Hospital regulators' decision criticized

Panel raised rates in private meeting

May 03, 2007|By M. William Salganik | M. William Salganik,Sun reporter

A member of the state's hospital rate-setting commission took his colleagues sharply to task yesterday for approving an extra boost in hospital rates over the next two years without discussion.

Joseph R. Antos said last month's decision means Marylanders will pay an extra $119 million over the two years that the hospitals don't need. Also, he said, the decision had been worked out in a private meeting between hospital representatives and three commission members, which "gives the impression of favoritism" toward the hospital industry and "undermines the public trust."

Such public criticism is rare within the commission, which spends most of its meetings in technical discussions.

Antos' brief statement, read in soft tones at the beginning of yesterday's public session of the Health Services Cost Review Commission, drew no response at the meeting from the other commissioners. But Irvin W. Kues, the commission's chairman, said after the meeting that the new rates were justified because hospital charges in Maryland are 4 percent below the national average.

Kues said the increase had been debated extensively over 16 months, so the commission "felt they had heard everything and there was no new evidence," and consequently no need for discussion last month. He said groups of three commissioners - more would constitute a quorum, triggering public meeting requirements - meet from time to time with all parties to understand their position, but that such meetings did not constitute negotiations or decision-making.

While the commission's meetings can seem arcane, the impact is substantial. Its rates determine how much Marylanders pay for hospital care - about $10 billion a year, accounting for about a third of the cost of health insurance. The commission is charged with both keeping rates low for consumers and making sure rates are adequate for the hospitals to operate.

In this particular case, what was at issue wasn't whether rates would go up - they generally do - but by how much. The commission's staff, backed by insurers, recommended in January a 5.65 percent increase for each of the two fiscal years beginning July 1. The hospitals said the annual increase should be 6.41 percent.

Although there was lengthy debate in January, there was no further public discussion at monthly meetings until the commission approved 6.25 percent last month.

Antos, who is a health policy scholar at American Enterprise Institute, said he didn't believe the commission had violated its rules but had departed from its norms of presenting new proposals for comment before voting at a different meeting.

Moreover, he said, rate-setting is essentially a bargaining process, so it didn't make sense for the commission to, essentially, endorse the initial position of one of the sides. "The data tells you something," he said, "but the decision is a judgment, not a formula."

He said after the meeting that some of his colleagues were "upset I went outside the normal pattern," but that he didn't believe it would impair his ability to work with other commissioners in the future.

Paul Sokolowski, senior vice president of the Maryland Hospital Association, said the commission's action last month was "a reasonable compromise to break an impasse."

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