Mass. Gov.’s 11th-Hour Proposal On Reining In High-Priced Hospitals

Massachusetts Governor Deval Patrick

As Carey wrote yesterday, the House and Senate are under the gun to reach an agreement on how to lower health care costs while improving care. A conference committee aims to have a bill out on Sunday. Their deadline is Monday evening. In the meantime, several major issues are still unresolved, including what to do about hospitals that use their market clout to demand high prices that are not based on higher quality.

Attorney General Martha Coakley, the state’s top insurers and several consumer groups argue that price is a critical issue. “Any meaningful health care reform legislation must include efforts to address the market power of providers and the negative impact on costs that we identified in our reports,” said Corey Welford, Coakley’s chief of staff, in a statement.

‘Patrick and Coakley have treated the market power issue like a hot potato.’ — The Boston Globe

But it’s been clear for a while now that a House plan to penalize high cost hospitals that couldn’t justify their prices would not be part of the final bill.

In response, some of the lower-cost hospitals and the Greater Boston Interfaith Organization have told lawmakers and the Patrick administration that it wouldn’t be smart or look good to pass a law that paid little attention to what’s known in health-care-speak as “provider price disparity.”

So last week, Gov. Deval Patrick began floating a late compromise (full text here) to tackle health care prices. The governor’s plan would let government dig into a provider’s books and forward findings of anti-competitive behavior to the attorney general. The AG would use his or her existing authority to launch an investigation. The AG’s office offered a different plan that would let the administration use the license renewal process to demand lower prices, but a spokesman says “there are positive steps taken in the House, Senate and governor’s proposals” as well.

Sources say the conference committee isn’t paying much attention to the governor’s compromise. Members don’t like the idea of requiring another state office holder (the AG) to take action based on an investigation that would begin in the governor’s office. And it’s not clear how effective the governor’s plan would be. It does not give the AG any new authority, although it might give her better information to use in an investigation.

Some of the high-cost hospitals are lobbying against the governor’s compromise, and Mike Widmer with the Massachusetts Taxpayers Foundation says “the open-ended nature of the governor’s proposal is just ripe for misuse and abuse.”

Widmer argues that consumers will drive down high prices by choosing lower-cost hospitals that deliver good care. But Harvard School of Public Health Associate Dean Nancy Turnbull says “government will have to take a much more active role in overseeing prices” if it hopes to take on market power.

What to do about health care prices may be an issue left for the next health care bill in Massachusetts. As one government spokesman says, “this is not the end, it’s just another step.”

For more on the proposal, see today’s Globe: Patrick proposes new way to target providers that abuse market power. It includes the pithy line: “Patrick and Coakley have treated the market power issue like a hot potato.”

And here’s an update from the Massachusetts Hospital Association:

The MHA Board of Trustees discussed the proposal by the Administration regarding a new state agency’s review of provider costs and market impact review and the role of the Attorney General in relation to the work of the new agency regarding these matters. After a full discussion of the proposal and expression of concerns about the proposal, the Board concluded that it did not support the proposal.”

Please follow our community rules when engaging in comment discussion on this site.
  • Harry Sutton, Newburyport, MA

    Allowing the market to decide isn’t the answer, either. Expecting people to make rational, well-informed decisions at potentially the most vulnerable points in their lives doesn’t make sense. Who among us, faced with a life-threatening diagnosis, perhaps for the first time in our lives, would honestly ask “What’s this going to cost?” as our first question? (Granted, it’s one of the first, but not, I think, THE first.)

    One of government’s most legitimate functions is to protect the rights of individuals against entrenched more powerful interests, in this case, the medical insurance industry and hospitals that charge higher rates seldom for no other reason than because it’s what the market will bear.

  • guest

    The idea that the government should be controlling cost is a scary one that will only lead to all hospitals charging the maximum that the regulations allow.
    While is it difficult to defend wide disparities in price, the reality is no one has a “right” to go to Mass General or the Brigham.  If I were to go to the Brigham, I’d be fine with paying a little more if it means that surgeon can continue to do incredible (and incredibly costly) procedures like face transplants.

    Transparency in pricing is the way to go.  One of the best inventions of the past few years is the  Explanation of Benefits form.  It provides great insights, the most obvious of which is that the huge disparity between what a hospital charges and what insurers will pay means that neither can be based on true cost.