A task force reviewing a formula to control hospital rates said yesterday that it could not agree on how the formula should be applied this year.
The report leaves the Health Services Cost Review Commission, which regulates hospital rates in Maryland, where it has been -- caught between payers demanding aggressive cost control and hospitals warning that too much would jeopardize community health programs.
The commission is set to vote next month on how -- or whether -- to impose a "system correction factor" reducing hospital rates in Maryland by 3.86 percent to bring the Maryland rate of health cost inflation in line with national benchmarks.
Already, the most vocal of the payer groups, the Maryland Association of Health Maintenance Organizations, has filed suit over the issue. And the Maryland Hospital Coalition, representing about three-quarters of the state's hospitals, has threatened to sue if the commission imposes the 3.86 percent reduction.
The correction factor was scheduled to go into effect in April, triggered by a report that the cost of a hospital stay in Maryland increased 4.67 percent in fiscal 1996, about double the national rate.
Imposition of the new formula was delayed after the hospital coalition called for reconsideration.
The task force was created to conduct that review, with representatives from hospitals, HMOs, business and labor.
The task force did agree that the ultimate goal should be to use rate-setting methods that do not require correction.
Accordingly, it asked the commission to take a complete look at how it sets hospital rates.
In the short term, however, pending an overhaul of the system, the members could not agree on how to apply the correction factor this year, "Rather than have a vote, we decided to lay out what the alternatives are," said Don S. Hillier, a member of the commission who chaired the task force.
HMO members supported the 3.86 percent reduction. That figure would be subtracted from the amount each hospital would get under the commission's inflation adjustment formula. A hospital due to receive a 6 percent inflation increase, for example, would get only 2.14 percent. While some hospitals would receive smaller increases than they otherwise would have, others would see their rates reduced.
The hospital coalition proposed a 2.3 reduction.
Advisers to the task force offered an in-between option. J. Graham Atkinson, a health cost consultant, and John M. Colmers, former director of the commission and now director of a different state health cost panel, made recommendations on a number of technical questions, and recommended changes in the formula that would result in an overall 3.32 percent reduction in rates.
Peter P. Parvis, a lawyer representing the hospital coalition, said his group would not be satisfied with the adjusted correction factor.
"We don't accept those proposals as appropriate at all," he said.
"The commission had to do what they have to do," Deron Johnson, an analyst for the HMO association, said after the task force report. "We'll wait until September."
Also at yesterday's commission meeting, Carroll County General Hospital requested a commission hearing on a rate increase -- which would be the first such review in five years.
Most hospitals get annual adjustments through a formula which accounts for inflation and provides "bonuses" for hospital efficiency.
The HMO association's lawsuit seeks full rate reviews for all hospitals each year, claiming that the inflation adjustment formula is not authorized by law or regulation.
Pub Date: 8/14/97
