Problems we don't have

November 26, 1995|By Sara Engram

WANT SOME GOOD news for a change? Here's a ''non-story'' about problems that don't exist in Maryland.

Last summer, the Washington Post reported on a shady method by which some health insurers shift hospital costs to patients, using negotiated discounts to lower their costs while continuing to calculate the patient's percentage of the bill on the full, undiscounted rate. Patients who are required to pay, say, 20 percent of their costs in fact pay much more, sometimes as much as 55 percent.

Meanwhile, public hospitals in other parts of the country face a crisis as elected officials try to control the costs of services these institutions provide to uninsured patients with little other access to medical care.

Neither problem applies to Maryland, thanks to a largely unheralded story of effective government regulation: the state's Health Services Cost Review Commission, which since 1974 has had authority over the rates hospitals can charge patients and their insurers.

One result of that oversight is that hospitals cannot charge different rates to insurers and to patients; there are no ''discounts'' to one party. (This holds true only for hospital bills, in case you are wondering about those ''negotiated fee reductions'' still common on physicians' bills.)

Another benefit to Marylanders is the fact that, once the commission established an efficient, equitable way for all hospitals to share the costs of caring for uninsured patients, there was no need for the taxpayer-supported public hospitals that are creating budget problems for many local governments.

We can thank the foresight and persistence of a number of elected officials and civic leaders. In the General Assembly, Senators Rosalie Abrams the late Harry J. McGuirk championed the legislation that finally became law in 1971.

Officials of the Maryland Hospital Association also played a key role in shaping the legislation, as did a number of other people in both the public and private sectors. The hospital association includes hospital board members -- often civic and business leaders with wider community concerns -- who share a keen interest in creating a stable, predictable financial environment that makes it easier for hospitals to carry out their public-service mission.

Anticipation, not reaction

The goal of all these people was ''a flexible Maryland solution with accessible regulators, . . . a system that anticipated problems rather than reacted to them,'' says Robert B. Murray, the commission's executive director. Their success is evident in the problems Marylanders do not have to worry about in the mid-1990s.

Maryland's Health Services Cost Review Commission is the kind of non-glamorous success story that often gets overlooked. Its history holds lessons for public officials and private citizens who want to encourage public policies that prevent big problems.

But nothing is perfect, and hospitals face new threats today. The prospect of cuts in compensation for Medicare and Medicaid patients, the advent of managed care and the oversupply of empty beds throughout the hospital industry, are creating a highly competitive environment in which it becomes more difficult for individual institutions to see the value of cooperating for the larger good.

Maryland's rate-regulation system is under pressure on other fronts as well. Hospitals face competition from new sources, such as free-standing clinics offering services like outpatient surgical procedures that once fattened hospital revenues. These clinics sprang up outside the oversight authority of the commission, posing a growing threat to the integrity of the rate-approval system.

The health-care landscape has changed drastically in the two decades since the commission began its work, making the prospect of creating the consensus needed to address other health care problems an even more daunting challenge than the effort to set up the cost-review commission.

That makes it even more important to give credit to all the foresighted Marylanders who were willing to take the risk that a system of rational state regulation could solve more problems than it would create.


Sara Engram is deputy editorial-page editor of The Sun.

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