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Massachusetts Bill Seeks to Limit Private Hospital Payments

Hospital association calls bill ‘overly simplistic’

In an effort to make the payment system more equitable between different hospitals for the same procedures, a bill in Massachusetts is aiming to set limits on what private insurers can pay hospitals, according to an article posted on the HealthLeaders Media website.

“We have vast discrepancies, well beyond the cost of care that’s provided and well beyond the outcome,” said State Senator Benjamin B. Downing (D), who filed the bill.

Bill S.574 would prohibit payments that are 20% higher or 10% lower than the average payment for similar settings. The ceiling wouldn’t apply to certain specialty or geographically isolated hospitals.

“My thinking, generally, was related to some of the issues that I’ve seen in my district,” Downing said, referring to the sudden closure last year of a financially beleaguered facility.

“This bill by no means would have solved all of those problems,” Downing acknowledged, but he said the way that health care is paid for now “drives costs up and drives people away from settings where they could get just as high-quality [care] and be closer to home.”

He added that making payments more evenly distributed would not only help ensure access to care but would also stabilize communities and “anchor institutions” that are major employers in some of the state’s most economically challenged areas. Moreover, he said, they’re providing high-quality care but are being paid much less for it.

Timothy F. Gens, executive vice president and general counsel for the Massachusetts Hospital Association (MHA), said, however, that the bill is flawed and could potentially “destabilize the health care system.” The MHA’s board of trustees has voted to oppose it, he said.

There are a number of “practical problems that suggest that this bill won't work,” Gens remarked. He noted, for example, that health care costs are about utilization as well as price; that the severity of an illness is different from one hospital to the next; that costs change from year-to-year as hospitals negotiate different contracts; and that there is a move away from fee-for-service payment models.

“The variables are numerous,” Gens said. “When we see these overly simplistic ideas, it raises serious concerns.”

Moreover, the bill doesn’t address a major issue: low government reimbursements.

Downing acknowledged that the bill isn’t perfect and said that he’s willing to work on alternative solutions. But, “If not this, then what? No one, I think, would say that the status quo is sustainable or ideal.”

Source: HealthLeadersMedia; July 6, 2015.


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