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Will Maryland's Rate Shift Send Tremors Around the Country?

Karen Minich-Pourshadi, for HealthLeaders Media, May 21, 2012

When it comes to healthcare, what happens in Maryland (unlike in Las Vegas) doesn't always stay there. The state is home to the Centers for Medicare & Medicaid Services, which is based in Baltimore, and its geographic location has made Maryland a testing ground for many of the agency's payment programs. So it was noteworthy when the Maryland Health Services Cost Review Commission (HSCRC), which sets payment rates for hospitals in the state, adopted reimbursement payments at a near-freeze level on May 2.

"I've always looked what happens in Maryland with CMS as an incubator for what could happen next in the rest of the country," says Michelle Mahan, senior vice president and CFO at Frederick Regional Health System in Frederick, MD.

Maryland's rate statement reflects the shifting dynamics of the healthcare business. According to the HSCRC final rate recommendation document, "Healthcare reform has altered the concept of efficiency in healthcare. There has been an increasing recognition that true efficiency is not at the level of the hospital discharge but at the level of providing population health. When the existing waiver was developed, the concern was the length of stay within a hospital discharge and the utilization of resources within that stay. Medicare and rate-setting states adopted prospective method payment methods for a hospital stay."

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