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MAY 1999 - New Reimbursement Schedule Saves $20 Million - In
response to new cost control measurers put in place by the state's
Group Insurance Commission (GIC), the Massachusetts Hospital
Association has filed legislation to force the state to negotiate
health care rates with each individual hospital across the state.
Over the past several months, GIC officials have heralded news of a potential $20 million savings for the indemnity plan in FY'99. Estimates for the coming fiscal year, FY'2000, place that savings at $35 million. This comes as great news to retirees and state budget officials who have had to endure the ever-increasing costs of the indemnity plan in recent years. Meanwhile, officials representing Massachusetts hospitals are crying foul. Hospital executives argue that the state has stabilized the costs of their number one insurance plan by short-changing health care providers. Hospitals complain that they are not being adequately reimbursed by the GIC for the services they provide. Last year, the GIC implemented what is known as a market based reimbursement (MBR) schedule. In doing so, the GIC dramatically reduced the level of payment to hospitals and doctors paid under the GIC Indemnity Plan. The new schedule sets a market, or average, price for each individual medical procedure performed by the medical provider. After an internal study showed the GIC to be paying as much as three times the average price, for some procedures that were billed under the Indemnity Plan, the eleven member commission adopted the MBR standard. First initiated last July, the full MBR method of payment was fully implemented in January. "The GIC made a strong case to us last spring as to why the change in reimbursement methodology was needed. From the evidence put forth at that time there was no question that the indemnity plan was being overcharged for a whole host of services," said Association Legislative Liaison Shawn Duhamel. "Now the hospitals are crying foul and indicating that they are the victims of cost cutting." Legislative Review Underway Over the next several months, GIC and hospital officials will be locked in a dance of sorts as the legislature reviews the GIC policy along with the several bills filed by the hospitals. The bills attempt to force the GIC to negotiate their rates with each individual Massachusetts hospital, a move insurance officials deem as "nightmarish". The first hints of the possible battle to come surfaced at a public hearing before the Joint Committee on Public Service on March 9, where two of the bills (H-2217 and H-3558) received a hearing. Although the hospitals provided no testimony other than to request the bills be discharged to the Committee on Insurance, GIC officials were on hand to discuss their policy change at length. GIC Chairman Deborah Heslop and Executive Director Dolores Mitchell deferred much of their testimony to Dr. Robert Sorrenti, senior vice president of UniCare. UniCare, a subsidiary of the California based managed care giant WellPoint, is the manager of the GIC Indemnity Plan. Sorrenti testified that the GIC, through UniCare, is paying the hospitals a fair rate for the services they provide. He argued that the bills pending before the Committee would place the GIC at an unfair disadvantage by requiring individual negotiations with each hospital. He went on the say that the MBR system is still paying higher fees than most managed care plans operating in the state. "Based on the information we have been given to date, we asked Public Service to kill these two bills," continued Duhamel. "It would be a mistake to take the Hospital Association lightly. They are a high powered group with a lot of clout on Beacon Hill. "However, unless the hospitals can show hard evidence that they are not being paid fairly, I don't expect these bills to pass. Besides, our members should not be forced to pay exorbitant rates for something someone in the private sector is charged half price for just because they have an indemnity plan. Public Service Says No Fortunately, the chairmen of Public Service, Representative Paul Casey (D-Winchester) and Senator Brian Joyce (D-Milton), agreed with the testimony offered by the GIC. At their March 23 executive session, the Committee voted unanimously to "kill" both bills by reporting them to the House floor with an ought not to pass recommendation attached. Although the 160 member House can vote to overturn a committee's recommendation, it is highly unusual. Committee recommendations are usually held in high regard. "Even though we have won round one the fight with the hospitals is far from over," predicts Duhamel. "Both the GIC and our Association are going to have to pay close attention to all health care related bills that come before the Legislature over the next two years. The hospitals are a powerful lobby and are determined to correct something they view as an inequity." |
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