BALTIMORE -- The panel in charge of setting Maryland hospital rates on Wednesday approved an increase in what medical facilities can charge patients for procedures.
The Maryland Health Services Cost Review Commission voted without opposition to allow hospitals to increase their rates by 1.65 percent starting in July. The increased rates would be re-examined in December.
Hospitals have long been clamoring for permission to up their rates. Officials say the medical facilities have faced declining operating margins and took a hit when federal budget cuts slashed their share of Medicaid funding by 2 percent. The commission denied hospitals' request for increased rates last month, before approving the modest bump Wednesday.
The state faces uncertainty over the effects of rising hospital rates on its Medicare waiver -- a unique agreement with the federal government that allows Maryland to set its own rates.
Steve Ports, acting executive director of the commission, said the purpose of the increase was "to provide stability in the short term while some of the unknowns become clear to us."
Maryland is currently negotiating a new waiver with the federal government. The purpose of allowing a rate increase for six months as opposed to a full year is to allow a new waiver to go into effect before re-examining rates.
The 1.65 percent rate increase, which is what the commission staff recommended, is lower than the 2.43 percent hospitals were hoping for.
"Maryland's hospitals right now are in fact in a financial skid," said Maryland Hospital Association President and CEO Carmela Coyle. She said that any of the proposed rate increases would result in a further decline of hospitals' operating margins, but 2.43 percent would dampen the effect.
"If we continue to let Maryland's hospitals fail, what are we doing? Why are we bothering with this?"
Hospital officials said continuing declines in revenue could result in layoffs of hospital staff but would more likely mean some hospitals would have to stop offering less profitable services.
Maryland's insurers -- the groups that would be paying the higher rates and passing the cost on to consumers in the form of higher premiums -- were in agreement with allowing rates to increase. However, CareFirst BlueCross BlueShield and United HealthCare -- the state's two largest insurers -- wanted a smaller increase of 1.35 percent.