Massachusetts bill would cap insurer payments to hospitals

A bill pending in the Massachusetts statehouse would limit how much insurers could pay hospitals within the state to perform the same procedures.

Authored by Sen. Ben Downing, a Democrat, it would place ceilings and floors on payments to hospitals, MassLive has reported.  A single hospital could receive no more than 20 percent more than what other hospitals are paid on average to perform the same procedure, or 10 percent less than the average.

"You can't look into that area without stumbling across the pretty significant disparities that exist from system to system for what both public and private payers pay for services that roughly get the same quality of outcome in dramatically different settings," Downing told MassLive.

An example of one such disparity: Mercy Medical Center in Springfield is paid approximately $12,200 to treat a critically ill patient suffering from asthma and bronchitis. Massachusetts General Hospital in Boston is paid $40,000 to treat the same patient, according to MassLive.

Such payment disparities are commonplace across much of the United States, with hospitals that have stronger market share commanding much higher prices, according to a 2013 study by the Center for Studying Health System Change.

The bill has the support of labor unions, which have pointed out that such a bill could provide more cash to financially strapped community hospitals, the Salem News has reported. However, it would likely encounter fierce opposition from the hospital sector. Partners HealthCare, for example, could stand to lose as much as $500 million a year in annual revenue if such a bill was signed into law, according to MassLive. Partners' market clout is such that it had to enter into a price-capping agreement with state regulators to complete a hospital acquisition last year, and it remains the subject of intense scrutiny by rival hospitals. 

"At a practical level, there's a sense this bill is flawed and wouldn't work as intended, and could create more problems than intended," Timothy Gens, general counsel of the Massachusetts Hospital Association, told MassLive.

To learn more:
- here's the bill
- read the MassLive article 
- check out the Salem News article