$390 million rise in state employee health insurance raises concerns about costs and quality

Photo by Jose Goulao on Flickr

By Sam Smith
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Maryland’s Board of Public Works voted Wednesday to increase spending authority on health care benefits for state employees by nearly $390 million.

The original spending cap on the health care contracts was close to $5 billion over five years ending in June of 2014. Budget Secretary Eloise Foster said the increase would pay for more people joining the state’s plan since the original health care authorization in 2008.

The federal Affordable Care Act extended the age of eligible dependents to 26 creating a larger pool of participants along with the addition of more spouses of employees.

“Over the last several years, enrollment has increased basically through the economic conditions as more spouses have joined our plan as well legislative changes,” Foster said.

Unnecessary spending and needless costs

Comptroller Peter Franchot, one of three members of the powerful board that includes the governor and state treasurer, brought up a recent report by the Institute of Medicine that found “30% of health care spending in 2009 was wasted on unnecessary and needless costs.” The report said that “lack of coordination in every point of the health care system is a big culprit.”

The report also said that the extra spending on unnecessary procedures has harmed a number of patients.

Anne Timmons, director of the Employee Benefits Division in the Department of Budget and Management, said there were changes made to the employee benefit plan on July 1 to help eliminate unneeded costs. Among them, raising the emergency room co-pay is designed to discourage unnecessary trips to the emergency room. Timmons mentioned that Medicare started a program where they will not pay for medical mistakes and said that the state is also working to build that into its benefit plans as well.

The state’s Health Quality and Cost Council, chaired by Lt. Gov. Anthony Brown, studies diseases that spread in hospitals. Timmons said combatting hospital-transmitted infection is another way the state will look to limit unnecessary health care spending.

Franchot suggested that conducting unnecessary procedures stems from patients not knowing who is their primary care doctor. The Institute of Medicine’s report stated that 75% of all hospital patients do not know who their clinician is.

“Apparently what is happening is because nobody knows who their doctor is, they are getting shuffled to one doctor after another and one specialist after another,” Franchot said. “It’s all adding up to a lot of unnecessary procedures and treatments that we’re paying for, that they don’t need and, in some instances, are actually hurting them.”

The report also mentions how other economic sectors such as banking are successfully using electronic records, but the health care industry is behind.

Maryland addresses electronic medical records

Health Secretary Joshua Sharfstein told the board that Maryland has been an innovator when it comes to implementing electronic medical records. Through the Health Information Exchange medical records can be can be shared from hospital to hospital.

“All the hospitals are putting in data about admissions and discharges. About half of them are putting in clinical data, and all of them will be very shortly,” Sharfstein said.

One thing that is being done in Maryland that is not being done in other states is alerting doctors when their patients check into the hospital or emergency room. In a pilot program, doctors can send a list of their patients and when their patient checks into the system, they will be sent an email.

“It allows the doctors to know,” Sharfstein said. “It’s actually happening for certain doctors, and soon it will be widely available.”