What could be the negative effects of each state’s rates being regulated as it relates to patient care?

To continue the discussion about health care in the state of Maryland, we will discuss this week on how it is delivered. The State of Maryland is unique in that hospital rates (the cost charged for each patient admitted into a Maryland hospital) are governed by the Maryland Health Services Cost Review Commission (HSCRC). Other state’s rates are driven by what the market will bear and the prices charged are what the hospitals set themselves for the services they provide.

For example, “When a patient arrives at Bayonne Hospital Center in New Jersey requiring treatment for the respiratory ailment known as COPD, or chronic obstructive pulmonary disease, she faces an official price tag of $99,690. Less than 30 miles away in the Bronx, N.Y., the Lincoln Medical and Mental Health Center charges only $7,044 for the same treatment, according to a massive federal database of national health care costs.” (Boice, Bycoffe and Scheinkman, 2013. Huffington Post, Hospital Prices No Longer Secret As New Data Reveals Bewildering System, Staggering Cost Differences.http://huffingtonpost.com/2013/05/08/hospital-prices-cost-differences_n_3232678.html). These inflated costs are also used for negotiating discounts with private insurance companies (Medicare and Medicaid rates are set for each diagnosis).

With Maryland’s rates being set by the HSCRC, the cost of insurance here is among the cheapest in the country. Health plans that will operate on the new health exchanges created under the federal reforms will charge among the lowest premiums of any state.

Maryland is not the only state that has implemented rate setting. New York, New Jersey, Connecticut, Massachusetts, Washington and West Virginia all experimented with rate setting in the past as well. However, these states have since discontinued.

Given the success Maryland has found in providing lower health care cost, (based on the readings and your research) why do you think these states did not continue with regulating hospital rate setting?

Could price controls work nationwide? Should the federal government impose mandates on all states to have a state agency such as the HSCRC in Maryland to regulate their hospital rates? Please be specific with your reasons for why or why not and show justification from your research.

What could be the negative effects of each state’s rates being regulated as it relates to patient care?

Below is supplemental reading to this week’s discussion:

http://commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2009/Oct/1332_Atkinson_state_hospital_ratesetting_revisited_1015.pdf

http://marylandhbe.com/wp-content/uploads/2013/07/Analysis-of-Individual-Market-Rates-for-Health-Plans-on-Maryland-Health-Connection.pdf

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