Negotiations聽to avert a breakdown in Maryland鈥檚聽unique system of regulating hospital聽prices have聽deteriorated聽into a stalemate between the state鈥檚 largest insurer and the Maryland Hospital Association.聽CareFirst BlueCross BlueShield CEO Chet Burrell, speaking out for the first time about the talks,聽blames聽hospitals for their proposal to shift聽hundreds of millions in costs to CareFirst and other private insurers in an attempt to control rising Medicare spending.
Maryland is the only state聽that , including the federal Medicare program for seniors and the disabled.聽It鈥檚 allowed to do so聽only so long as聽Medicare聽costs per聽hospital admission rise no faster over time in Maryland than in the rest of the country. Because Maryland is close to breaking聽this聽speed limit for its Medicare 鈥渨aiver,鈥澛爉edical providers and federal and state policymakers have been talking all summer about a redesign.
The idea is for the Department of Health and Human Services to use its聽regulatory authority to change聽the rules. HHS officials have , using its聽system to install new cost controls not just for all payers but for all providers, including physicians and drug vendors.
But the federal agency especially wants to rein in hospital Medicare spending.聽To address its concerns the hospital association has proposed while raising hospital rates for聽commercial insurers by 7 percent over three years 鈥� beyond normal health care inflation.
Once phased in, the plan would increase聽charges for companies such as CareFirst and their聽customers by about $350 million a year and boost聽their price for a typical hospital admission by $900.
Critics call the proposal a tax on consumers and聽employers that聽bails out聽hospitals from the obligation聽to control聽their own costs. Carmela Coyle, the hospital association鈥檚 CEO, previously told Kaiser Health News聽that聽commercial insurers pay a far lower portion of hospital costs in Maryland than in the rest of the country, and that鈥檚 it鈥檚 time for them to share more of the burden. Absorbing big Medicare cuts without offsets from private payers would jeopardize hospitals鈥� financial health and hinder them from implementing reforms in the 2010 health act, she said.
CareFirst鈥檚聽Burrell singled out hospitals as 鈥渢he single biggest driver鈥� of recent cost pressure.聽鈥淭hey are responding in a sense appropriately to the incentives that they are given鈥� to increase patient volume, he said.聽鈥淭his isn鈥檛聽malevolent. This isn鈥檛 inefficient just to be inefficient. They are rationally responding to the incentives that they have. If any of us were in their place we would do the same. The question聽then becomes, can you change the incentives?鈥�
The hospital association did not respond to a request for comment.
Participants in the negotiations,聽which involve CareFirst, HHS, Coyle, Maryland Health Secretary Dr. Joshua Sharfstein,聽Maryland Health Services Cost聽Review Commission Chairman John Colmers and MedChi, Maryland鈥檚 medical society, had talked about striking a deal by mid-September. The聽prospects of a Romney White House, which might not be sympathetic to Maryland鈥檚 regulation-heavy approach to addressing聽costs, had spurred everybody to eye聽a November聽deadline聽at the latest.
Even that may be elusive.
鈥淭here鈥檚 effort being applied鈥� to reach a compromise, Burrell said.聽鈥淢aybe it鈥檚 often darkest聽before the dawn. I don鈥檛 want to convey that I think it鈥檚 hopeless, but I wouldn鈥檛 want to convey that there鈥檚 been a huge amount of progress.鈥