Mid-Atlantic Health Law TOPICS

Background hero atmospheric image for 1998 Maryland Legislative Session

1998 Maryland Legislative Session

The Maryland General Assembly appears to have adopted a "do no harm" strategy in 1998. Although many health care measures were proposed, few were enacted. In fact, with one exception, most of the bills that passed were modest and non-controversial. The one exception was legislation establishing a formal internal and external process for adverse coverage decisions. This legislation could have a significant impact on the relationship between consumers, providers and payors.

The following is a sampling of some of the more significant health care measures enacted by the Maryland General Assembly during its 1998 Session.

1. Organ and Tissue Donation. Hospitals must contact the appropriate organ, tissue or eye recovery agency on or before each patient's death to determine the suitability of the patient's organs for donation. The contact and its disposition must be noted in the patient's medical record. If, in consultation with the patient's physician or physician's designee, an organ donation is deemed appropriate, a procurement agency representative will initiate an organ request. The new law also contains specific organ donation language to be included in health care decision making forms, such as living wills and advance medical directives. The bill is currently in effect.

2. Acquisition of Nonprofit Health Entities. Nonprofit hospitals, nonprofit health service plans and nonprofit HMOs, licensed in Maryland, must have prior Maryland governmental approval before they sell, lease, or transfer a substantial portion of their public assets to, or merge with, a for-profit entity. Among other things, the legislation sets forth a process for applications, public hearings, and the valuation and dispersal of the public or charitable assets, as well as penalties for noncompliance. Interestingly, the law requires that 100% of the fair value of the public or charitable assets of a nonprofit health service plan or HMO, and 40% of the fair value of the public or charitable assets of a nonprofit hospital, must be distributed to the Maryland Health Care Foundation, a quasi-public entity that has been created to help Marylanders who do not have health insurance. (The remaining 60% of the fair value of the public or charitable assets of a nonprofit hospital are to be distributed to a public or nonprofit independent entity that is dedicated to promoting health care in the affected community.) This new law goes into effect on October 1, 1998.

3. Tax Credit for Employer-Provided Long Term Care Insurance. Employers providing their employees with long term care insurance may receive a new Maryland tax credit. An employer may claim a tax credit in an amount equal to 5% of the cost of providing long term care insurance as a part of an employee benefit package. The tax credit may not exceed the lesser of $5,000 or $100 per employee covered by the long term care insurance benefit, and may be claimed against individual or corporate state income tax, financial institution franchise tax, state income tax due on unrelated business taxable income for tax exempt organizations, insurance premium tax, or public service company franchise tax. The same credit may not be applied more than once. The tax credit is applicable to all taxable years that begin after December 31, 1998.

4. Provider-Sponsored Organizations. On January 1, 1999, Medicare recipients may choose to receive benefits through a new program called Medicare+Choice. Under such program, enrollees will agree to obtain their Medicare services from a restricted panel of health care providers in return for the enrollees obtaining other benefits such as lower copays. These restricted panels of Medicare providers may be organized either by HMOs or by provider-sponsored organizations (PSOs). PSOs are risk bearing entities licensed under state law that will contract with Medicare on a capitated basis. Unlike HMOs, however, PSOs must be owned by health care providers. To help implement this new federal initiative, Maryland had to create a mechanism for licensing PSOs, and the Maryland General Assembly did so this Session, with the new Maryland law becoming effective on June 1, 1998.

5. Complaint Process for Adverse Decisions and Grievances. The Maryland Insurance Administration (MIA) and the Department of Health and Mental Hygiene will investigate complaints regarding quality of care, adverse health coverage decisions, and internal grievance decisions made by carriers. In addition, carriers must establish internal grievance processes for their members to protest certain adverse coverage decisions, including an expedited procedure for emergency cases. In most instances, a carrier must render a written decision on a member's grievance within 30 working days, and a member has the right to file a complaint with MIA within 30 days after the receipt of the carrier's grievance decision. Providers, including hospitals, may file a grievance on a patient's behalf. In certain cases, defined by new regulations to be drafted by MIA, a member, or a provider on behalf of a member, may file a complaint with MIA without first filing a grievance with the carrier. Additionally, MIA will now certify private review agents and HMO medical directors. Funding for the new governmental appeal process and the certifications will come from an assessment on each carrier. These new provisions apply to all health insurance policies, plans and contracts existing on, and issued on or after, January 1, 1999, and will apply to all adverse decisions rendered on or after January 1, 1999. Lynn S. Slawson


June 21, 1998




Rosen, Barry F.


Health Care