Amy Davis, Baltimore Sun
April 5, 2010
Nurse practitioner Emilie Stafford, left, and Dr. Yann-Yann Lin check on a 1-day old baby at Anne Arundel Medical Center.
Maryland's one-of-a-kind method of setting hospital rates - a system that has provided nearly $1 billion in additional federal money per year to local hospitals and consumers - is threatened by pressures to reduce costs under the U.S. health care overhaul measure.
The system, which dates to the 1970s, has been hailed for spreading the expense of patient care, slowing the growth of patient premiums and keeping Maryland hospitals afloat. But it has not controlled costs as well in recent years. And with the new health care overhaul law prompting changes in federal payments, Maryland will have to work hard to preserve its advantage."We are going to go through a messy decade," said Chet Burrell, chief executive of CareFirst BlueCross BlueShield, the state's largest health insurer. "The path forward isn't clear, and it's very complex."
Alone in the nation, Maryland has been getting a special deal. As long as its Medicare spending per hospital admission does not rise faster than the national average, the state is allowed to dictate the rates at which Medicare and Medicaid reimburse hospitals.
That bargain is worth an estimated $900 million to $1 billion in additional federal funding per year. The extra federal money is the lubricant in a system that covers charity care, so hospitals don't turn away the uninsured, go bankrupt treating them or pass the costs on to everyone else.
Advocates say it makes for a fairer system. Within a hospital, patients are billed roughly the same amount for the same service.
"Maryland, for many, many years, has had one element of this very, very complicated issue solved," said Robert Neall, chief executive of Priority Partners, which manages Medicaid coverage for about 170,000 low-income patients in the state.
But to help cover the expense of insuring millions more Americans under the Obama administration's health care overhaul, the U.S. government plans to reduce growth in Medicare payment rates for hospitals, which have agreed to $155 billion in federal cuts over 10 years. That will lower the national average that Maryland must beat.