The financially troubled Prince George's Hospital Center faces a nearly $5 million penalty for using an erroneous rate structure to charge patients seeking care in practically all areas of the hospital.
An investigation by the Maryland Health Services Cost Review Commission did not find that the hospital made a profit from using the faulty rate structure.
However, commission staff members allege that Prince George's Hospital Center and its sister facility, The Greater Laurel-Beltsville Hospital, manipulated data to get state approval for higher rates in some cases and lower rates in others, which may have had the effect of paying patients subsidizing the hospitals' losses for treating indigents. The commission approved the rate adjustments for Prince George's Hospital, but caught the error before adjusting the Laurel hospital's rates.
"People should be responsible for paying for the services they received rather than for what others are receiving," said John M. Colmers, executive director of the commission. "It's important that certain services not subsidize other services."
A spokesman for Dimensions Health Corp., the nonprofit corporation that owns Prince George's Hospital Center, the Laurel hospital and other health-care facilities in the county, said there was no "willful" manipulation of the rates, but there may have been computation errors.
"We investigated and there is no evidence of willful or policy decisions to affect" the rate structure, said Ronald W. Weitz, senior vice president of Dimensions. "We don't think there has been any harm done to any of the payers in particular."
If the full commission accepts the staff recommendations, the $4.8 million penalty against Prince George's Hospital, plus an additional $130,000 fine for late filing of data, would be the largest penalty ever for violating the rate-setting process. The penalty would be taken out of the hospital's rate increases over the next three years. Dimensions has requested a public hearing before the commission.
Since 1974, Maryland hospitals' rate structures have been set by the cost review commission. It reviews cost data provided by hospitals and determines where rate changes should be made, a system that proponents said has reduced health-care costs in the state from 25 percent above the national average in 1976 to 8 percent below last year.
The investigation found that Prince George's Hospital Center, which has one of the state's largest charity care loads, submitted false information in 1988 to receive a rate discount in some areas and large increases in others.
For example, under the rate change approved for last year, patients who went to the hospital's clinic got a 53 percent discount over the previous year, whereas those needing anesthesia paid 132 percent more.
The investigation of Prince George's Hospital Center is the latest blow to a hospital that has struggled for years to improve its image. After weathering massive layoffs and a threatened loss of accreditation in the mid-1980s, high-profile court cases involving the kidnapping of a newborn and a nurse charged with killing patients, the hospital in recent years has lost millions from treating indigents. In 1989, Prince George's County approved a $7.5 million bailout to help cover the growing cost of charity care.
In recent years, however, the hospital has made inroads with middle-class and private patients by upgrading facilities.