Hospital group pitches reform plan Community-based networks are basis of MHA proposal


Health care providers would be encouraged to forge community networks, while rates charged by independent medical clinics would be regulated by the state, under a health care reform package proposed by an industry group yesterday.

A key ingredient of the plan by the Maryland Hospital Association isto provide health insurance coverage for everyone in Maryland and hold down medical costs. The group also wants to stop the spread of cheaper outpatient surgery centers that are taking many of the hospitals' patients, doctors and profits.

Hospitals are a $4 billion business in Maryland, but they are losing share in what is estimated to be a $10 million health care market statewide. The broad vision outlined yesterday by the MHA came in response to this loss of patients as well as criticism of inefficiencies in the current regulatory system.

Yesterday's announcement signaled the beginning of what is expected to be a major lobbying effort by the state's health care industry less than two months before the start of Maryland's General Assembly.

The hospital association said it would take its plan to insurance companies, lawmakers, Gov. William Donald Schaefer and others to try to iron out an agreement before introducing legislation next year to change the system. The MHA also plans to talk with the state groups representing doctors, since they would play a large role in the networks and many are forming groups of their own.

The plan was approved by the MHA's board of trustees this week after eight months work by a task force headed by James P. Hamill, chief executive officer of Holy Cross Hospital in Silver Spring. Many of its details are still to come. But it calls for providing incentives for hospitals, doctors and other groups to band together into networks. These could take many forms, and the state agency that now sets rates only for hospitals would instead oversee "capitated" -- or per-person -- fees charged by the medical networks.

In presenting its schematic for the marketplace, the hospital association acknowledged it would take up to a decade to achieve such substantial reform in the health care and insurance business.

The MHA said its goal of providing health insurance coverage for all Marylanders would be pursued at the state level regardless of the outcome of the proposed federal health care plan.

As part of its program, the MHA, which represents 52 acute care hospitals, said it would seek new regulations or laws to stop what it calls the "cherry picking" of patients by centers that do not have to treat the uninsured or contribute to the cost of teaching hospitals.

Free standing medical centers, including those for same-day surgery, have proliferated in recent years. Most centers do not require licensing.

"There are major entrepreneurial groups going around [setting up care centers] that are in it for the money," said Andrew B. Wigglesworth, MHA chief lobbyist. "We're very quickly moving from a regulated system to a deregulated system that is in the interest of managed-care companies but not necessarily cost effective for the whole system."

The plan also would:

* Extend price controls or other rules -- such as paying a share of the cost of 600,000 uninsured people in the state -- to doctors, surgical centers and other medical providers. It also would take the drastic step of requiring insurers to take all customers regardless of their health in the region they serve.

* Provide incentives to doctors, hospitals and other providers to develop dozens of full-service health care networks aimed at consumers in four regions of the state.

* Aim to preserve Maryland's highly regulated system by injecting more competition by regulation rather than open it to new players. For example, it would impose requirements on networks that they be "community focused" or "community responsive."

* Create a quasi-state agency that would offer the networks to consumers in a way to allow them to compare prices and services. In practice, it would mean workers could choose from dozens of plans instead of the three typically offered by employers now.

* Require that consumers, though they would be able to choose their own network, take more responsibility for their own health. Consumers would be rewarded for losing weight or stopping smoking, for instance.

Calvin M. Pierson, president of the MHA, said the group's plan would result in more efficient care and lower prices because each collection of hospitals, doctors and medical services working as a single company or network would be forced to pare costs to compete with other networks for patients. Currently, doctors, medical centers and hospitals have incentives to provide unnecessary services or, in the case of hospitals with declining occupancy levels, to remain open.

At the same time, the hospital group wants to keep the waiver it enjoys from federal price controls because it has kept prices below the national average. "We want to create a unique Maryland system," said Mr. Pierson of the MHA.

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