Panel could authorize higher charges starting in July

Maryland officials decided not to allow hospitals to increase charges for the remainder of the current fiscal year ending in June, but could authorize rates to rise starting in July.

The Maryland Health Services Cost Review Commission ruled that hospitals would have to absorb the 2 percent cuts to Medicare payments that started in April as part of the across-the-board federal spending reductions known as the sequester. Hospitals had asked the commission to allow a temporary 0.8 percent increase in what they can charge to help make up for the lost revenue.

"Hospitals, while their operating margins are down, their overall profit are up quite a bit from last year, so there's some positive financial impact on hospitals there," said Steve Ports, the commission's principal deputy director.

"It's only a three-month period that the decision was made around, and we'll regroup and look at next year and decide how much rates should increase, not just for sequester, but for everything."

Hospitals say they will lose between $7 million and $8 million a month from the cuts, which could result in layoffs. Maryland Hospital Association spokesman Jim Reiter said the state's hospitals are already operating with slim margins.

"Truthfully, there's not much else to cut except services and jobs," he said.

"The main problem is, our main job is to be there 24/7 to take care of the community. ... There's been a real discrepancy between what it costs to take care of people and what hospitals are being paid to take care of people."

Top officials from many of Maryland's hospitals wrote letters urging the commission to approve the rate increase.

A spokeswoman for the University of Maryland Medical System deferred to the Maryland Hospital Association to comment on the commission's decision.

Though hospital rates will remain flat through June, the commission meets every summer to re-examine rates and make changes it feels are necessary. Ports said the panel soon will make a decision on whether to allow for a rate increase and will take into account sequestration along with inflation and other costs for hospitals.

"This is what we do every year, looking at the inflation rate for hospital years," Ports said. "One of the things we look at is the financial condition of hospitals. To the extent that [sequestration] impacts the financial considerations of hospitals, it will be considered."