In other states, each time a hospital provides a service, it has to negotiate how much money it receives from an insurer. The time-consuming and often contentious process results in widely varying prices for the same procedures.
Hospitals pushed for the highest possible payouts partly because they say they do not receive enough from Medicare, the federal program that reimburses medical providers for their care of the elderly.
Maryland put an end to the wrangling. It established a state commission that directly set rates for procedures at all of its 46 hospitals. Over time, hospitals and insurers embraced the system because they knew exactly what to expect.
But, as expenses in health care grew rapidly, the program did a poor job keeping up for hospitals and creating an incentive for hospitals to admit as many patients as possible,
Part of the problem with the old system is that it gave hospitals an incentive to admit as many people as possible. The more patients who walked through the door, the more the hospitals would get paid.
So Maryland officials came up with a new approach. On top of setting rates for individual procedures, they are proposing a cap on the growth of the total amount the hospital system spends per person in the state. The plan also allows hospitals to charge higher prices if they adopt preventive-care methods that improve patient health and reduce repeat visits, said Maryland’s health secretary, Joshua Sharfstein.
Boy, can’t say I support this proposal.