Hospital Rates in Maryland

Last week, the Health Services Cost Review Commission met to approve new rates for hospitals beginning in July.  Maryland has a unique rate-setting system that gives hospitals a waiver from the standard Medicare payment system as long as our hospital costs grow more slowly than the rest of the country.  Maryland’s rate-setting system is in jeopardy due to assessments used to fund Medicaid over the last several years--assessments that were approved by the Maryland General Assembly and the Governor.   Maryland Hospitals are close to losing the waiver, which represents approximately $18 million in additional revenue for WMHS annually.  Preserving the waiver is critical.  As a result, hospitals agreed to a 1% reduction in rates, which equates to a $3 million reduction to the WMHS budget effective July 1, 2012 (Fiscal Year 2013).  We will receive a modest increase in outpatient rates for FY 2013. 

The Maryland waiver benefits everyone--payers, consumers, businesses and hospitals.  Yet, hospitals have continued to shoulder the burden of trying to save the waiver.  Insurers mark up the cost of health care ten times higher in every other state but Maryland, so the benefit of the waiver is a plus for everyone.  There needs to be greater sharing of this burden going forward. 

The financial health of Maryland hospitals, including the Western Maryland Health System, is in serious jeopardy.    The Maryland waiver needs to be modernized to reflect current realities in health care to strengthen the focus on incentives for physicians to control total costs, advance the total patient revenue (TPR) payment methodology, apply population health based delivery systems for the urban and suburban hospitals in Maryland, and look at such creative initiatives as primary care medical homes. 

A lot has to be done and hospitals continue to ask the General Assembly to allow us to assist in a better approach to Medicaid sustainability going forward rather than apply assessments to hospitals year after year.  We need a plan of approach in Maryland but, unfortunately, we aren't yet there.