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University of Maryland Medical Center withdraws request to boost patient rates

The University of Maryland Medical Center in Baltimore dropped a plan Wednesday to seek more revenue from patients, a request critics called ill-timed in light of allegations of improper spending and above-average profits by the 13-hospital University of Maryland Medical System.

The University of Maryland Medical Center dropped a plan Wednesday to seek more revenue from patients, a request that critics had called ill-timed in light of allegations of improper spending and above-average profits by the 13-hospital University of Maryland Medical System.

The downtown Baltimore hospital submitted a request to state regulators in January that would have generated an extra $75 million from patients who sought services at the medical center, or a nearly 5% boost in revenue. Wednesday it withdrew the application.


The system’s overall profitability, coupled with the evolving board scandal, prompted patient advocates and some lawmakers and regulators to question why the system’s flagship hospital needed to make even more money.

The university medical system earned a profit margin of 5.3% in its 2018 fiscal year ended June 30 — exceeding the 3.3% margin earned by all Maryland hospitals and putting the system in the top third of hospital earners nationally, according to an analysis published this week by The Baltimore Sun.


In a four-sentence letter Wednesday, the hospital system thanked the state’s Health Services Cost Review Commission, which tightly regulates hospital rates in Maryland, for “reviewing and providing feedback related to this application,” but did not say why it was withdrawing its request. The letter was signed by Alicia Cunningham, the system’s senior vice president of reimbursement and revenue advisory services.

In Maryland, under a unique arrangement with federal authorities, hospital rates for everything from delivering babies to knee replacements are regulated and the overall amount of revenue generated from patients services is capped.

In a statement to The Baltimore Sun, the medical center said one reason for withdrawing was an increase the medical center expects to receive through a regular annual review. The state panel considers such things as inflation, the costs of potentially preventable care from infections and other complications, and unpaid patient bills.

On Wednesday, the commission approved an overall 3.3% rate increase for about four dozen hospitals in the state that goes into effect July 1, though the rate increases for individual hospitals have not yet been determined.

The 5% rate increase sought by the medical center would have been extra revenue, and was the largest request made by a hospital in the state since the caps went into effect in 2014.

“A contributing factor in our decision to withdraw the application included the update factor provided to the entire Maryland hospital industry,” the statement said. “It will support the critical needs of our organization and help ensure that we can continue to serve our communities, the state and beyond with safe, high-quality health care.”

The medical center and, for the second year in a row, Johns Hopkins Hospital also were given a special 1% increase in rates because they have extra costs associated with complex care, drugs and research. The increase would be worth about $15 million for the medical center and about $25 million for Hopkins.

The Morning Sun


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Commissioner Jack Keane, who had publicly criticized the 5% increase sought by the university medical center, also questioned the need for the extra 1% increase for the state’s two academic hospitals. He said Wednesday they had not demonstrated they were operating as efficiently as their academic peers.


The panel’s staff agreed to present options for better regulating those two hospitals by January.

Neither the scandal at the University of Maryland Medical System, nor its profits, were mentioned during the panel’s hearing. But the system has been under intense scrutiny and review by state officials for lucrative deals with board members. The system paid former Democratic Mayor Catherine Pugh of Baltimore $500,000 for copies of her self-published “Healthy Holly” children’s books.

Several board members resigned or took leave and the system CEO, Robert Chrencik, stepped down. Pugh resigned from the board and later as mayor amid multiple investigations into her book deals.

On Wednesday, Republican Gov. Larry Hogan named 11 new board members. And an outside auditor released a report that found problems with how some of the former board members’ deals were awarded. System officials pledged reforms.

Medical center officials did not say Wednesday when, or if, they would return to the state regulators for another increase in patient rates.

“As the new UMMS board of directors is put into place and becomes fully orientated to the organizational needs of our system and the complex nature of the care UMMC provides, we look forward to a continued dialogue with the HSCRC in the years to come,” the medical center said in a statement.