The Commonwealth’s commission on provider price variation is nearing the end of its deliberations. The commission has worked diligently since last year and co-chairs Representative Jeffrey Sanchez and Senator James Welch deserve credit for the effort they have made to find consensus among disparate perspectives.

In the midst of the commission’s work, a major new element has emerged in the health care financing landscape: the realization that there has been a dramatic exodus of low income workers from employer sponsored commercial insurance into the Medicaid program. Understandably concerned at the potential impact this will have on the state budget, the Governor has proposed sweeping changes in health care financing, including price caps on hospitals and doctors, cutting the rates paid to certain health care providers for care delivered to state employees, retirees and others covered under the Group Insurance Commission (GIC), eliminating hospital technical fees for outpatient clinic services and restoring an employer commitment to providing health insurance for low-income workers.

We are concerned that these responses are primarily directed at the commercial insurance market and will have a negative effect on our health care industry and the state’s economy. Health care providers in Massachusetts have collectively taken on new financial burdens with the shift toward Medicaid, which typically pays at much lower rates. Those constituencies that had previously funded and provided commercial insurance have experienced a financial benefit. Adding further constraints to provider payments in the commercial sector does not seem like an appropriate remedy. We need to work together on a balanced plan for health care in Massachusetts. That plan should be based on three things:

Continue with the approach of using a statewide benchmark rather than price caps – Pricing has been growing at rates that are at historic lows under the approach outlined in chapter 224. Price regulation has been unsuccessful in the past. Freezing or cutting rates to a labor intensive sector like hospitals will have immediate negative consequences on the workforce. We need to provide health care workers, doctors, nurses and other clinicians – reasonable wage increases in order to keep pace with inflation. Rate caps and rate cuts hinder efforts to treat health care workers fairly and could precipitate layoffs that will curtail access treatment.

Medicaid Must be Addressed – Ending the exodus from employer-sponsored insurance toward Medicaid is the first step. This will require multiple actions. A surcharge on employers that do not offer adequate coverage is one option -- but is only a partial fix. With nearly no copays, no premium contribution and broad benefits, MassHealth is an attractive health plan for qualifying low income workers compared to most commercial plans. This is the population that the exchanges were designed for, allowing means tested subsidized access to the commercial insurance market. But under the ACA the checks and balances that had held the equilibrium between employer sponsored insurance and Medicaid has broken down. We need to be sure we fully understand the underlying reasons Medicaid enrollment is under such duress and then everyone – federal, state government, health care providers, insurers and the business community – must reach agreement on a plan to fix it this year.

Strengthening our market-based approach – During the past six months the state commission on provider price variation has identified some areas of agreement on ways to further curb cost growth. Tiered networks help steer patients seeking routine care to lower cost settings and need to be presented in a more structured and transparent way to both consumers and providers. Tiered products can work better by limiting some of the “out-of-network” charges that have hampered these insurance products in the past. Understandable, accurate, and timely information about price and quality can help consumers select the best insurance plan for them and require that consumers be protected from surprise billing. Steps like these will help the market function better.

There has been a healthy debate during the meetings of the provider price commission and there is building consensus on a few policy options. Let’s allow those ideas to guide the legislative process moving forward – and work together to right the Medicaid program. A sudden push to cap and cut commercial rates will be destabilizing at a time when concerns about federal funding has already created much uncertainty.

Topics: Affordability, Medicare/Medicaid, Legislation

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