State Health Secretary S. Anthony McCann joined other people who pay hospital bills yesterday in calling for Maryland's rate-setting commission to moderate the increase of hospital rates over the next three years.
The state's Medicaid program for the poor, administered by McCann's department, picks up the tab for about 15 percent of hospital stays. McCann said too great an increase in hospital rates could push the state beyond federal spending limits for Medicaid. The state would lose the federal match for spending increases that exceed 7.1 percent per year per beneficiary.
"The more you attempt to accommodate the needs of the providers, you hasten the day that we have 100 percent state dollars on the table," McCann told the Health Services Cost Review Commission. The commission is scheduled to vote next month on rate increases for the three years beginning in July.
Hospitals mounted two hours of testimony at yesterday's commission meeting, with four top executives and two consulting economists arguing that increases need to be enough to allow the hospitals to be financially healthy and keep up with needed physical improvements.
The staff of the Health Services Cost Review Commission is recommending rate increases of just over 5 percent for each of the next three years - half a percentage point a year below projected national increases.
Hospital executives reiterated their call for rate increases that match the national level.
"We need the money - it's as simple as that," John P. McDaniel, chief executive officer of MedStar Health, told the commission. "We need the money to replace plant and equipment and to maintain the exemplary health care system we have in the state." MedStar, based in Columbia, operates four hospitals in Maryland and three in the District of Columbia.
Thomas Mullen, chief executive officer of Mercy Medical Center, said if rates weren't sufficient, his hospital might have to cut back or delay a planned $267 million replacement building.
Insurers, like McCann, supported the lower increases recommended by the commission's staff. "Beating the nation by one-half of 1 percent, when the nation is rising too fast, is not overly aggressive," said Harold Cohen, an economist representing CareFirst BlueCross BlueShield and Kaiser Permanente.
"Nationally, things are growing in an irrational and economically unsustainable way," agreed Robert Murray, executive director of the commission.