A Hopkins-affiliated managed care organization had sought the increase because Hopkins clinics, located in Baltimore's poorer neighborhoods, treat a large number of indigent patients and are not fully reimbursed for the relatively higher cost of treatment.

But state officials said that increasing the reimbursement would result in more patients seeking treatment at the academic health centers such as Hopkins and the University of Maryland Medical System, rather than at less expensive community clinics.

"Both our (Hopkins) facilities are located in poorer areas of the state and have historically served the most vulnerable populations," Patricia Brown, president of Johns Hopkins Healthcare, told a hearing Tuesday before the House of Delegates Health and Government Operations Committee. "Our ability to maintain these volumes is at risk."

About 428,000 Maryland residents are enrolled in the state Medicaid program, known as HealthChoice. Through that program, Medicaid recipients enroll in one of seven Managed Care Organizations, which then pay specified rates to clinics, doctors and other service providers.

Academic health centers such as Hopkins cost $216.52 per visit, almost three times as much as community-based providers. The state reimburses the MCOs $175 per visit - the average of the difference in costs.

Priority Partners, an MCO that is partly owned by Hopkins, asked the state health department to change that policy at the end of this year's General Assembly session, arguing that it lost about $3.5 million because so many of their patients were seeking treatment at Hopkins-affiliated clinics at a higher cost.

The state denied Priority Partners' proposal, saying it would cost too much to reimburse academic health centers more than the average rate paid to all other MCOs, and that it would be unfair to the other 11 teaching facilities in the state that do not receive the increased amount.

"If we did this, what would stop MCOs from directing more patients to academic health centers so that they could be reimbursed for more money?" asked Audrey Richardson, director of finance for Medicaid. "The less-expensive community based clinics would be left with less volume."

Other MCO representatives opposed the rate reimbursement changes suggested by Priority Partners, saying that all of the organizations have higher cost providers for which they are not completely reimbursed.

"Those are managed costs," said Steven B. Larsen, senior vice president of Amerigroup, another organization that provides services to Medicaid patients. "The rate-setting process is complicated and you can't look at such a narrow issue as a basis to rearrange the settings."

After the hearing, the committee chairman, Delegate Peter Hammen, D-Baltimore, said he worried that allowing higher reimbursements for MCOs that use academic health centers would "raise the tide" for all other MCOs that don't use them as much.

"We have to be cognizant that we need to maintain Medicare and ensure its affordability," Hammen said. The committee, along with the state health department, will work together to find other options to relieve the financial strain on MCOs that rely heavily on Hopkins services.