Hospital pricing causes disputed in Senate health bill
Sam Doran/State House News Service
Mass. General Hospital President Peter Slavin told a Senate health care working group their proposed bill would be an "unfair legislative attack" at MGH and Brigham and Women's. He testified alongside Brigham and Women's President Elizabeth Nabel.
Plans to tackle hospital pricing are emerging as a flashpoint in the Senate's health care reform bill, with the head of Massachusetts General Hospital decrying an unfair attack while community hospital heads cheered them as a potential lifeline.
The 100-page bill, rolled out last week by a working group helmed by Sen. James Welch, aims to address unwarranted variation in prices paid to medical providers by setting a target reimbursement rate for all hospitals -- 90 percent of the statewide average -- and creating a council that could impose additional regulations if the lowest-paid hospitals are not brought up to that target within three years.
If overall hospital spending grows faster than a target set by the bill, the council would also be able to assess a penalty on the top three hospitals "that contributed to hospital spending" -- which Massachusetts General Hospital president Peter Slavin said would affect only MGH, Brigham and Women's Hospital, and Boston Children's Hospital.
At a hearing Monday, Slavin told senators the bill directed an "unfair legislative attack" at MGH and Brigham and Women's, both part of the Partners HealthCare system. He said the bill creates "perverse incentives" for other hospitals to drive up costs, since they would not be subject to the penalties.
"This provision is a direct outgrowth of the notion that has taken root here on Beacon Hill in recent years that quality of care is identical in all hospitals across the state," Slavin said. "As you might imagine, I do not agree with that notion at all, nor do I think it is supported by considerable evidence. If the quality of care in Massachusetts is the same across all hospitals, then why does MGH and the Brigham consistently attract the best medical students from across the country and around the world?"
Slavin also told lawmakers he is concerned the bill's passage could put Massachusetts at a competitive disadvantage in the life sciences industry, noting competing teaching hospitals in other states are paid higher rates.
Senate Ways and Means Chairwoman Karen Spilka pushed back, telling Slavin the senators "could have stepped in with a hammer" on pricing but chose not to.
"Your hospitals are fabulous, and we don't contest that, and we want you to compete with those across the country," Spilka said. "And even though you're saying that you're getting a lot less reimbursement, you're still way up there competing with the top ones across, so I don't know if you have any other suggestions other than rolling up your sleeves over the next two or three years and working with all of the health care folks, because it's important that you see yourself within Massachusetts as a competitor for the health care dollars as well."
The hearing was before members of a Senate-only special committee that wrote the bill, rather than the Joint Committee on Health Care Financing, which includes House lawmakers and is charged with reviewing "all legislation relating to health care to evaluate the appropriateness and fiscal effect."
With the health care and insurance industries major players in the state's economy, Beacon Hill has been reluctant to move to price regulation, though the issue is one lawmakers have wrestled with for years while rising costs strain government, household and employer budgets.
A commission formed last year as part of a deal to avoid a costly ballot fight over over hospital pricing spent six months studying the issue and developing recommendations to address it.
Despite pricing discussions in the past, Lawrence General Hospital CEO Diane Anderson said there was "not a glimmer of hope for improvement" for lower-paid community hospitals before the Senate's bill came out.
"We do not need a modest, one-time pot of funding. We do not need another Band-aid," Anderson said in her written testimony. "We need a sustaining, permanent, structural remedy. We need a payment floor."
Spiros Hatiras, the president and CEO of Holyoke Medical Center, drew applause and laughter from the crowd that filled two hearing rooms with his analogy of "one little guy" -- representing community hospitals -- knocked into a pit of quicksand while hiking with "two big guys," academic medical centers and health insurers, who fight over how to rescue him.
"I think the only way out of it is for the rangers to come along and say, 'Look guys, stop the nonsense, OK, pull the guy out and get it done with,' and the ranger is you, the Legislature," Hatiras said. "There's no way we're going to make everyone happy on the issue."
The Retailers Association of Massachusetts, in testimony from Bill Rennie, its vice president, raised concerns that the price variation measures "could lead to a cycle of ever escalating rate increases and no corresponding cost decreases," because it provides a floor but no ceiling and does not take into consideration variables like geographic location.
Gov. Charlie Baker, in his budget recommendation filed in January, proposed directing the Division of Insurance to disapprove contracts between hospitals and insurers that exceeded certain price caps based on Medicare reimbursement rates. That provision was not contained in the fiscal 2018 budget that ultimately passed the Legislature and was signed into law.
Baker in June also proposed a series of MassHealth reforms, which lawmakers rejected in favor of developing their own health care proposals.
"As far as the MassHealth stuff is concerned, I really like the proposal we made, but again I recognize and appreciate that it's complicated and it's my hope that sometime after the first of the year that issue can get joined," Baker said Monday about the Legislature's efforts to address health care costs.
Baker had once said he wanted a bill on his desk in September to address the cost of MassHealth coverage, but has since softened that position.
On the Senate's bill, Baker said, "Like any bill that's that big and that complicated, there are pieces of it that we appreciate and we like and pieces of it we have concerns about and we'll certainly express those." He said his administration typically doesn't testify on legislation it did not file directly unless expressly invited.
During her testimony, Massachusetts Association of Health Plans President Lora Pellegrini said a provision creating a "buy-in" option for Medicaid could increase health care costs.
The idea of a buy-in -- for employers with MassHealth-eligible workers to buy in to the Medicaid program, with employers paying half of the premium -- might be worthy of exploration, Pellegrini said, but the language in the bill "actually creates a potentially new expansive public option" that would increase enrollment at time when MassHealth already accounts for over 40 percent of the state budget.
The Pioneer Institute said the buy-in program would mark a "radical change from the existing program structure," the impacts of which are unclear without "more elaboration and analysis."
The Massachusetts Medical Society expressed support for measures addressing prescription drug costs, including a provision requiring pharmaceutical manufacturers and pharmacy benefit managers to participate in annual cost hearings before the Health Policy Commission.
In written testimony, the society said it was "dismayed to find" that sections of the bill aimed at expanding the use of telemedicine include "neither a consistent mandate for payers to provide coverage to patients for telemedicine services when clinically appropriate, nor any assurances of adequate reimbursement when those services are provided."
The society also opposes language in the bill addressing out-of-network billing, which it says is "unlike any law in the country" and could have "drastic negative impacts on access to medical care in Massachusetts by giving payers unilateral authority to underpay physicians for services provided to patients."
In hopes of limiting unexpected costs for consumers, the bill sets a default rate for out-of-network billing and imposes restrictions on hospital facility fees.
Al Norman, executive director of Mass. Home Care, asked senators to strike a section of the bill he said would allow state officials to "forcibly disenroll thousands of MassHealth members" from the state home care program and enroll them instead in the "Senior Care Options" program.
Home care agencies in Massachusetts are already struggling to fill cases on weekends and evenings, according to Home Care Aide Council Executive Director Lisa Gurgone. Citing a "crisis" in the field, Gurgone urged lawmakers to seriously consider ways to boost home care, citing the potential to improve care, reduce costs and keep people living in their homes and out of hospitals and nursing homes.
Gurgone described home care aides as the "gatekeepers of the health care system in the home," but said the demand for home care outpaces the supply of home care workers. The council is working with the state on a survey to more specifically gauge the magnitude of unmet home care needs, she said.
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