LD 2177

APPROVED  CHAPTER
  APRIL 13, 2026  664
  BY GOVERNOR  PUBLIC LAW
  STATE OF MAINE
  _____
  IN THE YEAR OF OUR LORD
  TWO THOUSAND TWENTY-SIX
  _____
  H.P. 1465 - L.D. 2177
   An Act to Update and Improve the MaineCare Reimbursement System
Be it enacted by the People of the State of Maine as follows:
    Sec. 1. 22 MRSA §1708, sub-§3, as amended by PL 2021, c. 29, Pt. R, §1, is further
amended to read:
    3. Compensation for nursing homes. A nursing home, as defined under section
1812‑A, or any portion of a hospital or institution operated as a nursing home, when the
State is liable for payment for care, must be reimbursed at a rate established by the
Department of Health and Human Services pursuant to this subsection section 3173-J. The
department may not establish a so-called "flat rate." This subsection applies to all funds,
including federal funds, paid by any agency of the State to a nursing home for patient care.
The department shall establish rules concerning reimbursement that:
    A. Take into account the costs of providing care and services in conformity with
    applicable state and federal laws, rules, regulations and quality and safety standards;
    B. Are reasonable and adequate to meet the costs incurred by efficiently and
    economically operated facilities;
    C. Are consistent with federal requirements relative to limits on reimbursement under
    the federal Social Security Act, Title XIX; and
    D. Ensure that any calculation of an occupancy percentage or other basis for adjusting
    the rate of reimbursement for nursing facility services to reduce the amount paid in
    response to a decrease in the number of residents in the facility or the percentage of the
    facility's occupied beds excludes all beds that the facility has removed from service for
    all or part of the relevant fiscal period in accordance with section 333. If the excluded
    beds are converted to residential care beds or another program for which the department
    provides reimbursement, nothing in this paragraph precludes the department from
    including those beds for purposes of any occupancy standard applicable to the
    residential care or other program pursuant to duly adopted rules of the department;
    E. Contain an annual inflation adjustment that:
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  (1) Recognizes regional variations in labor costs and the rates of increase in labor
  costs determined pursuant to the principles of reimbursement and establishes at
  least 4 regions for purposes of annual inflation adjustments; and
  (2) Uses the applicable regional inflation factor as established by a national
  economic research organization selected by the department to adjust costs other
  than labor costs or fixed costs; and
    F. Establish a nursing facility's base year every 2 years and increase the rate of
    reimbursement beginning July 1, 2014 and every year thereafter until June 30, 2018.
    For the state fiscal year beginning July 1, 2018, the base year for each facility is its
    fiscal year that ended in the calendar year 2016. For state fiscal years beginning on or
    after July 1, 2019, subsequent rebasing must be based on the most recent cost report
    filings available. The department may provide a mechanism for subsequent
    adjustments to base year costs to reflect any material difference between as-filed cost
    reports used in rebasing and subsequent determinations of audited, allowable costs for
    the same fiscal period. The department's rules must provide that, beginning in the state
    fiscal year beginning July 1, 2018, the rates set for each rebasing year must include an
    inflation adjustment for a cost-of-living percentage change in nursing facility
    reimbursement each year in accordance with the United States Department of Labor,
    Bureau of Labor Statistics Consumer Price Index nursing homes and adult day care
    services index.
    Any rebasing done pursuant to this paragraph may not result in a nursing facility
    receiving a reimbursement rate that is lower than the rate in effect on June 30, 2018.
    G. Establish that nursing facility reimbursement will be rebased for rates effective
    January 1, 2028, and thereafter rebasing must occur in accordance with section 3173-J.
Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5,
chapter 375, subchapter 2‑A.
    Sec. 2. 22 MRSA §1720, as enacted by PL 2005, c. 242, §1, is repealed.
    Sec. 3. 22 MRSA §3173-J, as amended by PL 2023, c. 238, §1, is further amended
to read:
§3173-J. Rate-setting system for development and maintenance of sustainable,
       efficient and value-oriented MaineCare payment models and rates
       reimbursement of MaineCare-covered services
    This section establishes a rate-setting system for the development and maintenance of
MaineCare payment models and rates reimbursement of MaineCare-covered services that
comply complies with the requirement in 42 United States Code, Section 1396a that rates
be consistent with efficiency, economy and quality of care; that are is adequate to support
MaineCare member access to services; and that are is 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 defined quality measures.
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    B. "MaineCare section of policy" means a set of MaineCare-covered services, as
    categorized by the department through the adoption of rules that specify the parameters
    for coverage.
    B-1. "Payment model" means the method that the department uses to reimburse
    providers for health care services, including whether the reimbursement is paid on a
    fee-for-service basis or another basis such as per member, per month or an estimated
    basis that is cost settled.
    C. "Rate determination" means a process conducted by the department to establish the
    payment model, associated reimbursement rate methodology, base and, if applicable,
    the 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 or
    payment model 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 payment model, associated reimbursement
    methodology and resulting base rate amount and payment model based on the service
    model and cost components for the service amounts for current or potential MaineCare-
    covered services. A rate study relies on data collected as part of the analysis conducted
    by the department to inform the cost of providing services and resulting rates rather
    than relying on a benchmark of existing rates or payment models used by other payers.
    E. "Reimbursement methodology" means the method for determining the rate or
    reimbursement amount under the payment model. Examples of reimbursement
    methodologies include using standardized assumptions for determining service cost
    components, such as staffing levels, wages based on required qualifications, benefits
    and program administration, to determine a reimbursement rate per unit of service;
    using cost-based reimbursement, under which the MaineCare program determines the
    percentage it will pay of reported allowable costs; and adjusting reimbursements for
    patient acuity or the relative duration or intensity of the service.
