A state regulatory panel approved on Wednesday a 1.77 percent increase in the amount Maryland hospitals can charge their patients - a compromise of sorts between the figure state cost review staff members recommended and what hospitals wanted.
The 6-0 vote by Maryland's Health Services Cost Review Commission is expected to translate to higher costs for patients treated in Maryland hospitals, companies that pay for health care costs as part of workers' compensation and insurers. The increase takes effect July 1 and applies for one year to 47 hospitals, employing 88,000 people.
The panel's action drew criticism from the head of the Maryland Hospital Association, which had sought a greater rate increase to help hospitals cover their costs.
"I think the commission's action today was very unfortunate, and I think it's going to place hospitals on the edge of bankruptcy when that's the last thing we need here in Maryland," said Carmela Coyle, president and chief executive officer of the hospital association. "What they have done is make hospitals part of the state's economic problem, rather than part of the solution."
Before Wednesday's meeting, staffers for the commission had recommended a rate increase of 1.27 percent while the hospital association had sought a 3.25 percent increase. At the hearing, a coalition of state officials, hospital leaders and insurers - including John M. Colmers, secretary of Maryland's Department of Health and Mental Hygiene - recommended a last-minute compromise increase of 2.12 percent, but the citizen panel lowered the figure to 1.77 percent.
The approved rate change - described by one hospital official as "a compromise of a compromise" - is expected to generate about $260 million in increased revenue for state hospitals. The commission approved a 4.5 percent increase in hospital rates for the year that began last July 1.
Before taking its vote, the cost review panelists heard a wide range of opinions about rate increases. Eloise Foster, secretary of Maryland's Department of Budget Management, urged the commissioners to permit the lowest rate increase possible, as a way of keeping down health care costs for state employers and others.
But hospital leaders warned that too low a rate increase would harm health care providers by forcing them to postpone building upgrades and curtail services and by prompting the best employees to seek work in other states.