Hospitals Look to Private Insurers To Make Up Medicare Losses

Most people seem to agree that the Affordable Care Act has benefited the country’s consumers. For many hospitals, though, the ACA means even thinner profit margins. Even without the threat of fines from CMS, many hospitals are looking to unique solutions to the lost profits that the ACA represents.

“Maryland hospitals and regulators are discussing raising hospital prices for private insurers and businesses by hundreds of millions of dollars a year to make up for suggested cuts from Medicare and Medicaid,” begins this Kaiser Health article. “Once phased in, the plan would raise charges for commercial insurers and their customers by about $350 million a year and increase their price for a typical hospital admission by $900 — in addition to underlying health-care inflation.”

But Maryland’s plan isn’t that close to completion; it still requires a sign-off from HHS. The plan also has a fair amount of critics, who believe that such a maneuver would act as a tax on business. What makes Maryland so unique in a sector that is cutting costs in every other state?

The debate focuses on Maryland’s unique, decades-old system of setting all hospital rates for all payers.

The federal government lets the state control Medicare prices only as long as the program’s cost per admission rises no faster in Maryland than in the rest of the nation.

Now that the limit is close to being reached, Maryland policymakers are talking to the HHS and hospital and insurance industry leaders about sharply cutting rates for Medicare as well as those for Medicaid, which has been straining the state’s budget.

But instead of making hospitals absorb the reductions, those officials are talking about forcing commercial insurers, self-insured businesses and privately insured patients to make up the difference.

If approved, the plan will take effect in early 2013, so expect to hear more about this interesting policy before the close of the year.

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Pam Argeris is a thought leader in the Healthcare Industry and possesses extensive, hands-on experience with CMS compliance, and multiple regulatory bodies such as NCQA, JACHO, and DOI. In her role at Merrill Corp., Pam focuses on developing solutions for compliance and quality assurance, delivered in a cost effective manner to improve beneficiary and prospect communications. You can contact Pam at Pamela.Argeris@merrillcorp.com.