     2. Rate-setting system principles and processes. The department shall establish
MaineCare provider payment models, including reimbursement rates, including those paid
through fee-for-service and alternative payment models. The rates must be established
methodologies and rate amounts, where applicable, in accordance with the following
principles and processes and adopted through rulemaking as described in subsection 3.
Changes to rates required by the Federal Government to assist with emergency or
extraordinary circumstances or rate reductions required by the Legislature for the purpose
of responding to projected MaineCare budget shortfalls are not subject to this section. 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,
        including the date of the most recent rate review and any discussion of issues
        related to member access by section of MaineCare policy and a description of how
        the most recent rate review and discussion of issues related to member access
        impacted the proposed and final rate determination schedule;
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    (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. No less frequently than once every 5 years, conduct a rate determination process
for each 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 reimbursement
    related to 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
    covers a specific service and whether the Medicare reimbursement methodology is
    appropriate for a specific covered service;
    (4) In the absence of a an appropriate Medicare rate comparison, determine
    whether a rate from a review non-Medicare payer source sources, including, but
    not limited to, commercial health care rates payers 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 model agencies. The
    department shall determine an appropriate percentage of the benchmark rate for
    the service, taking take 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 an appropriate reimbursement methodology or
    comparison under 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 payment model or reimbursement methodology needs
  to should be revised;
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  (ii) The collection of data applicable to the rate determination 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 payment models or reimbursement
       methodologies by considering the following:
  (i) The appropriateness of adoption of a change in payment model or
  reimbursement methodology 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 the payment model, associated
   reimbursement methodology, resulting base rate amount and payment model
   amounts, if applicable, 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 report on the overall fiscal cost associated
   with implementation under this subparagraph; and
D. Ensure that base rate amounts and other components of the reimbursement
methodology 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
   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
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       (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 and implementing cost-of-living adjustments, the
       department shall:
  (a) Use inflation indices determined established through rulemaking to reflect
  a reasonable cost of providing services for different categories of services
  rather than reflecting other factors, such as private sector price increases or
  cost-shifting from different payers; and
  (b) Maximize use of a single, consistent and general cost-of-living adjustment
  index for services for which the costs of direct care staffing are the primary
  driver of overall cost increases, consistent with the cost-of-living adjustment
  applied to the 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 under Title 26, section 664, subsection 1. The department
  shall:
  (i) Apply this adjustment to services provided by essential support
  workers as defined in section 7401, subsection 3; and
  (ii) For any services for which the department applies an adjustment equal
  to the increase in minimum wage, apply the adjustment to the
  reimbursement rate between 6 and 12 months after the minimum wage
  increase goes into effect.
  (c) Publish, by January 1st, on the department's publicly accessible website,
  based on available data, the estimated cost of the cost-of-living adjustments to
  be applied in the subsequent fiscal year.
   3. Rulemaking for establishment of rate payment model and reimbursement
methodology. In addition to the requirements of Title 5, chapter 375, rulemaking for
MaineCare provider reimbursement rate methodologies must comply with the following.
The department shall:
   A. Establishment of a rate Conduct rulemaking to establish a payment model and
   reimbursement methodology for a new MaineCare section of policy or specific new
   service within a MaineCare section of policy or make changes to an existing rate
   payment model or reimbursement methodology must be adopted through rulemaking
   in accordance with the Maine Administrative Procedure Act. Rules adopted pursuant
   to this subsection must describe the payment model and reimbursement methodology
   but do not need to include codes, modifiers, reimbursement rates or any other
   information that the department includes in its centralized master index of rates posted
   on its publicly accessible website pursuant to subsection 7. Rulemaking is not required
   for the addition or deletion of new billing codes or to specify rates for specific billing
   codes if there is no change in the overall payment model or reimbursement
   methodology and the rates are posted in accordance with this section. Changes in rates
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    resulting from application of the reimbursement methodology, including adjustments
    as a result of changes in the value or amount of components of the reimbursement
    methodology or changes to billing codes, do not require rulemaking as long as the
    reimbursement methodology remains the same; and
    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.
Rulemaking is not required for rate adjustments tied to annual cost-of-living adjustment
increases unless the department changes the cost-of-living adjustment methodology.
Rules adopted pursuant to this subsection may incorporate by reference any part of a code,
standard, rule, regulation or schedule or any other source considered appropriate by the
department. Notwithstanding any provision of law to the contrary, rules adopted pursuant
to this subsection are not subject to Title 5, section 8056, subsection 2-A, as long as the
rules identify the incorporated matter by title or source, as appropriate.
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 of law.
    4. Funding. The department may use funds from the MaineCare Stabilization Fund
established in section 3174‑KK in order to fund the rate reimbursement adjustments made
in accordance with this section when funding may be needed in addition to appropriations
associated with separate initiatives. Adjustments to reimbursements made using the
MaineCare Stabilization Fund are not considered permanent until ongoing appropriations
and allocations funding the adjustments are made.
    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;
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       (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; 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 common assumptions and recommendations from rate determinations
       under subsection 2, paragraph C;
       (3) Review findings from benchmarking reports to inform the appropriateness of
       MaineCare rate reimbursement levels across services; and
       (4) Advise on other related technical matters, as appropriate.
   C. The panel shall meet at least twice once 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
   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 payment models and
       reimbursement methodologies 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
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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.
    Sec. 4. 22 MRSA §7403, as enacted by PL 2021, c. 398, Pt. AAAA, §1, is repealed.
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