Healthcare workers launch statewide push for reforms that would rein in big health insurance payments to the highest-priced hospitals in Mass.

BOSTON – Healthcare workers are launching a statewide push for reforms that would rein in big health insurance payments to some of the highest-priced hospitals in Massachusetts.

For years, inflated payments to a small group of academic medical centers have been cited as a major driver of higher consumer premiums and as a threat to community hospitals. Many community hospitals are struggling under a health care system that pays them exponentially less than other providers for the delivery of the same services at the same level of quality.

Now, members of the state’s most politically active and fastest growing union, 1199SEIU United Healthcare Workers East, are putting their full support behind a bold solution that workers say could be the key to preserving services and jobs at many community hospitals around the state.

The Act to Protect Community Hospital Services & Jobs, also currently known as SB574 An Act Relative to Equitable Health Care Pricing, would reduce excessive payments to hospitals by an estimated $450-$500 million annually. An estimated $250M of the savings from the bill’s price cap would be utilized to increase the rates for community and safety net hospitals whose commercial rates fall below the 90% price floor. Another $200-$250M would be returned to consumers and employers through reductions in health insurance premiums.

Caregivers have warned that – absent decisive action by the legislature on the issue – more community hospitals in the state are destined to close. The majority of Massachusetts residents receive their care at community hospitals, yet many of those facilities have struggled financially even while the state’s wealthiest hospital network amasses nearly $7 billion in reserves.

“For too long, community and safety net hospitals have been forced to fight over the crumbs within a system that caters disproportionately to wealthy hospitals,” said 1199SEIU Executive Vice President Veronica Turner. “The lack of equality in our hospital payment system is jeopardizing services at the community hospitals where a majority of residents receive their care. The time for reform is now. On their own, the current payment growth caps are inadequate as a policy solution. There needs to be a floor and a ceiling for these payment rates or our hospital system will be locked into a permanent state of imbalance and inequality.”

The legislation backed by the healthcare workers union would prohibit healthcare providers and private health insurance companies from entering into contracts that would pay hospitals more than 20% above the average amount paid to similar healthcare providers for the same healthcare services.

Coupled with the state’s rate cap of 3.6% annually, caregivers say creating a ceiling for payments to wealthy hospitals will help create the longer term market conditions necessary to curb increasing consumer premiums and preserve community hospital services.

The legislation would also prohibit contracts that pay hospitals less than 90% of the average amount paid to similar healthcare providers. Specialty and geographically-isolated hospitals would be explicitly exempted from the legislation’s price cap, although some will benefit from the bill’s price floor.

To drum up support for the reforms, 1199SEIU members are launching a statewide tour of more than 35 community hospital locations across the Commonwealth – including many non-union hospitals – during which 1199SEIU members and organizers will promote the new legislation at the facilities which would financially benefit from a more balanced payment system.

Hospital workers will simultaneously be recruiting hospital workers to join the union in hopes of continuing the record-setting growth seen by 1199SEIU in recent years. The union is also planning advertising and grassroots voter outreach drives to promote the reforms, including using social media and advertising to mobilize patients and voters whose local hospitals would benefit from the proposed regulatory changes.

Most of the worst paid hospitals in the Commonwealth are also community hospitals and/or disproportionate share hospitals (DSH), serving a large proportion of Medicaid and Medicare patients.

The below-average commercial rates paid to these community hospitals, combined with the relatively low rates paid by government payers, result in these important community-based providers struggling to remain open and to survive financially.