Cost of care for poor is plan's focus Most hospital rates would rise slightly under burden sharing; 714,000 uninsured in -- Md.; Rates in city expected to drop; institutions in suburbs not pleased


A plan will be unveiled today that would make all hospitals in the state share the financial burden of caring for the roughly 714,000 Marylanders -- mostly working poor people -- who have no health insurance.

The attempt to create good social policy in an atmosphere of intense competition would slightly raise most hospital rates across the state to generate about $33 million a year. The money would be allocated to seven hospitals, including Johns Hopkins Hospital and the University of Maryland Medical Center, that are not paid for at least 9 percent of their patients' care.

The redistribution would mean that an institution such as Liberty Medical Center would get enough extra money to drop its rates (( by about 6 percent, while suburban hospitals with fewer uninsured patients would post rate increases of 0.75 percent.

The report will be presented to the state's rate-setting body, the Health Services Cost Review Commission. Robert Murray, its executive director, pointed out that inequities beset insurance plans that have a city base and send patients mainly to city hospitals. As a result, they pay higher rates because more

uninsured people live in urban areas.

"It really makes a lot more sense to try to equalize these rates," Murray said. "When you change a system, there are going to be winners and losers, but in an overall sense, it's fair and it's a budget-neutral system."

But trying to create equity at a time of health care upheaval is difficult. Some hospital officials feel they shouldn't have to chip in for prestigious teaching hospitals that appear to have plenty of resources. Representatives of health maintenance organizations and some insurers say that all the hospitals have enough money to foot the bill themselves.

In another key provision, all hospital rates would be raised by another 0.5 percent or less to generate roughly $22 million in a separate fund for preventive programs to help the uninsured. Hospitals would bid to win some of that grant money.

Less dramatic

The plan -- a less dramatic change than originally proposed -- aims to spread a fraction of the cost of hospital care for the uninsured. Last year, it amounted to $404 million.

The Maryland Hospital Association supports the plan. Spokeswoman Nancy Fiedler called it an innovative way to address the uninsured issue by trying to get at some of the root causes.

"This is not just a hospital problem," she said. "This is a societal problem."

The issue has become more pressing as several factors collide: Employers are cutting back on health coverage, Medicaid and Medicare eligibility is tightening, and the number of uninsured is growing.

Maryland is the only state to have the "all-payer system," which is overseen by a commission that sets rates that all health plans pay. Hospitals are allowed to build the cost of caring for the poor, called uncompensated care, into their rates. But that has ,, become a liability in recent years, as institutions compete for contracts from powerful managed care plans. Those hospitals with higher numbers of poor patients -- and higher rates -- are losing business.

Johns Hopkins Hospital, for instance, has lost 30 percent of its labor and delivery business in the past two years, said Stuart Erdman, senior director for medical finance.

"We can't match the price of the other hospitals," said Erdman, who said Hopkins' rates are 5 percent to 7 percent higher because of uncompensated care. He doesn't think the plan gives enough money to help city hospitals.

At the University of Maryland Medical Center, where 12 percent of the care isn't paid for, officials said the plan fits the state's mission to assure that all people can go to a private hospital.

"We all favor competition," said Nelson Sabatini, UM Medical Center's vice president for integrated delivery systems operations and former state health secretary, "but if by virtue of geographic accident you're located in an area where there aren't many poor people, you shouldn't be able to escape responsibility."

Opposition from suburbs

But some suburban hospitals say some city institutions are not that bad off. "Some of the recipients are in better financial shape than the hospitals that are contributing to the fund. Look at the endowment funds that each of these hospitals has available to them," said Victor A. Broccolino, president and chief executive officer of Howard County General Hospital.

He also said that some hospitals are amassing far more profits than others, yet they would contribute the same percentage.

"This [plan] is more reasonable, fair than other proposals but this one could still be improved upon."

Representatives from Blue Cross/Blue Shield of Maryland and HMO groups opposed the plan because of the rate increase.

Murray said that when the plan is considered over the whole state, there would be no net increase. His commission will take feedback from the public in the next three weeks and may act in September. A 1992 state law gives it the authority to establish a new funding mechanism for uncompensated care.

In addition to Hopkins, UM Medical Center and Liberty, the other hospitals that may be able to reduce their rates under the plan are Bon Secours Hospital, Johns Hopkins Bayview Medical Center, Maryland General Hospital -- all in Baltimore -- and Prince George's Hospital Center.

Pub Date: 8/07/96

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