Massachusetts insurers push back on hospital costs

The Globe reports that insurers in the state, emboldened by the high costs at some hospitals (a euphemism for Partners HealthCare) are offering lower rates and asking hospitals for cuts. The hospitals say they are taking from institutions that are already losing money. No doubt true in some cases. In others, it’s not clear what “in the red” means.

Unlike in past years, insurers believe they have widespread backing from politicians, regulators, and employers to aggressively push back against large price increases, even if it means some unhappy providers drop out of insurers’ networks, forcing patients to find new doctors and hospitals.

Blue Cross Blue Shield of Massachusetts, the state’s largest insurer, this month sent letters to hospitals and large physicians groups “putting them on alert that the world has changed,’’ said chief executive William Van Faasen. Blue Cross recently began negotiations with 25 hospitals whose contracts expire in October, about one-third of its network.

Two other large insurers, Harvard Pilgrim Health Care and Tufts Health Plan, also have sent letters in recent weeks, requesting rate rollbacks from some hospi tals and doctors groups.

Many providers are in no mood to back down, however, after recently released data showed that some hospitals and doctors groups are paid vastly more than others for providing similar services, because of their market power. The lower-paid providers are demanding more equitable rates.

Hospital executives acknowledged that their industry must help control costs by becoming more efficient, but they said many hospitals are struggling and cannot withstand rate freezes or reductions, particularly since the state has cut Medicaid payments and they expect the federal government to reduce Medicare rates under the new national health insurance law.

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