AG would review health care providers’ market clout

Hospitals and health care providers that dominate a substantial share of the health industry would be subject to a “market impact review” to ensure that their clout isn’t hurting consumers, according to a plan outlined Friday by Attorney General Martha Coakley.

“Right now, there is no reporting mechanism in place to effectively monitor [the market size or clout of] providers,” Coakley said during the annual meeting of the Massachusetts Association of Health Plans, according to a text of her prepared remarks. “When a provider does reach a certain level of market clout, it should trigger a market impact review to determine whether the provider’s size is having a negative impact on consumer choice, access, or healthy market function.”

In her speech, Coakley also laid out a framework for government intervention when “market efforts fail” to correct sharp variation in the price of health services that often exist from hospital to hospital but are not based on the quality of care provided or the outcome for patients.

“Starting in 2015, if the market has not corrected unwarranted price variation, the administration should be able to reject health plan contracts with excessive or inadequate provider price variations,” she said.

Coakley also suggested that health insurers should be barred from paying provider’s rates that are excessively above or below their averages from a year earlier. Any savings as a result of these efforts should be directed to reducing premiums for consumers, she said, adding that government intervention should “sunset” once unwarranted price variation is eliminated.

Coakley’s call for government intervention tracks closely with the recommendation of a special commission that issued a report earlier this month on price variation among hospitals, health centers, and other providers. The Massachusetts Hospital Association rejected the commission’s conclusion, arguing that market clout is being overvalued as a factor in the disparity of price variation and that much of it can be attributed to underpayment by government for Medicare and Medicaid services.

During her remarks, Coakley also suggested hospitals should provide patients with their maximum potential cost liability for their own care. “We are considering requirements that providers disclose the full amount that consumers could be liable to pay, so that patients know in advance what they are agreeing to.”

Coakley’s remarks add to a chorus of elected officials who have offered proposals and outlines for plans to reform the health care delivery system. So far, no legislative proposals have gathered momentum.

Gov. Deval Patrick has called for a system of “global payments” to hospitals and doctors to streamline care, incentivize healthy outcomes for patients, and avoid unnecessary testing and duplication.

Patrick and Inspector General Gregory Sullivan have warned health care providers and insurers from preempting health care reform efforts by agreeing to long-term contracts with significant price increases.

The pitfalls of pressuring to achieve price reduction were on full display this week when talks between Blue Cross Blue Shield of Massachusetts and Tufts Medical Center broke down in an acrimonious and public display of disagreement. Blue Cross notified its members that Tufts was preparing to cut the insurer out of its network, and Tufts responded by declaring that Blue Cross had walked away from the table, disrupting care for 200,000 patients.

The parties issued a joint statement Thursday afternoon to suggest they had gotten past the animus and will seek agreement with the help of a mediator.

“Tufts Medical Center, its community physician network and Blue Cross Blue Shield of Massachusetts are committed to reaching agreement on a new contract,” the companies wrote. “Leadership of the organizations have spoken today and agreed to continue discussions and use a third-party during this process. Both organizations are dedicated to negotiating a contract that ensures our members and patients can continue their relationships with their doctors and their health plan.”

Senate President Therese Murray and House Speaker Robert DeLeo have both identified health care payment reform as a 2012 priority.

“That’s not an easy fix. That’s a very difficult issue to deal with and David Seltz from my office is our health care policy person. Most of the staff continue to work on that,” Ms. Murray said.