Policy: Health Care

Panel: Maryland hospitals should absorb sequestration cuts

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Local,Maryland,Andy Brownfield,Fiscal Policy,Health Care

The panel that sets hospital rates in Maryland is recommending that the state's hospitals absorb a 2 percent cut to Medicare as part of across-the-board federal spending cuts, a move strongly opposed by the hospitals.

The Maryland Health Services Cost Review Commission is scheduled to vote Wednesday on the recommendation for the last three months of the current fiscal year, which could mean hospitals won't see rate increases for the rest of Maryland's fiscal 2013, which ends June 30.

Maryland's hospitals say they're already operating on thin margins and the cut would further hurt their solvency. They could lose between $7 million and $8 million a month under the recommended plan.

"Hospitals do everything they can to meet their mission of getting patients the right care, at the right time, and in the right setting," said Maryland Hospital Association President and CEO Carmela Coyle. "For Maryland's hospitals, all of which are not-for-profit organizations, no margin means no mission. And these historically low margins cannot continue if hospitals are to answer the call of providing the services, and jobs, that their communities need."

Maryland's largest hospitals and systems -- including Johns Hopkins, the University of Maryland Medical System and Medstar Health -- wrote letters to the commission, but deferred to the Maryland Hospital Association for comment. They asked the Cost Review Commission for a 0.16 percent increase in hospital rates to help offset the cuts.

A third option rejected by the commission would have given hospitals half of the rate increase they asked for, while splitting the other half with insurance companies.

Patients covered under Medicare -- the federal health insurance program for seniors -- would not see a reduction in their benefits under the sequestration cuts.

The insurance industry supports the commission's recommendation.

In a letter to the commission, CareFirst BlueCross BlueShield CEO Chet Burrell wrote that if hospitals didn't absorb the Medicare cuts, they would be shifted onto private insurers and policyholders. Burrell wrote that doctor pay was cited by hospitals as one of the largest costs and said it would be a controversial proposition to raise hospital rates to justify physician salaries.

CareFirst declined to comment further.

The Medicare reductions come as part of the across-the-board sequestration cuts, which is requiring the U.S. Department of Health and Human Services -- which administers Medicare -- to cut $15.5 billion from its budget.

abrownfield@washingtonexaminer.com

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Andy Brownfield

Examiner Staff Writer
The Washington Examiner