Health panel finds some common ground

Draft plan calls for rate floor for community hospitals


AFTER SIX MONTHS OF SEEKING WAYS to address the variation in prices charged by Massachusetts medical providers, officials plan to recommend a host of solutions including a rate floor for lower-paid community hospitals, regulation of rate growth, and protections against out-of-network charges, according to a draft proposal.

The recommendations are made in a draft report that members of the 23-person commission discussed Tuesday in an at-times heated meeting that highlighted the level of disagreement among the panel.

The report makes what commission member Dr. Richard Frank, a health economist at Harvard Medical School, described as “strong statements” about what are acceptable reasons for insurers to pay providers different rates for the same services and which factors are unacceptable.

But conflicting opinions remain about the best way to address those unwarranted variations, commission co-chair Rep. Jeffrey Sanchez said.

“At the end of the day, at this table, not everyone agrees on how, on if and what we should do to go at it directly, or not,” Sanchez said. “It’s not clear. There is not unanimity at this table.”

The commission is charged under a May 2016 law with conducting a “rigorous, evidence-based analysis to identify the acceptable and unacceptable factors contributing to price variation in physician, hospital, diagnostic testing and ancillary services.”

The 125-page draft report names three factors as warranted causes for price variations: the acuity of patients typically served; the quality of care as measured by clinical outcomes and patient satisfaction; and whether the provider cares for patients considered “high-cost outliers.”

The unwarranted factors are listed as market power, brand, geographic isolation, government payment shortfalls and research costs. The commission plans to recommend further analysis on whether other factors — area wages, services that yield little or no margin, standby capacity, socioeconomic status of the patient population and an institution’s status as a teaching hospital — are acceptable contributors to price variation.

Stuart Altman, the chair of the state’s Health Policy Commission, took issue with teaching status not being included on the list of acceptable factors.

“By so reducing what you consider to be legitimate price variations, you really are squeezing down what would end up as the net result, and I think you end up with a very, in my view, wrong conclusion,” he said.

Health care pricing issues have vexed the Legislature for years, with lawmakers trying to balance the competing needs and desires of lower-priced community hospitals, higher-priced academic medical centers, patients, insurers and the employers, government entities and consumers that pay for care.

Many of those viewpoints are represented on the panel, which includes representatives from state government, community and teaching hospitals, health plans and businesses of different sizes.

“I went into this not expecting any consensus, so the fact that we did get some around some of the factors was a step in the right direction, I think,” House Majority Leader Ron Mariano, a commission member and veteran of the state’s health care policy debates, said after the meeting. “I actually thought there was more agreement than I expected. I really did.”

Mariano, a Quincy Democrat, said he is working on legislation that would address out-of-network billing.

“It’s a real consumer issue,” he said. “We should address it.”

The draft report recommends that health plans should educate patients on the benefits of in-network care and the risks of receiving care out-of-network, while calling on the state to enact prohibitions on patients being billed for the portion of emergency care not covered by insurance and to establish a default rate of payment for out-of-network services.

Dr. David Torchiana, the head of the Partners HealthCare system that includes Massachusetts General Hospital, said he disagreed with the “very definition of what price variation is” and the context for the commission’s review. He said Massachusetts hospital prices are lower than those in other states.

“If we want to do something about price variation, do we really want as I just heard everyone in this commission say, do we really want to take it out of the hospitals that we have that are higher paid in this state for whatever reason — warranted or unwarranted — in order to effect the redistribution and cause harm to among the most important institutions that we have that are already at a disadvantageous position in competing with their national peers?” he said. “Obviously as the leader of one of those institutions, I think that is absolutely atrocious policy and a very bad idea.”

The final report will be filed with lawmakers and Gov. Charlie Baker next Wednesday, Sanchez said, after commission members review it on Friday. The final version will incorporate discussion from Tuesday’s meeting and other edits.

Commission members appeared to shy away from making any major changes to the report’s content during the meeting, offering mostly what they described as technical corrections.

When Blue Cross Blue Shield of Massachusetts chief operating officer Deborah Devaux suggested replacing charts in the draft with more recent data from the Health Policy Commission’s annual cost trends report, Health and Human Services Secretary Marylou Sudders said, “I think we just stop this.”

“We can bring up the [Affordable Care Act] today, we can bring up a lot of stuff. I think we just stop deliberating. This is the last meeting,” Sudders said, later adding, “I’m sure there’s lots of new data on lots of things. I really just think we need to close deliberations on this.”

During the at-times heated meeting, the commission found a moment of levity when they agreed to scrap the draft’s four-page executive summary out of concern that it oversimplified the recommendations.

“Wow, see, we can do it,” Sanchez said to laughter, joking that the moment marked the group’s “first consensus.”

Sanchez said the commission’s report includes “plenty of compromise” and that no one “came into this thing thinking it was going to be a panacea for anything.”

Meet the Author

Katie Lannan

State House News Service
Sen. James Welch, who co-chairs the commission with Sanchez, said he was not worried by the level of disagreement expressed.

“Twenty-three members of stakeholders across the state that come from all different backgrounds and all different areas of the health care world, to get to where we are with issuing this report I think is seriously a tribute to people’s willingness to put their own personal feelings completely aside — express them, but at the same time understand that 100 percent of their feelings is not going to be reflected in the document,” he said. “But we do have a good document going forward.”