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2009 Session of the Maryland General Assembly


Email Alert

By Christopher P. Dean*

June 26, 2009

The Maryland General Assembly concluded its 426th Session on April 13, 2009. Final bill signing by Governor Martin O'Malley (D) took place on May 19, 2009. Unlike previous sessions, Maryland legislators seemed willing to amend and revise existing healthcare laws and, in particular, focused on hot-topic social issues, electronic health records, healthcare reimbursement, and healthcare access.

Maryland's constitution requires a balanced budget each year, which means that the total estimated revenue must equal (or exceed) the total estimated appropriations. However, Maryland has an estimated
$700 million budget deficit from fiscal year (FY) 2009 and tax collection projections continue to decline for FY 2010. The fiscal year begins on July 1, 2009, and ends on June 30, 2009.

Legislators were mindful of the current budget and rejected costly healthcare initiatives that lacked an existing funding source. For example, proposals to provide universal health insurance for all Marylanders failed.

On the contrary, revenue-neutral legislation and legislation with existing funding sources were more likely to become law. A statewide health-information-exchange law passed in part because of the availability of federal funding for electronic-health-record implementation. Skilled nursing facility pay-for-performance legislation, which was funded in part by a state levy on nursing-home reimbursements and in part by federal matching funds, also passed muster.

Maryland legislation is effective October 1, 2009, unless otherwise noted.

The following is a list of noteworthy items from the 426th Session.

  1. Hospital Debt Collection—Maryland hospitals have a statewide Medicare waiver and are subject to rate regulation under the Health Services Cost Review Commission (HSCRC). The HSCRC sets the rates that hospitals will charge and that all payors will pay, including Medicare and Medicaid, for hospital services. This rate regulation contemplates care for patients without health insurance or with insufficient funds to pay their hospital bills.

    Although hospital rates are regulated, each hospital was free to develop and implement its own financial assistance and bad-debt-collection policies prior to the 426th Session. A newspaper expose into certain hospitals' financial assistance and debt-collection policies revealed that some hospitals pursued debt collection more aggressively than others.

    Effective June 1, 2009, Maryland acute-care hospitals must develop a financial assistance policy that provides free medically necessary care to patients with family incomes at or below 150% of the federal poverty level, as well as reduced-cost medically necessary care to those with incomes more than 150%. Hospital debt-collection policies must prohibit the selling of patient debt to third parties or the charging of interest on overdue bills before court judgment. Debt-collection policies must also describe in detail the hospital's debt-collection process. All hospital financial-assistance information sheets and debt-collection policies must also be approved by the HSCRC.

  2. Electronic Health Information Exchange and Electronic Health Records—By October 1, 2009, the Maryland Health Care Commission (MHCC) and the HSCRC must designate a statewide Health Information Exchange (HIE) that will allow the electronic exchange of health information between providers and other healthcare organizations. The MHCC and HSCRC must also adopt regulations by September 1, 2011, requiring State-regulated payors, except Medical Assistance Managed Care Organizations, to include the costs of electronic-health-record (EHR) implementation in their reimbursement formulas and provide monetary incentives to providers to use EHRs. Maryland is one of four states participating in an EHR demonstration project directed by the Centers for Medicare & Medicaid Services (CMS).

    By October 1, 2012, the MHCC must report to the General Assembly regarding the statewide adoption and use of EHRs.

    By the later of January 15, 2009, or a date specified by the American Recovery and Reinvestment Act of 2009 (ARRA) for penalties for healthcare providers that do not use EHRs, each provider using EHRs that seeks payment from a State-regulated payor must use EHRs that are certified by a national certification organization designated by MHCC and capable of connecting to and exchanging data with the State HIE.

  3. Physician Reimbursement—Maryland physicians who do not participate in a health maintenance organization (HMO) will be paid more for providing evaluation and management-covered services to HMO members.

    Maryland's HMO balance billing law generally prohibits physicians from billing HMO members directly for covered services. HMOs are not required to reimburse for non-covered services, and the balance billing law also does not apply to non-covered services.

    Beginning January 1, 2010, and for covered services only, the HMO must pay the greater of 125% of the average rate the HMO paid as of January 1 of the previous calendar year for the same covered services by a similarly licensed provider in the same geographic area; or 140% of the Medicare rate for the same covered service to a similarly licensed provider in the same geographic area as of August 1, 2008, inflated by the change in the Medicare Economic Index from 2008 to the current year.

    For covered non-evaluation and management services, a HMO will pay non-participating providers no less than 125% of the average rate the HMO paid to a similarly licensed participating provider for the same covered service as of January 1 of the previous calendar year in the same geographic area.

