A plan to save Maryland $50 million by eliminating state payment of hospital inpatient services for at least 28,000 poor or temporarily disabled people will lead to higher hospital rates for those who pay.
People who lose payments for hospital inpatient care from the state's medical assistance program will not be denied treatment. The cost of their medical care is expected to be paid for by insurers, employers and policyholders.
The Medicaid cuts -- part of Gov. William Donald Schaefer's plan to trim the state budget by $450 million during the current fiscal year -- take effect Nov. 1 and will save the state $50 million over the rest of the fiscal year, which ends June 30.
The cuts eliminate state reimbursement for individuals who get General Public Assistance checks from the Maryland Department of Human Resources and others who are medically indigent.
GPA recipients are unemployed or work only part time because of a temporary medical disability.
The medically indigent do not have the income and assets to pay for their medical bills and then qualify "sort of on a one-time-only basis for a hospital stay," says Joseph M. Millstone, director of the state's Medical Care Policy Administration.
About 50 percent of the more than 400,000 on Maryland's Medicaid rolls live in Baltimore, according to the Maryland Medical Care Program's review of fiscal year 1990, which ended June 30, 1990.
Those affected by the cuts are about 7 percent of those on Medicaid.
The state agency that regulates hospitals plans to approve new hospital rates to generate increased revenues that will pay for the new wave of uncompensated care or bad debts caused by the elimination of the state aid, according to John Colmers, its executive director.
The agency -- the state Health Cost Review Commission -- also is weighing the merits of a statewide hospital "pooling strategy" to assure that certain geographical areas, such as Baltimore, won't be disproportionately affected by the Medicaid cuts and can remain competitive in the hospital industry.
Ultimately, the bill for the Medicaid cuts will be passed on to insurers, to employers and to policyholders, the experts say. Some think it might result in higher co-pays for the consumer, but Dan Collins, a spokesman for Blue Cross-Blue Shield, says the end result probably would be premium increases.
In an Oct. 15 letter to hospitals and physicians, Millstone said the termination of the Medicaid Program reimbursement does not entitle hospitals to refuse to admit these Medicaid recipients.
It asked physicians "who have trouble finding a hospital that will admit any of the patients" to notify the chief of the acute care division in the Medical Care Compliance Administration.
Traditionally, the commission has adjusted hospital rates to generate increased revenue that would make up for losses due to bad debts. This policy continues to be in effect, he said, and at its Nov. 6 meeting, the agency will discuss implementing rate increases that will average 1 to 2 percent.
The Medicaid program was formerly funded through sales taxes and income taxes, Colmers says.
"What we have here now is that payments are going to be made by a relatively few people going into a small number of hospitals largely in Baltimore City," he says.
According to Dr. Daniel T. McCrone, president of Maryland Medical Services, a division of Blue Cross, the bottom line is that "this is really a different way of taxing citizens actually -- or at least the premium-paying citizens."
The "pooling" concept, which spreads the burden of bad debts equally across all hospitals in the state, would require General Assembly legislation, says Robert A. Chrencik, senior vice president for finance and systems at the University of Maryland Medical Center.
"Right now, when Colmers responds to put these dollars into rates, the hospitals that have the high losses as a result of this coverage being eliminated are going to end up with higher increases in rates," Chrencik says. "Their prices are going to go up quite a bit faster than, say, St. Joseph Hospital or Greater Baltimore Medical Center in Towson."
University, one of four city hospitals that would be hardest hit, would need a 3.4 percent rate increase to cover the lost revenue from Medicaid.
Since employers are becoming more price-sensitive, Chrencik says, one option would be to put all the bad debts in the state into a single pool and to put in rates the same amount for every hospital.