Hospital pricing deliberations begin

Outcome uncertain as commission’s 22 members start talking

THE 22 MEMBERS OF THE SPECIAL COMMISSION set up to address unwarranted price variation among the state’s health care providers held their first meeting on Tuesday, with one of the cochairs jokingly saying it felt like an episode of Survivor.

The commission was created earlier this year as part of a deal to head off a union-sponsored ballot question that would have established a floor and ceiling on payments to hospital providers. The union sponsoring the question, 1199SEIU, estimated the proposal would have lowered payments to high-cost providers, primarily hospitals owned by Partners HealthCare, by $463 million and shifted a large chunk of that money to community hospitals.

The ballot question was withdrawn when state officials agreed to funnel more money to hospitals with relative prices below 120 percent of the statewide median and Partners agreed to support the right of its workers to unionize.  A commission to address pricing disparities was the third piece of the agreement.

At Tuesday’s State House meeting, the two cochairs, Rep. Jeffrey Sanchez of Jamaica Plain and Sen. James Welch of West Springfield, laid out the ground rules – nine, three-hour meetings open to the public; a public hearing on January 17, 2017; and a written report completed by March 15, 2017. Sanchez, who made the Survivor reference and then downplayed it by saying all of the commission members will emerge from the process, said it was still to be determined whether the final report would include any legislative recommendations.

Rep. Jeffrey Sanchez of Jamaica Plain laid out the groundrules.

Rep. Jeffrey Sanchez of Jamaica Plain laid out the ground rules.

The members of the commission then went around the room introducing themselves and highlighting their priorities for the commission.

Howard Grant, the president and CEO of Lahey Health, said he hopes the commission can address price disparities baked into the system by the state’s last health care law and push for incentives that would encourage consumers to seek care at low-cost, high-quality providers.

Stuart Altman, chairman of the state’s Health Policy Commission, said price disparities among health care providers are neither unique to Massachusetts nor necessarily bad. Teaching hospitals, for example, typically receive a price boost for the service they provide educating future medical professionals. The trick for the commission, Altman said, is establishing the right level of price disparity. “We really don’t know that yet,” he said.

Karen Tseng, the head of Attorney General Maura Healey’s health care division, said unwarranted pricing disparities enjoyed by some providers, primarily the Partners hospitals Massachusetts General and Brigham and Women’s, have been clearly documented and are the primary driver of increases in the cost of health care.

Tyrek Lee of 1199SEIU said everyone in the room knows what the problem is. “It’s complicated to fix without robbing Peter to pay Paul,” he said.

Steve Walsh, president and CEO of the Massachusetts Council of Community Hospitals, said if the commission can’t come up with a solution, probably no one can. He said he hoped everyone on the commission would start from the premise that “this is a problem, not is it a problem.”

The man on the hot seat, David Torchiana, the CEO of Partners HealthCare, which is likely to be the target of any action taken by the commission, was the last to speak. He simply said the fact base on pricing disparities is not complete. After the meeting, he raised concerns, as he did in an earlier interview with CommonWealth, about the potential for negative fallout from health care price regulation.

“We are pursuing what I would call a non-urgent problem with an inappropriate sense of urgency,” he said. “Health care costs are a problem for all. Health care cost trends are worthy of containment. But we have, again in relative terms, a low-cost, high-quality system that is functioning fine with actually modest variation compared to what the national standards are. So the basic premise that has created this sense of urgency is flawed.  Now I don’t think I’m going to convince a whole lot of people in this room because there’s lots of layers of complexity to this.”

Torchiana said he planned to personally attend all the commission meetings. “Obviously, for me, this is a very threatening process because I’m leading an organization competing on a national level with academic health centers that are paid vastly higher rates than we are,” he said.

Partners HealthCare CEO David Torchiana: "This for me is a very threatening process."

Partners HealthCare CEO David Torchiana: “This for me is a very threatening process.”

House Majority Leader Ron Mariano of Quincy said after the meeting that the expectations for the commission seemed extremely high.  “My expectations are not that high,” he said. “What I’m looking for from this commission is to maybe highlight where the real problem areas are and maybe work toward at least a majority view for some solution. I don’t think that there’s a magic bullet that’s going to solve this.”

Mariano said Torchiana’s comments represented the only “negative point of view” presented during the commission meeting. “That’s going to be a problem, although I think the bulk of the commission will end up disagreeing with him because the fact base is solid,” he said.

House Majority Leader Ron Mariano: "My expectations are not that high."

House Majority Leader Ron Mariano: “My expectations are not that high.”

Altman, a health policy expert who teaches at Brandeis University, said it will be a challenge for the commission to reach consensus. “I think technically we have most of the information but politically it’s a very complicated issue,” he said.

Sanchez said the outcome of the process is uncertain. He said the law creating the commission required the body to determine if there is price variation and then determine how much of the price variation is unwarranted. If it’s determined some of the variation is unwarranted, he said, the commission can then make recommendations to the Legislature to address it.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

He said he and Welch and their staffs would write the final report but would not be the final arbiters of what the commission does.  “It’s up to the group,” he said.

Disclosure: Partners HealthCare, Harvard Pilgrim Health Care, and Tufts Health Plan are sponsors of MassINC, which publishes CommonWealth.