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Md. hospitals seek a nearly 4% revenue increase next year

Maryland’s hospitals are likely to see a significant revenue increase next year, but not as high as they would prefer, when the Health Services Cost Review Commission considers its staff’s final recommendation for next year.

Under the staff’s recommendation, which will be presented to the commission at its meeting Wednesday, most hospitals in Maryland will see an overall revenue increase of 3.59%. Across the state, with about $17 billion in hospital revenue, that translates to an increase of more than $600 million. The hospitals are asking for an additional 0.33 percent increase on top of that recommendation.

The staff’s recommended increase, which would go into effect for the July 1-June 30 rate year, would be one of the largest increases in the last several years for hospitals.

The only hospitals not included in that are the state’s freestanding psychiatric hospitals and the Mt. Washington Pediatric Hospital. Those hospitals will see a 2.46% revenue increase.

Other than those specialty hospitals, the rest of the state’s hospitals participate in the global budgeting system that is part of Maryland’s Total Cost of Care Model agreement with the federal government, previously known as the state’s Medicare waiver.

The revenue increase accounts for a number of different variables, including the rate of population growth, the price of drugs and the amount of uncompensated care.

The biggest driver, though, is the rate of inflation, which tends to be a lot higher for medical costs than typical inflation.

This year HSCRC staff tabs the rate of inflation at 2.96%. That includes most medical costs, including the costs of most drugs.

But the staff also provided a separate rate for how fast the prices for the highest-cost drugs are growing. For those drugs, outpatient oncology and infusion drugs, the staff is projecting an increase of about 10 percent.

The staff has also proposed an additional 1% adjustment for the state’s two academic hospitals — University of Maryland Medical Center and Johns Hopkins Hospital — to account for the more complicated cases they typically take on.

But the state’s hospitals want an additional 0.33% increase across the board to account for expenses associated with the Total Cost of Care Model, the affordability of Maryland hospital care, and more favorable hospital spending than projected.

A 0.33% additional increase would amount to more than $56 million.

The Maryland Hospital Association requested the increase. Anne Arundel Medical Center, MedStar Health and University of Maryland Medical System wrote letters supporting the increase.

Staff did not include the additional increase in its recommendation because of concerns that a higher increase may get too close to guardrails set up by the federal government as part of the Total Cost of Care agreement.

But hospitals are hoping they can convince the commission to include the adjustment when it reviews the recommendation Wednesday.

“The staff recommendation will be reviewed by the commission next week and we are hopeful that they will include this modest increase in this year’s update,” Amy Goodwin, a spokeswoman for the hospital association, said in an email. “This slight increase will allow hospitals to expand care transformation investments to sustain the long-term success of Maryland’s Total Cost of Care Model.”


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