Massachusetts avoids hospital pricing ballot measure after officials reach compromise with union
The proposal would have created a floor and a ceiling for commercial payment rates.
A Massachusetts ballot question seeking to regulate commercial insurance payments to hospitals may be avoided, now that a compromise solution has been reached.
Gov. Charlie Baker, House Speaker Robert DeLeo and Senate President Stan Rosenberg announced this week an agreement was reached that reforms the Special Commission to Review Variation in Prices among Providers, adjusts MassHealth rates and provides additional support for community hospitals.
A healthcare workers' union had been lobbying on behalf of a bill and a ballot question that would limit the disparities in what commercial insurers can pay different hospitals for the same procedure, according to published reports.
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The proposal would have created a floor and a ceiling for commercial payment rates; private insurers, in effect. could not pay hospitals more than a certain percentage above or below the amount paid to similar hospitals. While smaller community hospitals would have gotten more money, reports say Partners Healthcare, the state's largest hospital system, could have stood to lose hundreds of millions of dollars in insurance reimbursements.
Under the agreement, the Executive Office of Health and Human Services would administer a $45 million Community Hospital Reinvestment Trust Fund over a period of five years. The trust fund will be financed by redirecting existing assessments that now fund the budget for the Center for Health Information and Analysis. The legislation will transfer $5 million from the CHIA appropriation to the trust fund in fiscal year 2017, and $10 million each year thereafter until fiscal year 2021.
The resulting $45 million in revenue will be distributed through a series of annual relief payments over a five-year period. All hospitals with relative prices below 120 percent of the statewide median price will be eligible for this funding; such annual payments would be weighted and allocated proportionally, so those hospitals with lower relative prices would receive relatively higher payment awards.
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The agreement also authorizes Secretary of Health and Human Services Marylou Sudders to expend up to $15 million in additional rates to be returned to hospitals -- in addition to the $250 million hospital assessment proposal already included in the fiscal year 2017 state budget. The additional funds will follow the same distribution formula as used for the distribution of the $250 million – with the sun setting after five years.
The compromise would also establish a Special Commission to Review Variation in Prices among Providers, which would bring together interested groups to work on solutions to healthcare pricing disparities.
"It is my hope that this plan will avert a costly and divisive ballot initiative and lend assistance to our community hospitals, which serve our most underserved residents," said House Speaker Robert A. DeLeo, D-Winthrop, in a statement.
Twitter: @JELagasse
