The secret payment pacts between Mass hospitals and insurers

Like most, BHN’s family has had to cope with the slow erosion of health coverage over the years — higher premiums, higher co-pays and poorly explained charges like co-insurance. 

Now dad’s NYC-based company has changed insurers and given staff no other option. And our new plan doesn’t cover Harvard Vanguard, where we have been happy for 11 years. 

So, yesterday, my son and I went to have a bittersweet “exit” visit with the pediatrician who has taken care of him for my boy’s entire life. My husband and I will leave behind a primary care doc we love, a gastroenterologist, ear nose and throat specialist, a surgeon and all the other specialist in the practice who know our medical history.  If I think about it too hard, it makes us nuts. 

Today the Globe reports that health insurers are refusing to talk to the state about how they negotiate prices that pay some docs 300 percent more than some others. “They explained their companies had signed confidentiality agreements with certain hospital or physician groups that prevented them from disclosing the information publicly because doing so would put the insurers at a competitive disadvantage.”

 Price setting between hospitals, docs and insurers amounts to a game of chicken. If the insurer refuses to pay — say, Partners — what the hospital system wants, the people who buy that insurance won’t have access to the Partners system. (See Globe story on Partners for details.) But, if the insurer covers a huge number of patients, they have the strong hand and can insist on lower prices. Don’t accept our price or we send all our patients elsewhere.

 Since our NYC-based insurance likely represents relatively few people in Boston, it was easy for HVMA to turn them — and us — away.

 Who’s missing in here — the patient, according to yesterday’s Department of Insurance hearing, The agency is looking : “into the reasons for disproportionately high health insurance rates paid by small businesses; but the agency has expanded its investigation to determine what is behind the soaring increases in insurance costs overall, including the large disparities in payments to providers….

In one instance,  (Kevin) Beagan, the deputy commissioner, pressed (Tufts Health Plan VP Marc)Spooner to explain whether Tufts health plan considers the impact on employers when it sits down to negotiate expensive contracts with health care providers. Those contract costs are passed on to employers.

“Do you start,’’ Beagan asked, “with what you think employers are willing to pay?’’

Spooner replied that contract talks with providers are “an interactive process’’ that takes into account the competition among providers.

Undaunted, Beagan pressed again.

“So the amount the employer would pay is not your target?’’ Beagan asked.

“No,’’ Spooner said

A pat on the back to the Globe’s Kay Lasar for covering an important but plodding under the radar hearing. I’ve covered similar and rarely leave without a headache, a notebook full of acronyms and a head full of jargon.

She herself took note of the lack of interest.

The sparsely attended hearing, in a drab fifth-floor conference room at the agency’s headquarters, featured mostly dense, bureaucratic answers to pointed questions.

Finally, take note of another Atul Gawande piece in the New Yorker holding up agricultural reform as a model that might address health costs. He suggests smaller decentralized efforts might get the job done.


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