Massachusetts Hospitals Respond to Boston Globe Investigation of Insurance Payment Discrepancies

Citing a recent Boston Globe investigation, officials from some large academic medical centers and community hospitals in Massachusetts this week sent a letter to Gov. Deval Patrick (D) requesting an investigation into how some hospitals in the state receive higher payments from insurers, even though there are no obvious differences in the quality of care that those hospitals provide -- especially for the most common procedures, the Boston Globe reports (Krasner, Boston Globe, 11/20).

According to an ongoing investigation by a Globe Spotlight Team, a recent review of private insurance data found that some hospitals in the state receive payments from insurers that on average are about 15% to 60% more than payments for the same procedure at competing hospitals. The hospitals that receive the highest rates are those that have the bargaining clout -- often based on a powerful brand name and elite reputation or geographical location -- to demand higher insurance payments (Kaiser Daily Health Policy Report, 11/17).

In the letter, Marshall Carter, chair of the Boston Medical Center, said that the Globe article "shone a very important light on the widening inequities in our health care system." He wrote, "The disparities in payments from private insurers to certain favored providers without a clear connection to quality or greater cost efficiency should trouble us all," adding, "The Globe Spotlight article demonstrated that so-called 'supplemental' payments do, in fact, come in different forms. For large and powerful hospitals that care for patients with higher incomes and the best insurance plans, those subsidies come in the form of higher payments from private insurers."

Ellen Zane, president and CEO of Tufts Medical Center, wrote, "Clout, over anything else, has driven insurers to disproportionately and inappropriately pay some providers more than others." She continued, "There are huge imbalances in this market -- not just between teaching hospitals and community hospitals, but among the various teaching hospitals," adding, "Tufts Medical Center offers the same (advanced) services as [Children's Hospital Boston] and Partners HealthCare, but is paid at unsustainably low reimbursement rates -- well below our real costs."

Paul Levy, CEO of Beth Israel Deaconess Medical Center, wrote, "We had heard talk about these payment differentials before, but to see them in black and white is startling and discouraging for those of us who are pursuing a quality and safety agenda."

In a statement, Rich Copp -- a spokesperson for Partners, which according to the Globe has been the "greatest beneficiary" of the payment discrepancies -- said, "We agree that there is a health care cost crisis, but it is not unique to Massachusetts," adding, "While we take exception to a number of points that were made (in the Globe report), including the use of outdated data to compare the quality of patient care, we welcome a dialogue on these issues, and believe the community will benefit from an honest and open discussion of all sides."

Consumer Web Site
In related news, the state Health Care Quality and Cost Council on Wednesday approved the development of a new Web site that is scheduled to be launched next month and that will include hospital payment data from insurers and hospital rankings based on quality measures for dozens of inpatient and outpatient procedures, the Globe reports (Boston Globe, 11/20).