  4. Nursing Facility Pay-for-Performance—A 2007 statute authorized the Maryland Department of Health and Mental Hygiene (DHMH) to collect a percentage of nursing home revenues from nursing homes, which is to be matched by federal funds. The 2009 legislation provides that DHMH must evaluate nursing facilities based on quality and begin distributing these funds in part by July 1, 2010, using pay-for-performance criteria.

    The scoring criteria will include the facility's score on the MHCC Family Satisfaction Survey, facility staffing levels relative to resident acuity, staffing-level stability, Minimum Data Set quality indicators, the facility's employment of infection-control professionals, and staff immunizations. DHMH must fully implement the pay-for-performance program by July 1, 2011.

  5. Physician Ratings—Effective January 1, 2010, the MHCC will regulate physician rating systems operated by carriers (which includes insurers, HMOs, nonprofit health service plans, and any health benefit plans). Carriers must contract and pay for a MHCC-approved ratings examiner to approve the carrier's physician rating system. Each carrier must disclose to physicians which portions of the physician rating system relate to cost efficiencies and which relate to quality performance. Quality performance ratings must use nationally recognized evidence-based or consensus-based clinical recommendations or guidelines.

  6. Physician Loan Assistance—Residents in rural Maryland counties outside of the Baltimore-Washington corridor are underserved in regard to primary-care physicians. This new legislation expands state loan assistance to recruited physicians into those and other underserved areas.

    Effective July 2, 2009, primary-care physicians will be eligible for a new separate Maryland Loan Assistance Repayment Program, with expanded eligibility and repayment requirements. Recruited physicians must be employed by entities that are tax exempt pursuant to IRC §501(c)(3) or §501(c)(4). The primary funding source will be from a rate increase approved by the HSCRC and applied to all hospitals, subject to a ruling from CMS that such a rate increase would be consistent with Maryland's Medicare waiver. The fund may also receive money from any other source, including physician licensing fees.

    By December 1, 2009, the MHCC and the Maryland Department of Business and Economic Development must report on the feasibility of providing financial assistance to physician practices.

  7. Small Group Health Insurance—The prohibition on pre-existing condition limitations in the Comprehensive Standard Health Benefit Plan (CSHBP), a health benefit package for businesses with two to fifty employees, has been repealed and replaced with the same pre-existing condition limitation as group insurance plans. The CSHBP uniform deductibles and cost-sharing requirements have also been repealed, and the MHCC must now set these requirements.

    The MHCC also must include a software application on its website for small businesses to compare premiums of different small group health benefit plans, including costs of riders typically purchased by small businesses. These new CSHBP provisions apply to all policies, contracts, and health benefit plans issued, delivered, or renewed on or after October 1, 2009.

    The Maryland Insurance Administration will study loss ratios, which are the ratios of incurred claims to premiums earned, and report to the General Assembly by December 1, 2009, about how to define loss ratios and manage loss ratios to encourage healthcare reform.

  8. Use of ARRA Funds—Maryland received approximately $1.5 billion in federal funding for Medicaid from the ARRA. According to estimates from the DHMH, this amount funded healthcare for 60,000 Marylanders through the Maryland Medical Assistance Program.

  9. Rescission of Contracts—This new legislation prohibits a carrier that conditions coverage on evidence of individual insurability from rescinding coverage on the basis of written information submitted or omitted from an application, unless the carrier completed medical underwriting and resolved all reasonable medical questions related to that information before issuing the health benefit plan. The new law places the burden of persuasion on the carrier that a rescission of a health benefit plan complies with these provisions.

  10. Prosthetics—Carriers must provide coverage for prosthetic devices, components of prosthetic devices, and repair of prosthetic devices that are used to replace, in whole or in part, a leg, arm, or eye. The co-payment for prosthetic devices may not be greater than the co-payment required for primary-care benefits. Carriers also may not impose an annual or lifetime dollar maximum on coverage for prosthetic devices other than any aggregate maximum benefit. Requirements for medical necessity for prosthetics must be no more restrictive than the requirements of the Medicare Coverage Database.

*We wish to thank Christopher P. Dean, Esquire (Gordon Feinblatt Rothman Hoffberger & Hollander LLC, Baltimore, MD) for providing this email alert.

For summaries of other state healthcare initiatives, please visit the Healthcare Reform Educational Task Force's website and click on Email Alerts in the left-hand navigation menu.

The Healthcare Reform Educational Task Force is a joint endeavor of the Healthcare Liability and Litigation; Hospitals and Health Systems; In-House Counsel; Payors, Plans, and Managed Care; Physician Organizations; Regulation, Accreditation, and Payment; and Teaching Hospitals and Academic Medical Centers Practice Groups.
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