Like health-care Robin Hoods, Massachusetts officials are taking roughly $216 million from the state’s health insurance plans and biggest hospitals and giving the money to small community hospitals, physician practices, tech companies, and community groups in an ambitious attempt to rein in the cost of medical care.
The money is coming from some of the state’s biggest health care players. Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, is coughing up nearly $73 million. Partners HealthCare, through assessments on its Massachusetts General, Brigham and Women’s, and Newton-Wellesley hospitals, is chipping in more than $41 million. Harvard Pilgrim Health Care is being tapped for more than $24 million.
About 13 percent of the money is going to promote the use of electronic medical records. More than a quarter of the money is going to the state Department of Public Health to promote community-based initiatives to reduce tobacco use, hypertension, adult falls, and pediatric asthma. The rest is going to a new state agency called the Health Policy Commission, which is tracking health cost trends and funding initiatives at nonprofit community hospitals to deliver care more effectively and economically. These efforts, as well as other initiatives launched by a law passed last year, are expected to reduce health care costs by some $200 billion over the next 15 years.
Officials at the Health Policy Commission don’t sound as if they intend to merely hand out a bunch of grants and call it a day. In its request for proposals from community hospitals, the commission said it anticipates “providing guidance to awardees.” At recent meetings of the commission, officials have repeatedly said the program is a joint effort between the state and the hospitals.
“We do not view this as a bailout of failing hospitals, but a chance to partner with hospitals,” said David Seltz, a former top policy aide to Senate President Therese Murray who is running the Health Policy Commission. “The grants we distribute will not be used to fill budget holes.”
The name the Legislature gave to the $119 million fund the Health Policy Commission is administering is the Distressed Hospital Trust Fund, but the commission tries to avoid that language whenever possible. It calls the grant program CHART, for Community Hospital Acceleration, Revitalization, and Transformation.
Grants will go to nonprofit community hospitals with prices that are below the state median. Anna Jaques Hospital in Newburyport is a good example. The hospital is making money, but not enough to invest in new, untested initiatives designed to improve the delivery of health care at a lower cost.
Delia O’Connor, the hospital’s president and CEO, said the institution is looking for money to invest in a program that would manage the care of patients who have chronic diseases along with mental health issues. O’Connor says research indicates those patients tend to use an unusually high volume of medical services. The hospital wants to build a database of those patients and hire two psychiatric nurse practitioners to coordinate their mental health and medical care. The nurse practitioners could, for example, work out strategies to make sure someone who is depressed doesn’t forget to take their medications for their chronic health issue.
O’Connor said she would welcome input from the commission on the hospital’s efforts. “This is far from ‘here’s the check,’” she said of the CHART program. “It’s almost like entering into a mentorship.”
Those on the giving side of the Robin Hood equation are less enthralled by the process. Their attitudes range from skepticism to outright hostility to the idea of funding a state intervention in the health care market.
Sharon Torgerson, a spokeswoman for Blue Cross, said in an email that the nearly $73 million the insurer was required to contribute comes on top of roughly $133 million it pays in federal, state, and municipal taxes and assessments. She said Blue Cross expects to see a “return” on its investment, meaning a reduction in the cost of health care.
Bill Graham, senior vice president for policy and government affairs at Harvard Pilgrim, said the company supports what the Health Policy Commission is trying to do. “At the same time, we are concerned about the use of insurance reserves to fund the CHART grants, given that the main purpose of reserves is for the protection of members in case of catastrophic events, so their claims may be fully covered,” he said.
Richard Copp, a spokesman for Partners HealthCare, calls the transfer of money from one set of health care providers to another bad public policy. “A tax that is selectively levied against a few hospitals is unfair,” he said. “It just creates more pressure in an environment when our margins are already razor thin.”
Partners took its $41 million payment to the commission as a charge in the final quarter of the fiscal year ending September 30, 2012. For the year, Partners reported income from operations of $191 million on revenue of $9 billion. By contrast, Anna Jaques reported operating income of $2.3 million on operating revenue of $114 million.
O’Connor, the Anna Jaques CEO, said research by the state and Attorney General Martha Coakley indicate the Massachusetts health care market is out of whack, with hospitals owned by Partners and others commanding much higher prices for their services from insurers with no clear evidence that their clinical outcomes are any better. “There is in the system a lot of inequality,” she said.
O’Connor said the Health Policy Commission in some ways is attempting to level the playing field between health care providers. “It is at some level about redistribution of wealth and power,” she said. “If you’re not willing to do that, then some valuable players are going to be wedged out.”