In Massachusetts, home of RomneyCare, legislators are taking a new look at health care costs and are proposing new ways to bring those costs down.
Since instituting the universal, individual mandate healthcare coverage the Commonwealth has been forced to address the question of skyrocketing healthcare costs. More people on insurance and more government funded health plans has brought the inequities of commercial insurance payouts to light.
As I discussed in an earlier column, hospitals and provider groups all negotiate individually for the payments they will receive from insurance companies. Bigger and more prestigious hospitals can negotiate much higher reimbursements as that is a selling point for people and companies buying insurance. For instance, the behemoth Partners system of hospitals, health centers and provider groups anchored by Mass General Hospital and Brigham and Women’s Hospital are paid far more for the same service than a small independent community hospital in the same service area. This perpetuates the wealth and influence of Partners at the expense of smaller providers. Same with large physician practices. They can negotiate a bigger reimbursement than a solo or small group practice. The smaller, independent hospitals are finding it impossible to survive and are increasingly being bought up by large, and sometimes for-profit, hospital chains.
Ronald Mariano, the House Majority Leader , who represents Quincy, MA, location of the floundering Quincy Medical Center, which is due to be yet another small Massachusetts hospital bought out by the for-profit Steward Health Care, is introducing legislation to curb this inequity by forcing insurers to cut payments to the top payee hospitals and providers. The saving would then be used to increase payments to smaller hospitals and cut insurance premiums for business and individuals. In theory.
Insurers seem cautiously supportive, which makes sense as they would no doubt like to cut their reimbursements to larger medical centers. It remains to be seen whether this legislation will also force them to lower premiums or increase pay outs to smaller groups. If it does force them to pass the savings along, it is doubtful that they will support it in that form.
The Massachusetts Hospital Association President Lynne Nichols is of course less than enthusiastic about the proposals and is quoted in the Boston Globe as being concerned that critical, but poorly paid services, such as psychiatric services at the larger hospitals would face cuts. And it is true that smaller hospitals in Massachusetts have severely cut or eliminated psychiatric services. However, the fact that their budgets were gutted by poor insurance payments has played a huge part in the resulting dearth of psychiatric services.
It is also interesting to note that more legislators are thinking along the lines of ‘capitated’ or ‘bundled’ payments – lump sum per patient payments to providers to cover all costs, rather than hospitals and providers billing for every separate visit and procedure.
What’s going on in Massachusetts is important, as RomneyCare is basically ObamaCare. What happens here in terms of payer reform and regulation is likely to be the future of everyone’s healthcare system. Legislators have never thought much about the disparities of commercial insurance payments, and appear to be getting a crash course in the iniquities and intricacies of healthcare economics. The system has not righted itself and more legislation to force them to do so will be forthcoming. It remains to be seen the result of the battle between the powerful Hospital and Insurance lobbies.
