ANNAPOLIS – Children’s Hospital Tuesday defended itself against a proposal to trim $9 million in Maryland state and federal funding, telling lawmakers the cut could jeopardize care for all its patients.
The proposed regulations, effective around March 1, would change the state’s Medicaid reimbursement policy for children with rare and expensive conditions not covered by traditional health care plans.
“We will not turn children away, so we have no bargaining room,” said Edwin Zechman, president of Children’s Hospital, which is in the District of Columbia, but serves young patients throughout the region.
The hospital argues the cuts in Medicaid funds would overburden the hospital and force cutbacks. The nonprofit organization had a $12 million budget gap last year and said contributions have decreased significantly since Sept. 11, 2001.
“We will have no choice but to close down facilities and consolidate services, which will impact all children, not just those on Medicaid,” said Zechman in written testimony to the Senate Budget and Taxation subcommittee on health.
The hospital serves 40,000 Maryland children from Prince George’s, Montgomery, Anne Arundel, Calvert, St. Mary’s and Charles counties.
The state is paying four times its share toward uncompensated care cases, according to the State Department of Health and Mental Hygiene. The proposed cuts would be phased in, beginning with a nearly $1 million cut for fiscal 2004. By fiscal 2007, the cuts would total $9 million in federal-matching and state funds.
“We’re paying a lot more for services than we should be,” said John Folkemer, a state health care finance director.
The state participates in the Medicaid disproportionate share hospital program, which provides a safety net for hospitals that serve a large number of low-income patients. The state pays 62 percent of the hospital’s cost of serving some high-risk uninsured patients. Yet the hospital reports 15 percent of its total costs are uncompensated. The state said it should be paying closer to the 15 percent rather than four times that amount.
Children’s argues however, the state is only contributing the uncompensated share for 700 of its approximately 13,000 Medicaid cases. The hospital spends $13 million for uncompensated care.
Zechman explained that Maryland’s share accounts for only about half of the uncompensated care provided to Maryland residents, and while he admits the rates are inflated for those cases, the hospital is still left with $6 million to $7 million in uncompensated costs, including some costs for Maryland patients.
If Children’s were in Maryland, the cost of treating indigent patients would be built into its rates, as it is for in-state hospitals. As it is, the only way for Children’s to be paid for uncompensated cases is through the 700 Medicaid cases.
The hospital said any lost revenue will have to be absorbed by patient treatment. Consolidation could mean patients would have to wait longer for appointments. Closing facilities would mean longer travel to the District for treatment and more costly emergency room visits.
“Children’s’ hospital cannot absorb the proposed reductions without it having some detrimental impact on the communities we serve,” said Zechman, “including some of the neediest children in our area.”