Among the many drivers of the state budget difficulties and lingering structural deficit is the cost of medical services, especially to Medicaid patients. A recent article by Kaiser Health News working with Politico focuses on Maryland, unique in its current control over hospital rate-setting, and how Maryland may seek out further cost-cutting measures to retain its existing authority under its Medicaid “waiver.”
The federal Department of Health and Human Services is “sending a message that they’d like to see more from Maryland,” including a commitment to limit Medicare costs not just for hospitals but for doctors and drugs, said Baltimore health care lawyer Barry Rosen. “I don’t think they can walk into that on day one, but they may offer to get there four or five years out.”
HHS officials declined to discuss talks with Maryland. But a July 13 agency document circulated among policymakers and medical providers urges the state to offer a “transformative” plan that would control “the total cost of care,” not just hospital spending.
HHS does have some leverage to push Maryland to go big as it renegotiates the state’s waiver that allows it to set the rates for all hospitals.
Under the current waiver, Maryland hospitals collect more than $1 billion annually beyond what Medicare pays for similar care in every other state. That money disappears if Maryland flunks the current waiver test – which could happen soon if the state can’t keep the average costs of its hospital admissions down.
The fact that nobody in Maryland wants that to happen suggests that a compromise could be struck.