Maine can't drop 19-, 20-year-olds from Medicaid, and other news

Maine cannot drop low-income 19- and 20-year-olds from its Medicaid rolls without violating the Patient Protection and Affordable Care Act, a federal appeals court ruled last week.

Because of a state budget deficit in 2012, Maine Gov. Paul LePage proposed eliminating coverage for nondisabled 19- and 20-year-olds. It was a move the state's health department projected would save Maine

$3.7 million, according to court documents, and the state's Legislature approved the proposal.

The CMS, however, refused to accept the change, saying it would violate the nation's new healthcare law. The law's “maintenance of effort” provision requires states to offer the same levels of coverage for young people until 2019 that they offered as of March 23, 2010, in order to continue to receive Medicaid funds.

The Maine Department of Health and Human Services appealed the CMS' decision to the 1st U.S. Circuit Court of Appeals, arguing that the maintenance-of-effort provision exceeded Congress' constitutionally granted power to spend money. The state also argued that the provision violated the doctrine of equal sovereignty, saying it “prohibit(s) Maine from exercising the prerogative to design its Medicaid laws in ways that many of its sister states remain free to do.”

The court rejected both of those arguments.—Lisa Schencker

Follow Lisa Schencker on Twitter: @lschencker

The rising costs of labor, supplies and other expenses led to a sluggish first nine months of 2014 for Montefiore Health System in New York City, as they have for many other health systems this year.

Montefiore said in a financial disclosure to bondholders that its operating margin in the nine months ended Sept. 30 was 1.4%, down from 2.9% in the year-ago period. Overall, the system posted a $35.6 million operating surplus on almost $2.6 billion of revenue, compared with a $71.4 million operating surplus on $2.5 billion of revenue last year.

Expenses grew 5.8%, faster than its 4.2% revenue growth. Salaries and employee benefits both rose considerably, but supplies shot up the most at 10.2% year over year.

Montefiore's total bottom line, which includes investment income, also took a hit compared with the same period of 2013. The health system's gains on Wall Street and other market securities fell 73%. Although Montefiore still reported investment income, the total surplus was down 62% in the first nine months of the year, totaling $48.7 million.

The system's financial results may signal some growing pains. Montefiore, based in the Bronx, is expanding to become a much larger regional player with six hospital campuses in New York, including two it recently bought out of bankruptcy. And the system is looking to scoop up 375-bed Nyack (N.Y.) Hospital from its competitor, New York-Presbyterian Healthcare System. —Bob Herman

Follow Bob Herman on Twitter: @MHbherman