"Citizens have been outraged," said Del. Adelaide C. Eckardt, R-Talbot, the bill's sponsor.
Two years ago, many Medicare customers in Washington County and other parts of the state switched from purchasing "Medigap" coverage to the Blue Cross "zero-premium" Medi-CareFirst HMO.
Under a contract with the federal government, Blue Cross is paid a monthly premium from Medicare for each member and, in turn, is responsible for providing the member's health care benefits.
Late last year, county customers and those living in other rural parts of the state were told that beginning on Jan. 1, they would have to pay monthly premiums of $75. They then were billed $150 for two months of coverage.
The change affected about 2,450 Western Maryland residents, including about 925 in Washington County, according to Blue Cross.
Blue Cross lobbyist Fran Tracy testified that the company had to charge a premium in rural areas because it has been receiving a lower reimbursement from the federal government in those areas. Meanwhile, the cost of providing service in the rural areas has been higher than expected, resulting in the company losing money.
Donoghue said leveling the payments statewide would mean about a $15 average premium, but Tracy said that would put her company at a competitive disadvantage with providers in urban areas.
The legislation would require Medicare-replacement services and premiums to be uniform throughout the state. It also would mandate that plans be available statewide.
The bill is written to be in effect only until the end of 1998, when federal regulations kick in that prohibit differences in fees between rural and urban areas.
But Del. Shane Pendergrass, D-Howard, wondered what would keep Blue Cross in the state's rural areas if it continues to lose money there.
"If I'm a CEO, it's a no-brainer. I get out of the areas where I'm not making money," she said.