Average rise of 6.69% in hospital bills OK'd

BUSINESS DIGEST

October 12, 2006|By M. William Salganik | M. William Salganik,sun reporter

The average Maryland hospital bill will increase 6.69 percent this year, the state's rate-setting commission decided yesterday.

The Health Services Cost Review Commission had approved a 5.21 percent inflation increase earlier, and the difference results from adjustments for a trend toward sicker patients and for a shift in cases from inpatient to outpatient care.

The Maryland Hospital Association disagreed with how the commission staff proposed to apply those adjustments. It argued for a different interpretation that it estimated would add about $90 million to hospital charges over the next three years. Both the association and the commission staff said their interpretations were consistent with policy and precedent.

The commission voted unanimously to follow the interpretation of its staff, but agreed to take another look at allocating the adjustments in fiscal 2008 and 2009.

The rate approved yesterday is retroactive to July 1. That doesn't mean hospitals will send additional bills to insurers for patients who were treated in the past few months, said Robert B. Murray, the commission's executive director. They've already increased charges by 5.21 percent for inflation, and will adjust future bills so their charges for the fiscal year will meet the targeted figure.

Individual hospitals will have different rates of increase, depending on whether they are treating increasing numbers of uninsured and sicker patients.

Hospitals got average rate increases of 5.78 percent last year, 5.58 percent in fiscal 2005, and 7.28 percent in fiscal 2004, according to Murray.

Hospital officials argued that, by generating higher rates, their interpretation of the adjustments would help hospitals finance needed building projects.

Robert Chrencik, chief financial officer of the University of Maryland Medical System, said the commission staff's interpretation would put hospitals "below the glide path" targeted in three-year rate projections, making it more difficult to obtain bonds to construct new buildings.

Insurers and state Health Secretary S. Anthony McCann supported the staff's interpretation.

"We are seeing a gradual, slow decline in companies offering health insurance," McCann told the commission. If the commission followed the hospital association recommendation and allowed larger rate increases, he said, "we are simply accelerating that trend."

bill.salganik@baltsun.com

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