House leader not sensing groundswell for health care rate setting

Members of a commission tasked with finding solutions to hospital price variation heard from health law expert Gwendolyn Roberts Majette on Tuesday, who provided them with an overview of how other states are handling similar issues. [Photo: Antonio Caban/SHNS]
Members of a commission tasked with finding solutions to hospital price variation heard from health law expert Gwendolyn Roberts Majette on Tuesday, who provided them with an overview of how other states are handling similar issues. [Photo: Antonio Caban/SHNS]

STATE HOUSE, BOSTON, NOV. 29, 2016….The need for a solution to unwitting patients getting billed exorbitantly for out-of-network health care sparked a moment of consensus on Tuesday for members of a commission studying pricing who are otherwise grappling with how best to control growing health care costs.

Other possibilities, including a return to government rate setting or the use of price caps to control costs, offer less clear cut paths forward, members of the commission said.

“Rate setting, probably not. I don’t see any real groundswell to get into rate setting,” said House Majority Leader Ronald Mariano, reacting to a presentation that included a discussion of how Maryland has used rate setting to reduce price variation among providers.

Massachusetts participated in rate-setting in the late 1970s and 1980s, but the system fell apart, Mariano said, when it became exceedingly difficult to get agreement. “Health care was also going through a lot of changes then. Managed care was just starting to come in and we started to see insurance companies controlling the length of time of hospital stays to control costs and it got to be the devil,” he said.

Health and Human Services Secretary Marylou Sudders also said Maryland has a unique set of circumstances, including a federal waiver to treat all payers, including Medicare, equally, that doesn’t exist in Massachusetts.

Mariano did open the door a crack to rate capping, which allows more flexibility for negotiations without full government control. “The use of rate caps as it applies to a percentage of Medicaid may be something you could look at as a short-term solution to close the gap so there is an opportunity to maybe take a look at that and see if it fits what we’re trying to do,” Mariano said.

The 23-member commission met Tuesday for the fourth time as it works toward presenting a set of policy recommendations by March of next year to address the gap in prices charged by different health care providers that have been blamed for rising health care costs.

“There’s obviously, I would say, general agreement, around out of network, but I don’t think goes to the heart of price variation. My interest would be, my own personal professional interest would be more of finding the incentives to have individuals in value-based organization rather than disincentives,” Sudders told the News Service.

The commission seemed in agreement that reforms are needed to protect patients in emergency care situations where they have little control over whether they are treated at an in-network hospital covered by their insurance plan.

Dr. Stuart Altman, the chair of the Health Policy Commission, also called it “atrocious” that some patients have found themselves being billed at high cost for out-of-network care when they go to an in-network hospital, but unknowingly receive part of their care from an out-of-network provider, such as an anesthesiologist.

“This area deserves action on the part of state government that cuts across everything we’re talking about,” Altman said.

Blue Cross Blue Shield, the state’s largest insurer, has suggested a default rate for out-of-network service with proper consumer notice and price transparency. Dr. David Torchiana, president of Partners Health Care, said a blanket default rate would “negate any ability that a provider network organization has to create leverage in a rate negotiations,” but did not oppose the idea for emergency services.

Lora Pelligrini, the CEO of the Massachusetts Association of Health Plans, said the protection probably would need to be extended beyond just emergency service to include other specialists and consultants who may provide services to a patient during the course of their care.

The discussion of out-of-network billing followed a presentation by health law expert Gwendolyn Roberts Majette, a professor from the Center for Health Law and Policy and at Cleveland-Marshall College of Law.

Majette assured the commission that Massachusetts is not alone in trying to mitigate provide price variation. While Majette said the Massachusetts is ahead of other states in banning many anti-competitive contract clauses that, among other things, might seek to shield quality and cost data from patients or stop insurers from steering patients to high-quality, low-cost providers, there are other tools the state could consider.

One of those options, Majette said, is known as “component contracting.”

Majette referenced a case in Evanston, Illinois where after two hospital systems merged in 2000, including one system that had much lower rates than its new partner, the Federal Trade Commission filed a complaint after funding the merger led to higher costs.

Instead of the breaking up the system, which could have been disruptive to patients years after the merger, the FTC tried to create competition by allowing insurers to negotiate contracts with each hospital separately for a period of 10 years.

Unfortunately, no payers took advantage of the option, so the component contracting experiment didn’t work.

“You can try it, but you have to think about all of these disadvantages to it. Will it actually work? We haven’t seen it work,” Majette said. The downsides include increased administrative costs and difficulty monitoring the individual contracts.

Lynn Nicholas, president of the Massachusetts Hospital Association, said component contracting would work against the progress made by providers to develop systems conducive to coordinate care for patients.

“As the world is evolving with more integration in general you’re building your system with pieces that can work together,” Nicholas said.

Blue Cross and Blue Shield of Massachusetts chief operating officer Deborah Devaux also criticized the idea: “I think it would be destabilizing for the provider community for plans to negotiate with components of the entity and could have drastic unintended consequences. I don’t see this as a mechanism we should pursue in further depth in our state.”

Pellegrini, however, said the plans she represents see value in one form of the idea. Though she said it would be “unworkable and administratively burdensome” if insurers had to negotiate separate contracts with every piece of a large provider network such as Partners, she would be interested in being able to negotiate a contract with one hospital in a network without having to contract with every other facility.

Health care contracting in Massachusetts is currently an all-or-nothing proposition for plans who must negotiate with an entire network of hospitals or not at all, except when putting together limited or tiered products.

Pellegrini said that allowing insurers to choose could provide an incentive for providers to lower their overall rates. “It is a way to put in people’s minds that we can contract with a community hospital you own, or maybe you think about how do I lower my price,” Pellegrini said.

Copyright 2016 State House News Service

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