Healthcare News & Insights

Medicare and Medicaid cuts: Maryland proposes unique hospital payment system

With the proposed Medicare and Medicaid cuts coming down the line, wouldn’t it be nice if you could get that revenue back from somewhere else? That’s just what the Maryland Hospital Association is trying to do.

How? By raising prices for private insurers and businesses.

The Maryland Hospital Association plans to raise the rates that  private payers pay hospitals by 7%, and give big discounts to the Medicare and Medicaid programs.

According to a recent story in The Washington Post, this would raise charges for commercial insurers and their customers by approximately $350 million a year and increase their price for a typical hospital stay by $900.

Opponents of this proposal feel it would jeopardize access to coverage by raising the price of care, and give Johns Hopkins and other Maryland hospitals a way to avoid the cost cutting measures that hospitals in other states face.

On the other hand, hospitals  say absorbing the Medicare and Medicaid cuts without sharing the burden with private payers would jeopardize their financial health and prevent them from making the updates governed by the 2010 health law.

In order to get the proposal passed, the Department of Health and Human Services  (HHS) would have to sign off on it, as would Maryland state regulators.  Maryland officials are planning to submit the plan to HHS by mid-September.

Cost-cutting measures

For decades, Maryland has been allowed to set the hospital rates for all payers. That’s because the federal government permitted the state to control Medicare prices provided the program’s cost per admission didn’t increase faster in Maryland than in other states.

But now Maryland policymakers are looking to cut Medicare and Medicaid rates which have been a burden on the state’s budget. However, instead of having its hospitals make cuts, the state is looking to other sources (commercial insurance, self-insured businesses and the privately insured) to absorb the cost-cutting measures.

But will pushing the burden on the private sector hurt Maryland residents?

Many think it will.

As it is, rising costs have affected small business coverage. And according to Ben Steffen, acting executive director of the Maryland Health Care Commission, only about 35% of Maryland small businesses with fewer than 50 employees offer health plans, which is down from 40% a few years ago.

That percentage is likely to drop since the Affordable Care Act won’t require small companies to provide coverage.

So which side of the argument will win?

Likely neither will get exactly what they want, but we’ll keep you posted as this debate continues.

Subscribe Today

Get the latest and greatest healthcare news and insights delivered to your inbox.