there will be some small measure of savings arising from the sale of this product to people who are uninsured. I believe that this savings will be miniscule. Because it is miniscule, I understand that the directors of Dirigo plan to take credit for, and maybe they should, other initiatives of the Dirigo program in a broader context. One of the awkward things in our discussion is that the Dirigo label is used not just for the health product, which is one initiative, but also for a whole set of government initiatives in the field of healthcare; the new controls over certificate of need, the efforts to gain control over hospital costs, and to gain voluntary compliance to limits on the growth in healthcare expenses. ___ Legis. Rec. S-1238 (1st Spec. Sess.2005) (emphasis added). [¶ 56] With the growing legislative understanding that the bad debt and charity care savings might not be as extensive as originally expected, differing opinions emerged regarding how broadly to interpret section 6913(1)(A) to determine what other savings were properly included as part of the aggregate measurable cost savings. This evolving legislative awareness that the term could or should include measures of savings resulting from initiatives in the broader Act To Provide Affordable Health Insurance resulted in a call for clarification of the original legislation. [¶ 57] Ultimately, to address the lingering question regarding the nature of the savings that should be included in the calculation of aggregate measurable cost savings, the Legislature created the working group to assist the Board in formulating an appropriate methodology to determine both what types of cost savings are included in aggregate measurable cost savings and how the savings should be calculated within each type of cost savings. [13] P.L. 2005, ch. 400, § B-1. The legislation directed that the working group, composed of members representing the various interests involved, would make recommendations to fill in the gaps existing in the statute where further description and definition were required. Id. § B-1(1), (3)(D). The Legislature left the Board with the authority to interpret the statutory term aggregate measurable cost savings after considering the recommendations of the working group. 24-A M.R.S. § 6913(1)(A); P.L.2005, ch. 400, § B-1(3)(D). [¶ 58] Nothing in this legislative history renders the Board's interpretation of aggregate measurable cost savings to include broader savings unreasonable. To the contrary, the Legislature obviously recognized the difficulty of making the determinations necessary to devise a method and calculate the aggregate measurable cost savings, and it created the position-balanced working group with the goal of reaching consensus. When that consensus could not be achieved, it was not unreasonable for the Board to interpret aggregate measurable cost savings to incorporate savings realized through the set of government initiatives that comprised the Act To Provide Affordable Health Insurance. [14] [¶ 59] On this record, we cannot conclude that the Board acted unreasonably in interpreting aggregate measurable cost savings to include savings that were realized through the broader Act that created Dirigo Health, or that the Superintendent erred in approving those savings supported by evidence in the record.