Md. rate-setters reach accord with St. Agnes Panel gives approval to fixed-price stay for new mothers, babies

March 07, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

The state's hospital rate-setters yesterday approved a "fixed price" rate for normal births at St. Agnes Hospital.

The decision gives St. Agnes essentially what it was seeking -- a second day in the hospital free for mothers and babies. It also gives the Health Services Cost Review Commission what it was seeking -- a reassertion that hospitals cannot offer discounts or special rates without commission approval.

Responding to concerns that insurers were covering only 24-hour hospitalizations for normal births, St. Agnes announced Feb. 12 that it would offer a second day free to mothers and their babies.

But the rate regulators said they needed to see proof that the St. Agnes offer did not shift the cost of the extra time to other patients. The hospital applied for the new rate Feb. 23.

While the rate that the commission approved was structured as a fixed price rather than a free day, "We view that as just a technicality," said Kenneth Bancroft, senior vice president and chief financial officer of the hospital.

"The result will be that women coming in will be able to stay a second day, and the insurance company will get a rate that's satisfactory."

Whether the woman and baby need to stay in the hospital a second day will be decided "by the mother and physician in consultation," Mr. Bancroft said. Births with complications would not be covered by the fixed price, which is $2,162.28 for the mother and $349.66 for the baby -- regardless of how long they stay in the hospital.

Mr. Bancroft said obstetric bookings are up since St. Agnes began promoting its second-day-free policy, but no precise numbers were available.

However, any marketing edge for St. Agnes may be short-lived. The five-hospital Helix Health System applied for a similar fixed-price rate last week, and the Maryland General Assembly is considering legislation that would require insurers to cover a second day for mothers who want it.

Robert Murray, executive director of the commission, said, "The same structure will be available to any other hospital that applies," and he promised an "expedited process" of review.

Helix officials said they hope to have their rate approved at next month's commission meeting.

Greater Baltimore Medical Center won approval in January for a "global rate," similar to a fixed price but including doctor fees as well as hospital charges. Global rates are not regulated by the commission and are not made public.

Mr. Murray also said, "Any hospital that does not adhere to the regulatory system should not derive its benefits." He said penalties should not be severe in the case of St. Agnes -- which applied for the new rate less than two weeks after it began to offer a free second day.

The commission approved a staff recommendation that St. Agnes not be eligible for any "guaranteed inpatient revenue" bonuses for obstetrics from Feb. 12 to Feb. 23, the period between when the hospital announced the free day offer and when it applied to the commission.

The bonuses allow hospitals a larger rate increase the next year if they meet cost-efficiency targets. Mr. Murray said he was unsure how much denial of the bonus for that brief period would cost St. Agnes.

Figures submitted by St. Agnes to the commission pegged the annual cost of the "free day" at $387,775 -- which will come off the hospital's bottom line. It reported a 1995 profit of $15.1 million.

About 60 percent of the normal births at St. Agnes resulted in one-day stays and 35 percent in two-day stays, for the first three quarters of 1995, said Rhonda C. Anderson, a hospital vice president.

While 5 percent of normal births showed three-day stays, Ms. Anderson said those generally involved mothers in labor arriving at the hospital shortly before midnight. That counts as an extra day in the statistics.

Pub Date: 3/07/96

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