Massachusetts Proposed Legislation to Curb Health Care Costs by Regulating Hospital Reimbursement Rates

Health Care > Legislation to reduce health care costs by regulating hospital reimbursement rates

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In a previous article we began to dissect the new Massachusetts Senate Bill "Strengthening Health and Accessibility Act by Using Transformative Health Care", and focused on a provision prohibiting hospitals to bill payers for many routine outpatient services. . In this second part of a multipart series, we examine how this bill proposes to improve the affordability of health care in the Commonwealth.

During the Health Care Costs and Containment Reform Working Group Debate, the Senate Working Group stated that this proposal would reduce the costs associated with health care and provide $ 425 million in savings by 2020. premium rate increases.

Definition of a target hospital rate distribution to help moderate costs

One of the main ways to mitigate costs is to establish a hospital Alignment and Review Board that will establish a "hospital fee target allocation", the minimum payment that an insurer must reimburse to a hospital for services. The Senate Working Group hopes that setting a lump sum payment for carriers will reduce price variation between Commonwealth hospitals and, subsequently, stabilize the market. During the hearing, senators asked the industry to give its opinion on setting the rate at 0.9%. Some argue that establishing a floor will help hospitals that currently receive lower reimbursement rates to "thrive and survive." Others say that fixing a floor is not enough, rather than a capping rate of repayment. .

To ensure that target hospital rate distributions are met, Section 111 instructs insurance companies to submit annual attestations to the board of examiners. If a certification reveals that any hospital has received a reimbursement increase, all other hospitals contracting with that carrier must have received a similar increase.

Other elements allowing a slower growth rate

The bill provides the board with other tools to achieve a slower growth rate. One such measure is that the board will establish a "target growth in hospital expenditures". In the event that hospital expenses exceed the target rate, the board may penalize the first three hospitals that have contributed to expenditures above the target. Each of these three hospitals will be required to pay its proportionate share of the difference between the actual growth of hospital expenditures and the target growth of the board in hospital expenditures. Some consider this penalty to be a government intervention necessary to correct price changes in the marketplace. On the other hand, others claim that this penalty unfairly attacks three hospitals and will create perverse incentives for hospital expenses just below the top three.

Setting a target allocation of hospital rates will be a mechanism to deal with price changes, but the task force continues to gather industry input to determine the ultimate level of government control needed on the Commonwealth health care market.

This bill is currently open for comment. Any interested party should strongly consider commenting on the state's Senate bill.


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