ANNAPOLIS, Md. (AP) — The Maryland Hospital Association urged a state commission on Thursday to spare hospitals from a 2 percent Medicare cut that is part of federal budget reductions.

In response to the recommendation by staff members of the Health Service Cost Review Commission to have hospitals absorb the cuts for the rest of the fiscal year, the group issued a report warning the panel about deteriorating financial health of hospitals in the state. The report said the percentage of hospitals experiencing negative operating margins have climbed from 17 percent in 2011 to more than 40 percent in the first half of fiscal year 2013.

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The commission is scheduled to consider how to address the cut at a meeting Wednesday.

The group is urging the commission to let the impact of the cut go into hospital rates, where they would be shared broadly by all payers for hospital care. The association says that would only raise hospital rates by 0.83 percent on a temporary basis.

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The group says making hospitals bear the whole burden of the cut would cost them about $108 million annually, an amount that would cause more hospitals to drop into negative margins.

“Hospitals do everything they can to meet their mission of getting patients the right care, at the right time, and in the right setting,” said Maryland Hospital Association President and CEO Carmela Coyle in a statement. “But for Maryland’s hospitals, all of which are not-for-profit organizations, no margin means no mission.”

Coyle added: “And these historically low margins cannot continue if hospitals are to answer the call of providing the services, and jobs, that their communities need.”

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