State delays starting new Medicaid rates Independent review of $80 million overpaid last year is planned

Health care

July 18, 1998|By Thomas W. Waldron | Thomas W. Waldron,SUN STAFF

Under prodding yesterday from legislative leaders, the state health department delayed implementation of new payment rates for Medicaid providers while an independent actuary examines about $80 million in overpayments the state made last year.

House Speaker Casper R. Taylor Jr. and Senate President Thomas V. Mike Miller informed the state health secretary, Dr. Martin P. Wasserman, that the legislature would be contracting with a nonprofit foundation to examine the state's Medicaid rates.

"We want to make sure the rates we're promulgating are going to be actuarially sound," Taylor said yesterday.

The unusual legislative involvement was triggered by the health department's recent disclosure that Maryland had overpaid health maintenance organizations $80 million to care for Medicaid patients last year.

The payment problem arose as the state reformed its Medicaid program, which provides health coverage for the poor and disabled, last year, shifting more than 300,000 people into HMO-like plans called managed care organizations, or MCOs. Some are run by HMOs; others were set up by hospitals or other groups.

The overpayment came from what Wasserman said was an overestimate of the number of patients with chronic conditions that drive up the cost of care.

Wasserman told legislators in Annapolis this week that he wanted to phase in new, lower rates for MCOs over the next year, a move that would have cost the state an additional $56 million.

Now, those rates are on hold as well.

Wasserman said yesterday he had agreed with legislative leaders on the need for an outside study of the rates.

G; "I'm delighted that the legislature recognizes the com-

plexity of our rate-setting process and will bring in what will be competent outside observers to figure out what is going on," Wasserman said.

The health secretary said overpayments are not uncommon in government programs in which certain reimbursement assumptions are made.

"We make assumptions all the time," Wasserman said. "Sometimes they work out, sometimes they don't. Many people looked at those assumptions in the beginning and they thought they were accurate."

Legislators voiced concern this week that the state health fTC department did not yet have enough information about payments and the actual cost of health care provided through the MCOs to allow the health department to set fair payment rates for the future.

The Assembly leaders are planning to hire the Millbank Memorial Fund, a New York-based nonprofit that focuses on health care issues, to do the actuarial study, an examination expected to take about 90 days.

Taylor said yesterday that he believes the Medicaid rates in place last year "may not have been excessive."

In any case, the overpayments quickly became a political issue this week, as two challengers to Wasserman's boss, Gov. Parris N. Glendening, blasted the administration for the Medicaid problem.

Both Harford County Executive Eileen M. Rehrmann, a Democrat, and Ellen R. Sauerbrey, a Republican, issued

statements yesterday calling for an independent investigation of the situation.

"I am outraged the state health secretary could make a 'mistake' of this magnitude," Sauerbrey said. "Something just doesn't smell right."

Peter Hamm, a spokesman for the Glendening campaign, referred the matter to the health department, adding: "The governor has confidence in Marty Wasserman."

Pub Date: 7/18/98

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