Md. hospitals, regulators step closer on rates

State favors reduction over freeze in charges

February 04, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

Maryland hospitals and the state regulators who set their rates came closer yesterday on a plan to hold down costs -- but the regulators still want to reduce costs, while the hospitals are still proposing a freeze on charges.

"We're encouraged that we're actively talking about options. This has the potential to be an effective solution," said Calvin M. Pierson, president of the Maryland Hospital Association.

His view was expressed after the staff of the Health Services Cost Review Commission commented on his proposal for dealing with hospital charges.

The commission is expected to decide next month how to handle inflation adjustments to hospital rates over the next year. It has set a goal of reducing the cost of a hospital stay in Maryland, now about 3 percent above the national average, to 3 percent below the national average over 2 1/2 years.

Arguing that such rapid reductions would hurt the quality of hospital care, the hospital association instead proposed a freeze on charges last month.

Commission staff expressed interest yesterday in some aspects of the trade group's freeze proposal, although the panel still wants to lower rates.

Robert Murray, commission executive director, said the staff was particularly intrigued by the association's proposal to use the cost of each case as a yardstick, rather than the rates for each hospital service as regulators do now.

The hospital association proposal would allow each hospital flexibility in setting rates, as long as its cost per case did not rise.

But while Murray said the commission could allow such flexibility, he said a freeze was not enough and hospitals should reduce cost-per-case by 2 percent over the next 12 to 18 months.

Pierson said, "A freeze in rates is a bitter pill to begin with. There are difficult issues ahead."

Pub Date: 2/04/99

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