Lawmakers must make hospital rates fairer

Left unresolved, price disparities will undermine affordable health care

HEALTH EQUITY MOTIVATED Massachusetts’ first-in-the-nation, near-universal healthcare coverage in 2006.  Now, it should be a guiding principle as we tackle rising healthcare costs so necessary to keep the healing and caring power of healthcare within reach for everyone.

By the same token, we, as physicians and clergy, believe in working together to remove all barriers to the pursuit of healthy communities. Resonant with our deepest values, we believe healthcare to be a right that everyone should be able to access.

The Massachusetts State Senate’s promising HEALTH Act aims to address healthcare costs in ways that improve health and protect coverage.  Among the bill’s positive advances are more transparency in pharmaceutical costs, improved access through telemedicine and new dental therapists, safeguards to protect consumers from surprise billing, and community prevention and wellness efforts.

In particular, we commend the Senate bill’s provision to address a previously intractable inequity plaguing healthcare in our state– the wide disparities in how commercial insurers pay hospitals for the same high quality services. Left unresolved, this problem, which ultimately drives up costs and threatens local care, will progressively undermine the Commonwealth’s quest to achieve affordable and accessible healthcare for all.

Over the past decade, Massachusetts has witnessed widening disparities in how much commercial insurers pay hospitals for care – for tests, treatments, and hospitalizations.  Price variation negotiated between insurers and health systems, according to the Health Policy Commission, is not related to quality or patient acuity, but predominantly to market leverage. Massachusetts’ healthcare market, increasingly dominated by large players, is broken and unable on its own to act as the arbiter of fair payment.

An example of this stark reality comes to light in maternity care and the delivery of a healthy baby. Cambridge Health Alliance provides excellent care and outcomes, yet receives the second lowest commercial insurance reimbursement in the state at $11,601. The same service at a neighboring high-relative-price hospital is reimbursed 60 percent more, or $18,475. The statewide average is 27 percent more, or $14,686.

Consider what is at stake by unjust commercial insurance rates that underfund community hospitals such as Cambridge Health Alliance and others in communities across the state such as Lawrence, Springfield, Brockton, Holyoke, Chinatown, and across central Massachusetts.

Today, our patients and communities obtain cost-effective, personalized care close to their homes, whether for routine preventive and specialty care, emergency or inpatient needs. Those with mental illness or addictions find compassionate care and support. Our hospitals train the next generation of physicians through Harvard and Tufts medical schools, many of whom remain in Massachusetts practicing in otherwise underserved areas in primary care, psychiatric care, and other needed disciplines. Without improvement in rates, these hospitals, their patients, and their communities are unfairly shortchanged of local resources that ultimately impact access and public health.

Hospitals are economic cornerstones in our communities.  And the future for thriving communities is inextricably linked to fair community hospital rates from commercial insurers.  With the proper investment, community hospitals offer excellent value and are among the most efficient in the state managing population health under innovative accountable care models.

The Senate’s thoughtful course correction, following the recommendations of a state commission and seven years of review, includes a minimum payment floor in which private insurers must pay hospitals no less than 90 percent of the statewide average price.  Tying this to a monitoring system that assures that overall growth for commercial hospital payment stays within a targeted level will promote lower premiums and lower out-of-pocket spending.   These much needed structural remedies, carefully phased in over four years, should help to put us on a path towards a more affordable and equitable commercial payment system for hospitals in our state.

Meet the Author

Burns Stanfield

President, Greater Boston Interfaith Organization
Meet the Author

David H. Bor

Chief academic officer, Cambridge Health Alliance
Acting now to better align the private insurance system with fairer payment helps to address an inequity that affects both the public’s health and access to affordable health care for Massachusetts residents.

Rev. Burns Stanfield is president of the Greater Boston Interfaith Organization and pastor of Fourth Presbyterian Church in South Boston. David H. Bor is the chief academic officer at Cambridge Health Alliance and a professor of medicine at Harvard Medical School.