How the hospital performance rating system works

Friday, March 18, 2011; 5:55 PM

Regarding the Feb. 28 letter "Making money off the above-average":

The Maryland Hospital Acquired Conditions (MHAC) method of applying hospital rewards and penalties is based on measuring each hospital's performance and determining whether the complication rates are lower or higher than, or on par with, expected rates. The expected rates of complications for each hospital are calculated using statewide average rates for the type and severity of illnesses of the patients treated by a given hospital. Therefore, hospitals with more complex patients are not disadvantaged because their expected complication rates would be higher than those hospitals with less complex patients.

The MHAC approach to funding the rewards and imposing penalties is revenue-neutral and does not raise money for the state through fines; for poorer-performing hospitals, a portion of their approved increase in prices for the current year has been withheld and redistributed to the better-performing hospitals based on performance in the previous year.

Robert Murray, Baltimore

The writer is executive director of the Maryland Health Services Cost Review Commission.

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