Hospital bill rise alarms panel

Outpatient services nearly double gain in inpatient costs


Outpatients are receiving more services when they visit Maryland hospitals, driving up their overall bills so rapidly that state regulators want to take action.

The collective outpatient bill at Maryland hospitals rose 14.15 percent in the 12 months that ended April 30 - nearly double the 8.43 percent increase in inpatient charges, according to data presented yesterday at a meeting of the Health Services Cost Review Commission. Outpatient care accounts for about 30 percent of the state's hospital spending of more than $10 billion a year.

Robert Murray, executive director of the commission, said the panel might switch to controlling outpatient costs on a per-case basis, rather than controlling what the hospital charges per service (say, for a CT scan). The charge for each service could increase only 5 percent this year under the commission's inflation controls, but, Murray said, more services have pushed the total cost up much faster than that.

The commission uses a charge-per-case method to limit inpatient costs. Before it can impose similar controls on outpatient spending, however, the commission needs to refine its method of measuring and comparing outpatient costs.

Yesterday, it began to move in that direction, releasing results of a still-in-progress measurement system that showed per-case ambulatory surgery costs ranging from 29.5 percent below the state average (at Garrett County Memorial Hospital in Oakland) to 78.7 percent above (at McCready Memorial Hospital in Cris- field).

The comparison adjusts for the complexity of the cases, the costs of medical education at teaching hospitals and labor market differences in regions of the state.

Hospital representatives, however, said the measurements need further refinement, and the commission agreed.

"There are a lot of adjustments that need to be made," said J. Graham Atkinson, a consultant to the commission on the outpatient project. Despite that, he said, it was important to publish the figures. "It's only when you start using them that people take them seriously and begin to make sure they're right," he said. "In a year, I'll have a lot more confidence in them."

Among those questioning the numbers at yesterday's meeting was Donna Kinzer, of Navigant Consulting, on behalf of the Johns Hopkins Health System and University of Maryland Medical System. Speaking for systems that include the largest teaching hospitals in the state, Kinzer said costs of training doctors had been underestimated. Hospitals affiliated with the two university systems accounted for five of nine highest-cost hospitals on the new outpatient surgery measure.

Kinzer also said that while the measure attempted to adjust for complexity of cases, it didn't do so well enough. "What we've got is a $500 case being compared to a $10,000 case," she said.

Atkinson said both problems would be addressed as the measure is adjusted over the next year.

Overall, outpatient costs at hospitals total more than $3 billion a year in Maryland - up from $2 billion four years ago. Besides outpatient surgery, Murray said, emergency room care is another big-ticket outpatient item, and the commission will work on a way to compare those charges as well.

Kinzer said Maryland is already doing better than most other states at controlling outpatient spending. While total spending was up 9.0 percent in Maryland in fiscal 2004, the most recent year for which she had complete data, it was up 11.3 percent nationally. Over the past six years, according to Kinzer, Maryland's rate of increase, on average, has lagged 2.1 percent behind the national rate each year.

Despite that, outpatient costs need to be controlled, argued Harold A. Cohen, a consultant to CareFirst BlueCross BlueShield and Kaiser Permanente. "Whether it is as bad as the nation or not as bad as the nation, we have a significant problem," Cohen told the commission.

And Gary E. Vogan, chief financial officer at Holy Cross Hospital in Silver Spring and chairman of a work group on outpatient costs for the Maryland Hospital Association, said that while some hospitals would like outpatient charges deregulated altogether, "the inpatient system has been fairly successful, and the outpatient system is on the right track."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.