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Maryland Regulatory News Spring 2004

1. In December, the Health Services Cost Review Commission (HSCRC) approved regulations to offset acute hospitals' additional uncompensated care (UCC) generated by the Department of Health and Mental Hygiene's imposition of Medicaid Day Limits. The new policy, initiated because of the State's budget deficit, defines the Day Limits as 105% of the mean length of stay for Medicaid fee-for-service adult patients, meaning that the State will not pay for hospital or ancillary charges related to services provided beyond these Day Limits. To address the UCC issue, the HSCRC will allow hospitals to increase rates prospectively for 80% of the net projected impact of the Day Limits, and track each hospital's actual UCC Day Limits experience. Additionally, the HSCRC will permit a hospital to file a partial rate application if the HSCRC's offset is not sufficient. The Day Limits became effective 1/1/04 for 18 months, and are predicted to save the State $40M.
2. In January, the Maryland Health Care Commission (HCC) released its State Health Care Expenditures Report based on data from 2002. Total health care spending for Maryland residents was $22.6 billion - an 11% increase in 2002, compared to a 12% jump in 2001. Marylanders spent approximately $4,146 per person for health care services, including administration and the net cost of private health insurance, compared to the U.S. projected average of $4,484 per person. Physician service expenditures grew by 11% in 2002, while hospital inpatient and outpatient expenditures increased by 9% and 14%, respectively. Medicaid spending increased 13%, private insurance expenditures grew by about 12%, while Medicare spending only grew by 6% in 2002. The largest increase in payor expenditures was consumer out-of-pocket spending - a 15% increase.
3. In January, the HCC and the HSCRC released a report entitled "Study of Reimbursement of Health Care Providers," as required by the 2002 General Assembly. The report concludes that private sector payments are adequate to fully cover allocated operating costs for a typical private practice, and that identifying a revenue source to support a physician uncompensated care program would be a challenging proposition. Also, the report said that there is no significant support for resuming development of a physician/health care professional payment system, although a limited use of payment ceilings and floors may signal the appropriate level of payment for services when stakeholder interests conflict. The HCC Commissioners specifically stated that they made no recommendation regarding the abrogation of the current prohibition on balance billing of HMO subscribers for covered services by non-participating providers. They believe that changes to balanced billing alone will not remedy the financial stress of hospital-based physicians, and that high uncompensated care volumes and low Medicaid reimbursement are more pressing issues.

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Date

03.23.04

Type

Publications

Authors

Rosen, Barry F.

Teams

Health Care