After months of tense dialogue, Maryland officials believe that they are making progress. John Colmers, the chair of the Health Services Cost Review Commission, said he was optimistic about the outcome of the talks during his testimony before the Senate Budget and Tax Committee.
“We have been very greatly encouraged,” Colmers said, explaining that the Obama administration has been supportive of Maryland’s efforts to contain Medicare costs. “They are excited to see a state as a whole take on the challenge.”
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RATES FOR MD HOSPITALS IS SET BY A COMMITTEE WHICH ALSO COMPENSATES HOSPITALS FOR ALL “CHARITY CARE” AND BAD DEBT EXPENSE
Maryland is the only state with a Medicare waiver and the prices for medical procedures at hospitals are determined by a rate-setting committee. The Health Services Cost Review Commission (HSCRC) has established the rates that MD hospitals can charge for procedures for all payers including Medicare, Medicaid and the private insured for over thirty years. This results in higher payment to hospitals in Maryland than the Medicare rates established in the other 49 states. The waiver will go away if the costs for Medicare rise more quickly than the national average. The HSCRC rates determined by the HSCRC allow the hospitals to be compensated for "Charity Care” and “Bad debt” expenses. All Maryland acute-care hospitals are "Not for Profit” and consequently they are free from federal and state corporate and property taxes. Hospitals are afforded “Not for profit” status in return for their “Community Benefit” the main component being “Charity Care” for low income patients. However the amount of charity care and bad debt experienced by a hospital are factored in the rates set by the HSCRC. The hospital is compensated for charity care and bad debt losses during the next rate-setting cycle by being able to charge higher prices to future patients. In other words the “Charity Care" provided by the hospital is paid for by other patients! What is charitable about this?
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