Reimbursement strategies in healthcare and business

Maryland Health Service Cost Review Commission

Maryland is the only state that has a Board overseeing its inpatient commission. The Board is called the Maryland Health Service Cost Review Commission. It is a panel that regulates the rates for all hospital services in its state and requires all payers -- commercial, Medicaid, Medicare, self-pay -- to pay each hospital (regardless of status, history, and quality) the same fixed rate.

The The Health Services Cost Review Commission's (HSCRC's) statute was first enacted in 1971 and began setting hospital rates in 1974. At first, it pertained only to non-governmental care institutions, but, in time, the federal government granted it a waiver and the State was exempted from national Medicare and Medicaid reimbursement principles. Increasingly more and more, the HSCRC was granted power over setting rates for inpatient reimbursement, until it became the sole body that set the rates that payers pay for hospital service (The Maryland Health Service Cost Review Commission).

There are advantages and disadvantages to this. The advantages are that it eliminates cost-shifting and fluctuation of price amongst hospitals with some hospitals serving only an elite segment and other hospitals diminishing t heir care due to their potentially poor population. This system democracies the procedure. On the other hand, disadvantages include the fact that hospitals suffer and cost of service may become unprofitable for them.

In May 2012, Becker's Hospital Review reported that the Maryland Health Service Cost Review Commission approved a 1% cut to inpatient rates at all Maryland hospitals. The Board had originally agreed to increase outpatient rates 2.59%, but their former decision is beginning to trouble them due to the impact of the recession and rise of inflation.

Carmela Coyle, president of the Maryland Hospital Association, expressed her concern in the following way:

"We find ourselves falling below the state rate-setting commission's own benchmark -- an efficiently operating hospital ought to have an operating margin of 2.75 per cent, and we're below that already, so we're very, very concerned,"

Their inpatient commission system, rare and wonderful as it is, has its disadvantages too -- hospitals are simply not making a profit. The Maryland Health Service Cost Review Commission is still grappling towards some solution. (Herman, 2012).