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Md. lets Blues keep $20 million discount pending hearing in fall


The state agency that regulates hospitals will allow Blue Cross and Blue Shield of Maryland to keep a discount worth nearly $20 million pending a public hearing in September.

The Maryland Health Services Cost Review Commission yesterday agreed to take a second look at the 4 percent discount on hospital costs granted insurers that provide coverage to all comers during open enrollment periods.

The hearing will determine whether the benefits provided to people turned away by other companies because of their medical conditions justify the millions of dollars in discounts to the Blues and a few other companies known as insurers of last resort.

The discount is intended to make health insurance affordable to people with medical problems and thus reduce the amount of uncompensatedcare provided by Maryland hospitals. But while it has been in effect, the number of uninsured has soared to an all-time high of 561,000 people.

In Maryland, Blue Cross is the largest health insurer of last resort, signing up several hundred otherwise uninsurable people every year. About 2,500 people currently are in the program.

"Our view is, the nature of the insurance industry has changed so dramatically since 1979 -- the data year used to evaluate the discount --that the best way to handle it is in a full hearing," said John M. Colmers, executive director of the cost review commission.

Blue Cross' discount was worth almost $20 million last year, but it paid out only $2.5 million in hospital bills for people it signed up during its semiannual open enrollments.

The $17.5 million difference was discovered three months ago in papers filed by Blue Cross with the state insurance division. Until then, Blue Cross had maintained it could not separate the cost of care for people who signed up under open enrollment from that for people in other nongroup policies.

In a report issued yesterday, the commission staff disputed Blue Cross' claim that the cost of care for a wider group of people should be included when judging whether the health insurer deserved the discount. According to the report, the discount is supposed to be evaluated in terms of how much savings it generates for hospitals.

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