Hospitals and insurers ended months of wrangling this week by agreeing to an increase in the rate hospitals can charge patients, but a state rate-setting commission will make the final decision.
The Maryland Health Services Cost Review Commission was set to vote on a rate increase Thursday but received a letter from insurance company and hospital representatives this week asking for a two-week delay. The commission, which sets the rates that hospitals statewide charge and what everyone must pay, will now vote July 7.
The new rates would be retroactive to July 1.
The two sides said in the letter that they were recommending a rate increase of 2.44 percent. Hospital-rate increases have broad implications, including higher premiums charged by insurance companies.
The staff of the commission is recommending a lower increase, of 1.91 percent, and doesn't have to adopt the proposal from the hospitals and insurance companies.
The commission's staff was surprised by the last-minute compromise but said they were still evaluating it.
"We'll give it due consideration and be happy to meet with the payers and hospitals to fully understand the implications," said Robert Murray, executive director of the commission. "We certainly are concerned about rising health care costs and the fact that the public is going to have to finance this."
The letter to the commission was signed by heads of the Maryland Hospital Association, United Healthcare and CareFirst BlueCross BlueShield. John M. Colmers, secretary of the state's Department of Health and Mental Hygiene, also signed the letter.
Just last week, the hospitals and insurance companies seemed to be at a stalemate. Insurers were recommending a 1.58 percent increase, while hospitals were pushing 2.97 percent.
A BlueCross BlueShield spokesman would not comment beyond what was in the letter. A United Healthcare spokeswoman said there was no one available for comment.
Jim Reiter, a spokesman for the Maryland Hospital Association, said there is going to have to be more cooperation among hospitals and insurers with federal health care reform approaching.
He said the two sides sought a delay in the hospital-rate vote to give commission members time to consider their proposal.
The proposal also provides an incentive for hospitals to reduce the number of patients who are readmitted to hospitals after their initial visit. Roughly one-fifth of the proposed increase could be used to reduce hospital readmissions. Maryland has one of the highest readmission rates in the country, a problem that some say drives up hospital costs.
Colmers said it was good that an agreement was negotiated on what is normally a testy issue between hospitals and insurers.
"It is good to encourage the parties to work together," Colmers said. "They were very far apart. But ultimately, it is a decision the commissioners will make in public. It will be fully vetted."