Teaching hospitals lose a round in House Amended bill could cost them Medicaid funds


The House of Delegates yesterday weakened a bill that would give Maryland's teaching hospitals their "fair share" of Medicaid money under managed care.

A final vote is expected today on the entire bill -- with the amendments approved yesterday -- which calls for a study of the problem this year. If it passes, no legislative action will take effect until mid-1998.

Dr. Edward D. Miller, dean and chief executive of Johns Hopkins Medicine, called the amended bill "malarkey" and said his institution had once again been rolled by the powerful health insurance lobby.

But Marty Roach, a lobbyist for the HMOs, said portions of the bill give her heartburn as well. And Del. Peter Franchot, a Montgomery County Democrat, says he's concerned that the bill tilts too far in favor of the teaching hospitals and plans to offer an additional amendment today.

Del. Howard P. Rawlings, a Baltimore Democrat and sponsor of the original legislation, said the amendments approved yesterday represent "a compromise that will move this issue to resolution."

The issue pits teaching hospitals such as Hopkins and the University of Maryland against community hospitals and Medicaid managed-care companies, many of which are affiliated with large HMOs.

The problem, as the teaching hospitals see it, is that the costs of graduate medical education are now factored into the per-person rates Medicaid pays to managed care organizations (MCOs) on an across-the-board basis regardless of where they send their patients.

According to Miller, that means hospitals that don't bear graduate medical education (GME) costs indirectly receive part of the compensation for those expenses.

"Places that do not give GME should not be reimbursed for GME," he said. "They essentially would have a windfall. We would have the cost."

The problem especially worries the teaching hospitals because the transition of Medicaid recipients into managed care is scheduled to begin in earnest June 2.

According to Miller, Hopkins is concerned that MCOs will have a strong incentive to channel their patients to lower-cost nonteaching hospitals and away from more expensive institutions that must recover the cost of medical education.

Besides Hopkins and University hospitals, the Maryland institutions at risk include Sinai Hospital and Dimensions in Prince George's County, he said.

The original GME bill would have required the Department of Health and Mental Hygiene to implement a payment system that would ensure that only teaching hospitals received the benefit of the education factor in the rates.

That proposal ran into a buzzsaw of opposition from HMO and community hospital lobbyists. By the time they were finished, the bill that came out of the House Environmental Matters Committee called for nothing more than a feasibility study during 1997. No implementation of regulations would be required before July 1998.

Miller said the result was not a compromise but a clear win for an HMO lobby that contributes heavily to legislators. He said that the bill at least should have set some money aside in a fund to compensate the teaching hospitals for any future losses.

But Roach, executive director of the Maryland Association of HMOs, said the teaching hospitals' concerns are unfounded. She said that one-third of Medicaid patients come under managed care now and that there is no evidence they have been steered to low-cost hospitals.

"We won't change our referral patterns," she said.

Roach objected to the provision calling for the issuance of regulations next year, after a study by the health department, Health Services Cost Review Commission and a seven-member commission.

"That probably gives me some heartburn," said Roach.

But Rawlings, who heads the powerful Appropriations Committee, said proponents of the bill decided they needed to find a solution that would not disrupt existing contracts with MCOs.

When told of the complaints from Hopkins, Rawlings said, "Everyone that didn't get their way feels they were rolled."

Sen. Larry Young, chairman of a key health subcommittee, said the stronger bill probably wouldn't have passed during this session. "Regretfully, we have not been able to build a political consensus to get it done," said the Baltimore Democrat.

Pub Date: 4/04/97

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